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Loans by modern banks rely on the issuance of new currency; it's a scheme which relies on diluting the value of citizens' existing currency. It's unethical; it'

Loans by modern banks rely on the issuance of new currency; it's a scheme which relies on diluting the value of citizens' existing currency. It's unethical; it's stealing from the many to enrich the few who will receive the credit once it's spent into the economy (going into friends' businesses). Kind of like how Carl Icahn sat on the Hertz board, made Hertz take out a huge loan, used the credit to award a huge contract to one of his other businesses and then let Hertz go bankrupt. Citizens footed some of the bill by having their savings and salaries diluted (since Carl kept the proceeds of the loan and spent it into the economy; contributing towards inflation) and of course Hertz shareholders footed most of the bill. It's just theft.

sanderjd 4y ago
This is so misguided. Just raising interest rates by a few points has resulted in many thousands of people losing their livelihoods in under a year, because companies could no longer justify taking out loans. What you're suggesting is eliminating loans altogether. This is a fun dorm room thought experiment, but it's not even hyperbolic to say that if it were actually pursued, it would result in a huge number of deaths by starvation.
- brutusborn 4y ago
  Modern Islamic countries without usury manage to feed their citizens so although I would agree that banning loans would cause a lot of pain in the modern economy, I can't see how it would cause mass starvation.
  - jongjong 4y ago
    Exactly, and even in those cases, it only serves to enrich certain people who intermediate the loans and to satiate reckless or impatient consumers. It's more like gambling; it appeals to and takes advantage of human nature but doesn't benefit the individual; it only benefits the house. It doesn't actually provide any true value to society.
    - sanderjd 4y ago
      This is nonsense. We're rich. Broadly.
    - brutusborn 4y ago
      I disagree, loans can benefit both parties if they are well regulated. In these cases loans provide a lot of value for society. Reckless loans are a symptom of an under regulated system (or in the case of the GFC, a combination of under regulation and no effective enforcement).
  - sanderjd 4y ago
    Your "countries with Sharia law are good" argument might not be as compelling to me as you seem to think it is... Are there any good examples of non-authoritarian non-dictatorships in this space? Edit to add: You're right, I guess, that our government would probably take over everything and narrowly dodge mass starvation with mere mass poverty, but that doesn't sound great to me either. And mass starvation isn't so far fetched either, there have been multiple such occurrences globally within the last century.
    - brutusborn 4y ago
      I didn't say they were "good", I'm just pointing out that they generally aren't starving, which means your point was hyperbolic. I don't understand why the government would need to "take over everything" to avoid starvation. There's no technical reason that capitalism can't exist without usury. Again I'm not saying usury is good or bad, just that it doesn't 'need' to exist. I suspect it is good for society when well regulated (better use of capital), and horrible for society when allowed without limit (indentured servitude, instability e.g. GFC caused by immoral lending). The question is which world are we living in? I'd argue the West is living in the latter world, the GFC is a symptom that shows that our financial system is causing more harm than good. In this case if the US had used the Islamic system, banks would have owned the assets they were "lending" for, and so would not be incentivized to make risky loans and sell them to unsuspecting investors. A bank isn't going to give a loan on an overvalued property if they know it will sit on their books until the losses are eventually realized.
      - sanderjd 4y ago
        > I don't understand why the government would need to "take over everything" to avoid starvation. If the non-starvation examples are all dictatorships, then what's your point here? I agree that it's possible for capitalism to exist without "usury". Definitions of "usury" tend to define it as "unreasonably high interest rates". Interest rates right now are like 7%, which isn't particularly high and certainly isn't "unreasonably" high. The GFC isn't relevant to what's going on here. This is an entirely different (indeed in many ways an opposite) set of problems.
  - selimthegrim 4y ago
    I look forward to your interview with the Taliban finance ministry and Afghan central bank - let us know how they’re doing
    - brutusborn 4y ago
      I must have missed this one in my Inbox - I look forward to it too haha But to be serious, I'm not arguing that the Islamic system is "better", just that it removes certain risks that unrestricted lending cause. I don't think the solution is to ban lending but instead to be aware of the risks and make sure your regulation and enforcement is adequate. I hate knee jerk dismissal of alternative policies, so I felt I needed to point out to the parent commenter that there are places where there is no debt, and no hunger.
      - selimthegrim 4y ago
        Believe me I wish there was no hunger in those places too
        brutusborn 4y ago
        I definitely misspoke there: I meant that they have no debt and no mass starvation. I’m aware there’s a lot of poverty in the Islamic world, but it’s not because Usury is illegal.
        sanderjd 4y ago
        It isn't not because of that either.
        brutusborn 4y ago
        I’d need to see some statistics to be convinced either way. When I think of poverty, I think of sub Saharan Africa. I believe debt is legal in most of those countries, so the odds are that banning debt is a small part of the poverty picture.

