3 ms·

I hope to see the day where interest bearing loans are recognized by the rest of the world as the evil they are. Muslims and Jews know this fact quite well.

SamBam 3y ago
Serious question: what would incentive anyone to lend to people who have any risk at all (i.e. everyone)?
- timfsu 3y ago
  The same incentive you'd have to do something for someone without receiving payment - a desire to help. I'd imagine the fact that people in that time had stronger familial ties to others in their village also helped increase payback rates.
  - ars 3y ago
    And both religious created a way to indirectly pay interest by turning it into a business partnership. i.e. when you are helping someone (a friend, relative) you don't pay interest. But when it's a business loaning the money that desire to help doesn't exist, and it becomes a business partnership instead. https://en.wikipedia.org/wiki/Loans_and_interest_in_Judaism https://en.wikipedia.org/wiki/Loans_and_interest_in_Judaism specifically: "Heter iska". And https://en.wikipedia.org/wiki/Murabaha https://en.wikipedia.org/wiki/Murabaha for Muslims (I think there are other forms as well). A copy of a Heter Iska: http://www.jlaw.com/Forms/iska_d.html http://www.jlaw.com/Forms/iska_d.html
    - OkayPhysicist 3y ago
      You're supposed to use Mudarabah[0] preferentially, which is dramatically less of a lazy hack around usury rules than Murabaha. (Also as a English speaker, those words are very hard to distinguish.) [0] https://en.wikipedia.org/wiki/Profit_and_loss_sharing https://en.wikipedia.org/wiki/Profit_and_loss_sharing
- Retric 3y ago
  One of the major dangers with interest is it compounds in bad times. Someone gets laid off for 6 months and suddenly owes more money, this is especially problematic if someone gets injured and can no longer make the same income etc. Fees are one option. If you agree to a 2 year loan of 100$ as long as they pay you back 110$ that’s acceptable, the difference being if it takes them 3 years you still only get 110$. Obviously this runs into problems with inflation and people skipping payments etc, but it’s one socially “fair” way to handle loans between friends and family.
- sakjur 3y ago
  Assuming such a rule would mean "all mandatory fees are prohibited" and that we're talking about profit driven ventures (not cooperatives or patrons that might have other reasons to want to lend money than monetary profits), you can be creative and charge money in ways that technically doesn't count as interest. The Medici bank gained lots of their money from foreign exchange speculation issuing a sort of option for buying foreign currencies at a specific date (this would probably be a lot harder to do today), you could also charge late fees with the social understanding that paying a loan back on time is really bad for your credit score. I guess a modern conglomerate might make money by putting certain terms in effect: You want to build a house but need some money to do so? I will lend you the money if you contract my contractors to build your house. A university could lend you the money but keep charging extortionate tuitions as long as the cost for the education service is unregulated.
- micromacrofoot 3y ago
  Well if you're a credit union that operates in Shithole Town, USA... then in theory if you lend money to people who improve the community, you'll reap the benefits everyone else does by living in a more desirable place (more valuable property, more customers for businesses, etc). Almost impossible to imagine given the current state of the economy where every possible thing you can imagine has been commodified.
tiedieconderoga 3y ago
Abrahamic religions in general - Jesus was also not a fan. >Jesus went into the temple courtyard and threw out everyone who was buying and selling there. He overturned the moneychangers’ tables and the chairs of those who sold pigeons. He told them, “Scripture says, ‘My house will be called a house of prayer,’ but you’re turning it into a gathering place for thieves!” - Matthew 21:12-13 >If you lend money to my people—to any poor person among you—never act like a moneylender. Charge no interest. - Exodus 22:25 KJV used the word "usurer", but it's the same idea.
boeingUH60 3y ago
This seems good in theory but hard in reality. The modern economy is built on debt being used for new investments. The problem is high interest rates, not interest rates in general.
- pixelatedindex 3y ago
  Debt is being used for new investment? That can’t be right - it’s gotta be some form of credit, right? Maybe I’m mistaken.
  - boeingUH60 3y ago
    Of course, it’s credit. The word “new” is redundant.
- uoaei 3y ago
  Something never asked is whether what the modern economy is built on makes sense for longer than a couple hundred years. It seems premature to assume that the modern economy is sustainable ad infinitum.
gottorf 3y ago
The fact that default risk and time value of money exist are immutable, irrespective of whether you think that's evil. Modern Islamic banks in Sharia jurisdictions still recoup that risk and time value through various means, irrespective of whether you call that interest. (Some forms of "Islamic mortgages" charge you "rent" based on LIBOR/SOFR, which is just interest with extra steps.)
crote 3y ago
Christianity also used to have many restrictions on charging interest, but that got lost somewhere around the 19th century. It is where the whole "Jews are greedy bankers" stereotype comes from: during the Middle Ages Jews were allowed to charge interest to non-Jews, so they were essentially the only people who could act as bankers for Christians. Combine that with a large dose of racism keeping them out of a lot of other jobs, and you end up with a lot of Jewish bankers.

