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All this is because money lending is a business. We've known for literally thousands of years (Islam, Judaism, Christianity at least) that lending money with in

All this is because money lending is a business. We've known for literally thousands of years (Islam, Judaism, Christianity at least) that lending money with interest is predatory, harmful, and destructive. Couple that with the government being able to print money at will to cover its ever increasing debts (again, due to interest), and we see how the hole keeps getting deeper. It saddens me that we don't learn from past wisdom, and that greed drives the world. We see people vouch for clean energy, what we also need is clean finance and economics.

schoen 6y ago
I know YC purchases equity rather than debt with its investments (and that equity stakes are rarely considered "usury" and not always considered "lending"), but it's a little odd to see this comment on a forum hosted by a venture capital firm, whose whole business is about letting people have some money in the hope of profiting from it later on.
- gher-shyu3i 6y ago
  Purchasing equity is the moral approach. This means that the investor also bears the risk. If the company succeeds, the investor makes money, if it doesn't, then he lost money. > but it's a little odd to see this comment on a forum hosted... Why? They're not lending money, they're investing, two very different things.
  - ahepp 6y ago
    Creditors certainly bear risk of default. In fact, isn't that why VC exists? If banks were insulated from the consequences of their lending, wouldn't you expect them to loan to risky startups?
    - vineyardmike 6y ago
      > isn't that why VC exists Not entirely. VC exists for things where debt doesn't work. You can use debt to fund some things, eg. real estate, because a failed business still has a valuable asset to sell. If a vc funded tech company goes under, the only thing to sell is source code, which is not nearly as fungible.
      - ahepp 6y ago
        I'd argue that's a consequence of creditors bearing the risk of default. The risk is high both because the business may go under, and because the business has few assets that can be liquidated.
        gher-shyu3i 6y ago
        With an interest bearing loan, the bank will come after the borrower's assets, seeking not just the principal, but the interest on top, until they milk them dry. This is just one reason why lending money with interest is immoral. Read up about Islam's position on this issue if you want to learn more. It's quite eye opening, and sad that we have to live in a world that is based on fundamentally evil and corrupt financial practices.
        selimthegrim 6y ago
        I see you are representing all of Islamic jurisprudence here but somehow condemning things like sukuk?
        ahepp 6y ago
        Are they condemning sukuk? I thought sukuk was an attempt to reconcile the desirable qualities of a loan with Islamic jurisprudence surrounding finance? So unless the commenter thought sukuk was illegitimate (I haven't seen them state this, maybe they have), wouldn't it be reasonable assume they consider sukuk acceptable? Perhaps obviously, I'm only vaguely aware of Islamic finance, so I may be missing something basic. *EDIT*: I've just seen the comments where they appear to be condemning sukuk, or at least common implementations. But it seems like their point is that they think it's simply slapping a different label on lending, which I'm inclined to agree with (especially if there are repurchase agreements and guaranteed returns).
        gher-shyu3i 6y ago
        A lot, if not most, of present day "Islamic finance" isn't compatible with Islam. They're simple relabeling of Western practices with Arabic terms, but underneath they're more or less the same. There are many Hadiths and narrations prohibiting and condemning these actions.
Gene_Parmesan 6y ago
Lending money at predatory interest rates is predatory. Lending money at interest, full-stop, is not predatory. Just because an activity was widely condemned by ancient religions does not make it evil in fact; see homosexuality. Further, these prohibitions originated in a different era, an era centuries before the existence of anything approaching modern finance. For instance, in the Roman era, loans were a purely private thing, and from what I could find, the rich elites who would loan out money would do so at rates potentially approaching 48% per year. It's fairly easy to see how a mostly poor, mostly minority religion during the time of the Romans would consider this practice sinful, considering it was likely a common tool used against their communities. As more modern commercial practices began to slowly form in the 1600s or so, average interest rates began to drop, and with it went much of the prior vehemence against usury. Interest is what encourages a bank to lend me money now so that I can afford to build a house. The total value of the house is $200,000. I am willing to make a bet that over 30 years, I will earn enough that I can afford the purchase price of this house in present value dollars. However, the people building my house need to be paid now; materials need to be purchased now; and so on. Not in 30 years, but now. Who in their right mind is going to give me $200,000 to use now with no promise of recompense? At the very least we need interest to cover risk. People no longer live in houses that they can build themselves with a modicum of diligence and work. (I am using houses here as just one example, but you get my point.) We have an unimaginably better standard of living than we did 2000 years ago. A large part of how we pay for that is interest. I'm just not clear how we could keep living in anything approaching an approximation of our current world without the existence of interest. Having idealistic visions of constant charity is not workable.
