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Zer Netmouse
February 3rd, 2009
07:12 pm

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Do You Believe in Usury?

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From:sethb
Date:February 4th, 2009 04:38 am (UTC)

Re: All interest is usury

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One of us understands money, interest, time value, derivative instruments based on interest rates, and the like.

The other created his LJ account today.

You're not even getting Marx right.
From:theinterest
Date:February 4th, 2009 01:00 pm (UTC)

Re: All interest is usury

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Oh, yeah, the LJ account today thing. So now whatever I say doesn't make any sense. If that was a reason to throwout ideas we wouldn't have any.

And we both understand "money, interest, time value, derivative instruments based on interest rates, and the like." The difference is that you've been lulled to sleep on how this works and now prop-up the very system that forces you to play in it.

My guess is you work in the industry that makes money from money.

Read some Aristotle:

"There are two sorts of wealth-getting, as I have said; one is a part of household management, the other is retail trade: the former necessary and honorable, while that which consists in exchange is justly censured; for it is unnatural, and a mode by which men gain from one another. The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural object of it. For money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of any modes of getting wealth this is the most unnatural."

We some how think that "money, interest, time value, derivative instruments based on interest rates, and the like" is some new economy or BS like that. It isn't. There's nothing new about money. You work, you get paid. Period. Anything that makes wealth without work robs others of their work.

Yes, I know. This all sounds pie in the sky. And that's what the bankers want you to think.
From:sethb
Date:February 4th, 2009 04:40 pm (UTC)

Re: All interest is usury

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"LJ account today" is a troll sign. So is "no friends".

And you quite clearly don't understand things like time value of money.

Appeal to experts isn't a valid form of proof. Logic is.

But go back to growing all your own food and making all your own clothing, because you consider the people selling such things to you to be evil, and you wouldn't want to participate in evil, would you?

And you certainly wouldn't want to buy a house with a mortgage, or rent an apartment (or house) that the owner has a mortgage on, would you?

Some of us like the modern world despite its flaws.
From:theinterest
Date:February 4th, 2009 10:34 pm (UTC)

Re: All interest is usury

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So explain to me the time value of money.

And if you insist on living in a world that doesn't create the money in the system to pay interest, then tell me how you deal with bankruptcy?
From:sethb
Date:February 4th, 2009 10:44 pm (UTC)

Re: All interest is usury

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Simple version: money now is worth more than the same amount of money later. If stuff doesn't spoil, having it now is worth more than having it later, because you can always turn the former into the latter but not vice versa.

The concept of "a world creates money" doesn't make sense.

Even on a gold standard (where money is gold, period) there's interest and bankruptcy, even though gold cannot be created.
From:theinterest
Date:February 4th, 2009 10:57 pm (UTC)

Re: All interest is usury

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Why is money, let's say $10 not worth $10, 50 years from now?

As for gold, I'm not a gold bug.

Let me explain "a world creates money". In the US (and in most countries) money is created by debt. When the government sells treasuries it created a debt for which it now owes interest. Likewise when you take out a car loan, mortgage, spend money on your credit card, you create money into existence. Thus, ALL of our money is equal to debts held at banks. But this debt only represents the principal amount. When you borrowed from the bank, they didn't give you the interest money, only the principal. So where in the system does the interest money come from? That's what I mean by "a world creates money". Of course money does have to be created, but we create it through debt. And that's the bad part.
From:sethb
Date:February 4th, 2009 11:16 pm (UTC)

Re: All interest is usury

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If I have $10 now, I can trivially have $10 in 50 years: just hold on to it.

If you have a guarantee of receipt of $10 in 50 years, that doesn't get you the ability to buy $10 worth of stuff today. Therefore, $10 today is better than $10 in 50 years.

Money is not created only by debt. Nor does debt create money: if I lend a friend $100, my friend has $100 more, I have $100 less. Where was money created?

When money was gold and silver coins, there was no debt involved in its creation, just mining and manufacturing. When the government printed certificates redeemable in specie, that didn't create debt either. Even when the amount of certificates exceeded the available specie, there was no debt involved.