SamBam 3y ago

Serious question: what would incentive anyone to lend to people who have any risk at all (i.e. everyone)?

timfsu 3y ago
The same incentive you'd have to do something for someone without receiving payment - a desire to help. I'd imagine the fact that people in that time had stronger familial ties to others in their village also helped increase payback rates.
- ars 3y ago
  And both religious created a way to indirectly pay interest by turning it into a business partnership. i.e. when you are helping someone (a friend, relative) you don't pay interest. But when it's a business loaning the money that desire to help doesn't exist, and it becomes a business partnership instead. https://en.wikipedia.org/wiki/Loans_and_interest_in_Judaism https://en.wikipedia.org/wiki/Loans_and_interest_in_Judaism specifically: "Heter iska". And https://en.wikipedia.org/wiki/Murabaha https://en.wikipedia.org/wiki/Murabaha for Muslims (I think there are other forms as well). A copy of a Heter Iska: http://www.jlaw.com/Forms/iska_d.html http://www.jlaw.com/Forms/iska_d.html
  - OkayPhysicist 3y ago
    You're supposed to use Mudarabah[0] preferentially, which is dramatically less of a lazy hack around usury rules than Murabaha. (Also as a English speaker, those words are very hard to distinguish.) [0] https://en.wikipedia.org/wiki/Profit_and_loss_sharing https://en.wikipedia.org/wiki/Profit_and_loss_sharing
Retric 3y ago
One of the major dangers with interest is it compounds in bad times. Someone gets laid off for 6 months and suddenly owes more money, this is especially problematic if someone gets injured and can no longer make the same income etc. Fees are one option. If you agree to a 2 year loan of 100$ as long as they pay you back 110$ that’s acceptable, the difference being if it takes them 3 years you still only get 110$. Obviously this runs into problems with inflation and people skipping payments etc, but it’s one socially “fair” way to handle loans between friends and family.
sakjur 3y ago
Assuming such a rule would mean "all mandatory fees are prohibited" and that we're talking about profit driven ventures (not cooperatives or patrons that might have other reasons to want to lend money than monetary profits), you can be creative and charge money in ways that technically doesn't count as interest. The Medici bank gained lots of their money from foreign exchange speculation issuing a sort of option for buying foreign currencies at a specific date (this would probably be a lot harder to do today), you could also charge late fees with the social understanding that paying a loan back on time is really bad for your credit score. I guess a modern conglomerate might make money by putting certain terms in effect: You want to build a house but need some money to do so? I will lend you the money if you contract my contractors to build your house. A university could lend you the money but keep charging extortionate tuitions as long as the cost for the education service is unregulated.
micromacrofoot 3y ago
Well if you're a credit union that operates in Shithole Town, USA... then in theory if you lend money to people who improve the community, you'll reap the benefits everyone else does by living in a more desirable place (more valuable property, more customers for businesses, etc). Almost impossible to imagine given the current state of the economy where every possible thing you can imagine has been commodified.

tiedieconderoga 3y ago

Abrahamic religions in general - Jesus was also not a fan. >Jesus went into the temple courtyard and threw out everyone who was buying and selling there. He overturned the moneychangers’ tables and the chairs of those who sold pigeons. He told them, “Scripture says, ‘My house will be called a house of prayer,’ but you’re turning it into a gathering place for thieves!” - Matthew 21:12-13 >If you lend money to my people—to any poor person among you—never act like a moneylender. Charge no interest. - Exodus 22:25 KJV used the word "usurer", but it's the same idea.

boeingUH60 3y ago

This seems good in theory but hard in reality. The modern economy is built on debt being used for new investments. The problem is high interest rates, not interest rates in general.

pixelatedindex 3y ago
Debt is being used for new investment? That can’t be right - it’s gotta be some form of credit, right? Maybe I’m mistaken.
- boeingUH60 3y ago
  Of course, it’s credit. The word “new” is redundant.
uoaei 3y ago
Something never asked is whether what the modern economy is built on makes sense for longer than a couple hundred years. It seems premature to assume that the modern economy is sustainable ad infinitum.

gottorf 3y ago

The fact that default risk and time value of money exist are immutable, irrespective of whether you think that's evil. Modern Islamic banks in Sharia jurisdictions still recoup that risk and time value through various means, irrespective of whether you call that interest. (Some forms of "Islamic mortgages" charge you "rent" based on LIBOR/SOFR, which is just interest with extra steps.)

crote 3y ago

Christianity also used to have many restrictions on charging interest, but that got lost somewhere around the 19th century. It is where the whole "Jews are greedy bankers" stereotype comes from: during the Middle Ages Jews were allowed to charge interest to non-Jews, so they were essentially the only people who could act as bankers for Christians. Combine that with a large dose of racism keeping them out of a lot of other jobs, and you end up with a lot of Jewish bankers.