- notsureaboutpg 6y ago
  >I'm just not clear how we could keep living in anything approaching an approximation of our current world without the existence of interest. Having idealistic visions of constant charity is not workable. VCs don't take interest on their investments into companies. The problem with interest is that it's basically a gamble. For everyone who wins the bet that in 30 years they earn enough to afford the interest on a home loan, there are people who lose that bet, people who get injured, lose their jobs, have to take care of an infirm family member, etc. Eventually, we'll have to live in something that's far less high in terms of quality of life than this world because we can't keep winning the interest gamble forever.
betwixthewires 6y ago
Lending money is absolutely essential to the development of any society. Lending is not predatory by it's nature, or harmful, or destructive. The US for example would not have coast to coast and border to border high quality road and other transportation infrastructure if not for lending. This infrastructure increase the productivity of the nation, allowing that debt to be paid back, decreased the cost of transportation for everyone and increased the standard of living for everyone in the US. Think of it like this: if you are borrowing money for anything that does not increase your productivity, you're making a mistake. If you're lending money to someone for something that does not increase their productivity, you're increasing your risk of default substantially. It isn't about greed, fact is, sometimes people need money they don't have, and sometimes people have money they don't need at this very moment, and if both parties make a good, sound judgment, both can benefit from this scenario. Every day people make their lives better by borrowing money. The view that lending and borrowing are innately bad is a very narrow minded view, one based on ignorance of the facts of how lending works.
- deleted 6y ago
  [deleted]
- gher-shyu3i 6y ago
  It's not ignorant, otherwise it would have been prohibited by Islam, Christianity, and Judaism, among others probably. This video is telling: https://www.youtube.com/watch?v=Io2a4SOX22Y https://www.youtube.com/watch?v=Io2a4SOX22Y If you want to build and prosper, you can find investors willing to put money into your project or business. Lending money is not the only way to prosperity, as evident by how we had an entire empire (the Islamic Empire) that prospered and was at the forefront of many fields, yet did not deal with interest. People simply want the easy way out, and lending with interest is the easy way out in this case. It's intellectually lazy, and has caused destruction time and time again throughout history. But people turn a blind eye because of the relative few who stand to benefit greatly from interest, at the expense of everyone else. How do you feel about the government being able to print money at will and devalue the dollars or euros you worked hard for? You can thank interest for that.
- spurgu 6y ago
6gvONxR4sf7o 6y ago
I've actually been coming around to this view after thinking it was naive for a long time. Lending is incredibly useful, but sensitive to accurate predictions. If I get a 30 year mortgage, I'm betting that my salary can cover the payments for 30 years or else I can at least sell and recover my debt. If my life doesn't go as planned, I can end up screwed. This gets us into trouble when life happens. Prices increase because of available credit so most people have to play the game, then something big happens. It can make the whole system collapse unless you bail out people who made bad bets. That pisses off the people who didn't overextend themselves for good reason. Debt can be great, but it makes the system brittle and incentivizes weird instances of bailing out people who fucked up, not because they deserve to be bailed, but because the system will collapse otherwise. Let's not pretend its benefits don't come with drawbacks, like what's discussed in OP, or what happened in 2008.
- tengbretson 6y ago
  It can also lead to a breakdown of morality. If your boss asks you to do something you find to be immoral how ready are you to say no if you have a 30 year mortgage on your home? Multiply that by 50 million current mortgages in the United States and here we are.
  - gher-shyu3i 6y ago
    Very good point. When Islam says that lending is only done as an act of charity (0% interest), it means that we should not have a society that is built on debt. Easy debt means that now you have very large swathes of society enslaved in loans. This is not how to run a proper society.
015a 6y ago
This position is unpopular (referencing religion on HackerNews, oof move), but I think there's more wisdom in it than those who dismiss it immediately by referencing religions stance on homosexuality are seeing. Lending is absolutely critical to our economy. But that's not what we're talking about; what we're talking about is lending with interest. And right now, we're in a discussion here about the Fed hitting 0% or near-0% interest rates. Its absolutely a valid train of thought to consider. I don't have the knowledge or skills to comment on why it may be invalid or valid, but I do believe that its a worthy point of discussion.