sanderjd 4y ago

This is so misguided. Just raising interest rates by a few points has resulted in many thousands of people losing their livelihoods in under a year, because companies could no longer justify taking out loans. What you're suggesting is eliminating loans altogether. This is a fun dorm room thought experiment, but it's not even hyperbolic to say that if it were actually pursued, it would result in a huge number of deaths by starvation.

brutusborn 4y ago
Modern Islamic countries without usury manage to feed their citizens so although I would agree that banning loans would cause a lot of pain in the modern economy, I can't see how it would cause mass starvation.
- jongjong 4y ago
  Exactly, and even in those cases, it only serves to enrich certain people who intermediate the loans and to satiate reckless or impatient consumers. It's more like gambling; it appeals to and takes advantage of human nature but doesn't benefit the individual; it only benefits the house. It doesn't actually provide any true value to society.
  - sanderjd 4y ago
    This is nonsense. We're rich. Broadly.
  - brutusborn 4y ago
    I disagree, loans can benefit both parties if they are well regulated. In these cases loans provide a lot of value for society. Reckless loans are a symptom of an under regulated system (or in the case of the GFC, a combination of under regulation and no effective enforcement).
- sanderjd 4y ago
  Your "countries with Sharia law are good" argument might not be as compelling to me as you seem to think it is... Are there any good examples of non-authoritarian non-dictatorships in this space? Edit to add: You're right, I guess, that our government would probably take over everything and narrowly dodge mass starvation with mere mass poverty, but that doesn't sound great to me either. And mass starvation isn't so far fetched either, there have been multiple such occurrences globally within the last century.
  - brutusborn 4y ago
    I didn't say they were "good", I'm just pointing out that they generally aren't starving, which means your point was hyperbolic. I don't understand why the government would need to "take over everything" to avoid starvation. There's no technical reason that capitalism can't exist without usury. Again I'm not saying usury is good or bad, just that it doesn't 'need' to exist. I suspect it is good for society when well regulated (better use of capital), and horrible for society when allowed without limit (indentured servitude, instability e.g. GFC caused by immoral lending). The question is which world are we living in? I'd argue the West is living in the latter world, the GFC is a symptom that shows that our financial system is causing more harm than good. In this case if the US had used the Islamic system, banks would have owned the assets they were "lending" for, and so would not be incentivized to make risky loans and sell them to unsuspecting investors. A bank isn't going to give a loan on an overvalued property if they know it will sit on their books until the losses are eventually realized.
    - sanderjd 4y ago
      > I don't understand why the government would need to "take over everything" to avoid starvation. If the non-starvation examples are all dictatorships, then what's your point here? I agree that it's possible for capitalism to exist without "usury". Definitions of "usury" tend to define it as "unreasonably high interest rates". Interest rates right now are like 7%, which isn't particularly high and certainly isn't "unreasonably" high. The GFC isn't relevant to what's going on here. This is an entirely different (indeed in many ways an opposite) set of problems.
- selimthegrim 4y ago
  I look forward to your interview with the Taliban finance ministry and Afghan central bank - let us know how they’re doing
  - brutusborn 4y ago
    I must have missed this one in my Inbox - I look forward to it too haha But to be serious, I'm not arguing that the Islamic system is "better", just that it removes certain risks that unrestricted lending cause. I don't think the solution is to ban lending but instead to be aware of the risks and make sure your regulation and enforcement is adequate. I hate knee jerk dismissal of alternative policies, so I felt I needed to point out to the parent commenter that there are places where there is no debt, and no hunger.
    - selimthegrim 4y ago
      Believe me I wish there was no hunger in those places too
      - brutusborn 4y ago
        I definitely misspoke there: I meant that they have no debt and no mass starvation. I’m aware there’s a lot of poverty in the Islamic world, but it’s not because Usury is illegal.
        sanderjd 4y ago
        It isn't not because of that either.
        brutusborn 4y ago
        I’d need to see some statistics to be convinced either way. When I think of poverty, I think of sub Saharan Africa. I believe debt is legal in most of those countries, so the odds are that banning debt is a small part of the poverty picture.