For some definitions of "money", some types of debts create it.

Your starting claim, that money is created by debt, is wrong. Some debt creates some forms of money. That means that your next step, that the total amount of money equals the total amount of debt, is likewise wrong.
From:theinterest
Date:February 5th, 2009 12:18 am (UTC)

Re: All interest is usury

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Didn't someone rob me of my $10, 50 years later? After all, I put it away for safe keeping, why can't I buy the same $10 worth of stuff 50 years later? Someone stole my work I did that produced the $10 that I saved.

"if I lend a friend $100, my friend has $100 more, I have $100 less." But, where did you get your $100 from to give to your friend? Where does our money come from?

"Even when the amount of certificates exceeded the available specie, there was no debt involved." If not, then where did all the money come from? How did it get into people's pockets?

"Your starting claim, that money is created by debt, is wrong." Then where does it come from? How does it get into people's pockets and bank accounts?
From:sethb
Date:February 5th, 2009 04:04 am (UTC)

Re: All interest is usury to people of silly religions

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If somebody robbed you, who? You still have the $10, which buys precisely $10 worth of stuff. For some stuff, it's more than it was 50 years ago; for other stuff, it's less. How much did 100 lumens of room lighting for 3 hours at night cost in 1900? 1950? How much will $10 worth of 1970's computing power cost in 2020?

I lend a friend $100, creating debt, not creating any money. What difference does it make where I got the $100 from? That's an example of debt not creating money.

When the government printed money, the money came from the Mint (the government's printing press). No debt was involved. It got into people's pockets by people putting it there. The government paid people salaries and bought stuff, that's how it spent money and people acquired it.
From:theinterest
Date:February 5th, 2009 04:28 am (UTC)

Re: All interest is usury to people of silly religions

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I won't go to the religion thing yet.

As for your inflation example, if my Grandfather a 100 years ago put in an hours worth of work that he got paid in $1 and put it in his coffee can, why isn't the work he did back then and the $1 it represents still able to buy the same amount of stuff today? Due to inflation that dollar is now worth $.03 cents. Somebody stole his work from him. True, some prices have gone down, but the basket of goods used to measure inflation has shown it to go up.

"What difference does it make where I got the $100 from?" That's one of our biggest problems. Nobody really understands where their money comes from.

"The government paid people salaries and bought stuff, that's how it spent money and people acquired it." And that's how it should work or at least for some of the money supply. But, then if government can do this, then why do they have to create treasuries and sell them to China with interest? Why do we even have a $10.7 trillion debt with interest to pay if we can just print it and pay people with it?

Come on, isn't this fun? Aren't you learning something? Keep going, learn the truth.

Now, answer the question where does money come from? Think about it. You got paid, and assuming you don't work at the government, how did your employer get the money? How did the person who bought your company's widget get their money? And on, and on. It all traces back to a bank. Only the principal though and not the interest.

Don't let religion cloud this. Even Aristotle (non-religious) wrote against usury and he wasn't religious. Keep going, I can tell you're coming around. I'm not trying to "win", I just want someone to tell me, with out a doubt, that I'm wrong.
From:(Anonymous)
Date:February 7th, 2009 05:13 am (UTC)

Re: All interest is usury

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"I just want someone to tell me, with out a doubt, that I'm wrong."

I found someone to prove me wrong!

To sethb (and others), I apologize if this thread sounded like a flame war.

I think what you (sethb) was talking about when you say you gave $100 to a friend and they now have money to spend on something else is called the velocity of money. The frequency of exchange of money in the economy can allow even the originally created money as a debt to be reused over and over. Wow, this makes so much sense now. Just needed to hear the term velocity of money as it is applied to economic theory.

So, back to the usury/interest question? I don't know. I've always been inclined to say that it's your money so do with it what you want. Which I struggled with while under the illusion that all money used in any transaction had debt behind it. With the velocity of money theory, maybe charging interest is okay.
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