schoen 6y ago

I know YC purchases equity rather than debt with its investments (and that equity stakes are rarely considered "usury" and not always considered "lending"), but it's a little odd to see this comment on a forum hosted by a venture capital firm, whose whole business is about letting people have some money in the hope of profiting from it later on.

gher-shyu3i 6y ago
Purchasing equity is the moral approach. This means that the investor also bears the risk. If the company succeeds, the investor makes money, if it doesn't, then he lost money. > but it's a little odd to see this comment on a forum hosted... Why? They're not lending money, they're investing, two very different things.
- ahepp 6y ago
  Creditors certainly bear risk of default. In fact, isn't that why VC exists? If banks were insulated from the consequences of their lending, wouldn't you expect them to loan to risky startups?
  - vineyardmike 6y ago
    > isn't that why VC exists Not entirely. VC exists for things where debt doesn't work. You can use debt to fund some things, eg. real estate, because a failed business still has a valuable asset to sell. If a vc funded tech company goes under, the only thing to sell is source code, which is not nearly as fungible.
    - ahepp 6y ago
      I'd argue that's a consequence of creditors bearing the risk of default. The risk is high both because the business may go under, and because the business has few assets that can be liquidated.
      - gher-shyu3i 6y ago
        With an interest bearing loan, the bank will come after the borrower's assets, seeking not just the principal, but the interest on top, until they milk them dry. This is just one reason why lending money with interest is immoral. Read up about Islam's position on this issue if you want to learn more. It's quite eye opening, and sad that we have to live in a world that is based on fundamentally evil and corrupt financial practices.
        selimthegrim 6y ago
        I see you are representing all of Islamic jurisprudence here but somehow condemning things like sukuk?
        ahepp 6y ago
        Are they condemning sukuk? I thought sukuk was an attempt to reconcile the desirable qualities of a loan with Islamic jurisprudence surrounding finance? So unless the commenter thought sukuk was illegitimate (I haven't seen them state this, maybe they have), wouldn't it be reasonable assume they consider sukuk acceptable? Perhaps obviously, I'm only vaguely aware of Islamic finance, so I may be missing something basic. *EDIT*: I've just seen the comments where they appear to be condemning sukuk, or at least common implementations. But it seems like their point is that they think it's simply slapping a different label on lending, which I'm inclined to agree with (especially if there are repurchase agreements and guaranteed returns).
        gher-shyu3i 6y ago
        A lot, if not most, of present day "Islamic finance" isn't compatible with Islam. They're simple relabeling of Western practices with Arabic terms, but underneath they're more or less the same. There are many Hadiths and narrations prohibiting and condemning these actions.

Gene_Parmesan 6y ago

Lending money at predatory interest rates is predatory. Lending money at interest, full-stop, is not predatory. Just because an activity was widely condemned by ancient religions does not make it evil in fact; see homosexuality. Further, these prohibitions originated in a different era, an era centuries before the existence of anything approaching modern finance. For instance, in the Roman era, loans were a purely private thing, and from what I could find, the rich elites who would loan out money would do so at rates potentially approaching 48% per year. It's fairly easy to see how a mostly poor, mostly minority religion during the time of the Romans would consider this practice sinful, considering it was likely a common tool used against their communities. As more modern commercial practices began to slowly form in the 1600s or so, average interest rates began to drop, and with it went much of the prior vehemence against usury. Interest is what encourages a bank to lend me money now so that I can afford to build a house. The total value of the house is $200,000. I am willing to make a bet that over 30 years, I will earn enough that I can afford the purchase price of this house in present value dollars. However, the people building my house need to be paid now; materials need to be purchased now; and so on. Not in 30 years, but now. Who in their right mind is going to give me $200,000 to use now with no promise of recompense? At the very least we need interest to cover risk. People no longer live in houses that they can build themselves with a modicum of diligence and work. (I am using houses here as just one example, but you get my point.) We have an unimaginably better standard of living than we did 2000 years ago. A large part of how we pay for that is interest. I'm just not clear how we could keep living in anything approaching an approximation of our current world without the existence of interest. Having idealistic visions of constant charity is not workable.

