8 ms·

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

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.
tengbretson 6y ago
A lot of the problems you bring up have already been solved. You should take a look at sharia-compliant finance.
- epistasis 6y ago
  This is a very interesting point, and everybody should look at this! But I would also counter that everybody should read David Graeber's book "Debt: The First 5000 Years" as it covers this and much much much more. Probably one of the most interesting books on the concept of money and lending and how human societies have organized around it.
- gher-shyu3i 6y ago
  Please note that not all "Sharia-compliant" financing models are in fact, Sharia compliant. As a matter of fact, many of them aren't (unfortunately). What ended up happening is that many so called "Sharia compliant" solutions are simply changing the names (and some minor mechanisms) of modern day usurious offerings (e.g. bonds, mortgages), and then slapped the "Sharia" label on them. However, talk to proper scholars and they will tell you that they're nothing but usury in disguise. That being said, I've seen some good attempts at producing proper Sharia compliant offerings. But most people will not want them, because they have true risk sharing, unlike the modern financial system which feeds off the poor and widens the gap.
  - betwixthewires 6y ago
    They absolutely are "usury" in disguise because usury is defined as lending for profit and forbidden and the governments of these countries have acknowledged that they cannot run a modern economy and develop a modern society without allowing for lending for profit, but they cannot admit this because there are serious consequences for admitting that the book is wrong on this topic. Define "true risk sharing", if you mean what I think you mean, the opportunity for a borrower to file bankruptcy is true risk sharing.
    - gher-shyu3i 6y ago
vineyardmike 6y ago
> Just because an activity was widely condemned by ancient religions does not make it evil in fact i can't believe we still need to explain this to people
- gher-shyu3i 6y ago
  This is literally a logical fallacy. We see the evils of interest every time the topics of wage gaps, national debt, and so many others come up. Yet, it seems most people are blind to it, and try to patch the system, not realizing one of the core contributors to the problem.
  - deleted 6y ago
    [deleted]
gher-shyu3i 6y ago
Any lending for profit is dangerous and predatory. You mock religions, but fail to defend your point. We're literally living the destruction and huge gaps and wage issues caused by interest, yet no one is batting an eye. I feel sorry for humanity at times. You're arguing against a strawman. I never said that people will be forced to lend money without compensation. With 0% interest rates, any lending will be purely out of charity. If people want to make money, they will invest it, as we've been doing for millenia. Invested in moral ways. There exist today developers who will sell property in installments, without upping the price. I've seen this in at least one West Asian country, and I wouldn't be surprised if it were more commonplace.
- betwixthewires 6y ago
  I'm not who you're responding to, but you've yet to defend your assertion, that lending for profit is always predatory, and your assertion that "we have known for centuries" by way of bronze age cults (in my opinion) that this is indisputable fact. It isn't indisputable, defend your point. I'm not calling you stupid or anything like that, but you're showing that you do not quite understand how lending and markets and even investing works. You're ignorant on this topic and I strongly advise you to do a lot of reading on it.
  - selimthegrim 6y ago
    His stated position is that war spoils are more ethical than interest because the raiding party shares the risks and profits equally
    - gher-shyu3i 6y ago
      Who said anything about war spoils?
      - selimthegrim 6y ago
        You did when you said maal-e-ghanimat was equal risk to all participants

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.

tengbretson 6y ago

A lot of the problems you bring up have already been solved. You should take a look at sharia-compliant finance.

epistasis 6y ago
This is a very interesting point, and everybody should look at this! But I would also counter that everybody should read David Graeber's book "Debt: The First 5000 Years" as it covers this and much much much more. Probably one of the most interesting books on the concept of money and lending and how human societies have organized around it.
gher-shyu3i 6y ago
Please note that not all "Sharia-compliant" financing models are in fact, Sharia compliant. As a matter of fact, many of them aren't (unfortunately). What ended up happening is that many so called "Sharia compliant" solutions are simply changing the names (and some minor mechanisms) of modern day usurious offerings (e.g. bonds, mortgages), and then slapped the "Sharia" label on them. However, talk to proper scholars and they will tell you that they're nothing but usury in disguise. That being said, I've seen some good attempts at producing proper Sharia compliant offerings. But most people will not want them, because they have true risk sharing, unlike the modern financial system which feeds off the poor and widens the gap.
- betwixthewires 6y ago
  They absolutely are "usury" in disguise because usury is defined as lending for profit and forbidden and the governments of these countries have acknowledged that they cannot run a modern economy and develop a modern society without allowing for lending for profit, but they cannot admit this because there are serious consequences for admitting that the book is wrong on this topic. Define "true risk sharing", if you mean what I think you mean, the opportunity for a borrower to file bankruptcy is true risk sharing.
  - gher-shyu3i 6y ago

vineyardmike 6y ago

> Just because an activity was widely condemned by ancient religions does not make it evil in fact i can't believe we still need to explain this to people

gher-shyu3i 6y ago
This is literally a logical fallacy. We see the evils of interest every time the topics of wage gaps, national debt, and so many others come up. Yet, it seems most people are blind to it, and try to patch the system, not realizing one of the core contributors to the problem.
- deleted 6y ago
  [deleted]

gher-shyu3i 6y ago

Any lending for profit is dangerous and predatory. You mock religions, but fail to defend your point. We're literally living the destruction and huge gaps and wage issues caused by interest, yet no one is batting an eye. I feel sorry for humanity at times. You're arguing against a strawman. I never said that people will be forced to lend money without compensation. With 0% interest rates, any lending will be purely out of charity. If people want to make money, they will invest it, as we've been doing for millenia. Invested in moral ways. There exist today developers who will sell property in installments, without upping the price. I've seen this in at least one West Asian country, and I wouldn't be surprised if it were more commonplace.

betwixthewires 6y ago
I'm not who you're responding to, but you've yet to defend your assertion, that lending for profit is always predatory, and your assertion that "we have known for centuries" by way of bronze age cults (in my opinion) that this is indisputable fact. It isn't indisputable, defend your point. I'm not calling you stupid or anything like that, but you're showing that you do not quite understand how lending and markets and even investing works. You're ignorant on this topic and I strongly advise you to do a lot of reading on it.
- selimthegrim 6y ago
  His stated position is that war spoils are more ethical than interest because the raiding party shares the risks and profits equally
  - gher-shyu3i 6y ago
    Who said anything about war spoils?
    - selimthegrim 6y ago
      You did when you said maal-e-ghanimat was equal risk to all participants