notsureaboutpg 6y ago
>I'm just not clear how we could keep living in anything approaching an approximation of our current world without the existence of interest. Having idealistic visions of constant charity is not workable. VCs don't take interest on their investments into companies. The problem with interest is that it's basically a gamble. For everyone who wins the bet that in 30 years they earn enough to afford the interest on a home loan, there are people who lose that bet, people who get injured, lose their jobs, have to take care of an infirm family member, etc. Eventually, we'll have to live in something that's far less high in terms of quality of life than this world because we can't keep winning the interest gamble forever.

betwixthewires 6y ago

Lending money is absolutely essential to the development of any society. Lending is not predatory by it's nature, or harmful, or destructive. The US for example would not have coast to coast and border to border high quality road and other transportation infrastructure if not for lending. This infrastructure increase the productivity of the nation, allowing that debt to be paid back, decreased the cost of transportation for everyone and increased the standard of living for everyone in the US. Think of it like this: if you are borrowing money for anything that does not increase your productivity, you're making a mistake. If you're lending money to someone for something that does not increase their productivity, you're increasing your risk of default substantially. It isn't about greed, fact is, sometimes people need money they don't have, and sometimes people have money they don't need at this very moment, and if both parties make a good, sound judgment, both can benefit from this scenario. Every day people make their lives better by borrowing money. The view that lending and borrowing are innately bad is a very narrow minded view, one based on ignorance of the facts of how lending works.

deleted 6y ago
[deleted]
gher-shyu3i 6y ago
It's not ignorant, otherwise it would have been prohibited by Islam, Christianity, and Judaism, among others probably. This video is telling: https://www.youtube.com/watch?v=Io2a4SOX22Y https://www.youtube.com/watch?v=Io2a4SOX22Y If you want to build and prosper, you can find investors willing to put money into your project or business. Lending money is not the only way to prosperity, as evident by how we had an entire empire (the Islamic Empire) that prospered and was at the forefront of many fields, yet did not deal with interest. People simply want the easy way out, and lending with interest is the easy way out in this case. It's intellectually lazy, and has caused destruction time and time again throughout history. But people turn a blind eye because of the relative few who stand to benefit greatly from interest, at the expense of everyone else. How do you feel about the government being able to print money at will and devalue the dollars or euros you worked hard for? You can thank interest for that.
spurgu 6y ago

6gvONxR4sf7o 6y ago

I've actually been coming around to this view after thinking it was naive for a long time. Lending is incredibly useful, but sensitive to accurate predictions. If I get a 30 year mortgage, I'm betting that my salary can cover the payments for 30 years or else I can at least sell and recover my debt. If my life doesn't go as planned, I can end up screwed. This gets us into trouble when life happens. Prices increase because of available credit so most people have to play the game, then something big happens. It can make the whole system collapse unless you bail out people who made bad bets. That pisses off the people who didn't overextend themselves for good reason. Debt can be great, but it makes the system brittle and incentivizes weird instances of bailing out people who fucked up, not because they deserve to be bailed, but because the system will collapse otherwise. Let's not pretend its benefits don't come with drawbacks, like what's discussed in OP, or what happened in 2008.

tengbretson 6y ago
It can also lead to a breakdown of morality. If your boss asks you to do something you find to be immoral how ready are you to say no if you have a 30 year mortgage on your home? Multiply that by 50 million current mortgages in the United States and here we are.
- gher-shyu3i 6y ago
  Very good point. When Islam says that lending is only done as an act of charity (0% interest), it means that we should not have a society that is built on debt. Easy debt means that now you have very large swathes of society enslaved in loans. This is not how to run a proper society.

015a 6y ago

This position is unpopular (referencing religion on HackerNews, oof move), but I think there's more wisdom in it than those who dismiss it immediately by referencing religions stance on homosexuality are seeing. Lending is absolutely critical to our economy. But that's not what we're talking about; what we're talking about is lending with interest. And right now, we're in a discussion here about the Fed hitting 0% or near-0% interest rates. Its absolutely a valid train of thought to consider. I don't have the knowledge or skills to comment on why it may be invalid or valid, but I do believe that its a worthy point of discussion.