At my blog page: http://wherestheinterest.com/2009/02/01/minn-ag-sues-allina-for-violating-state-usury-laws/, I talk about what is usury. Or rather, if we think of usury as "high" interest rates, the rate doesn't really matter.
From my blog: "Let’s crunch some numbers. Say you have $10,000 in medical debt at 8% interest and you agree to pay this off in 10 years. You’ll pay $4559.31 in interest over that time. Now, how about we change the terms to 18% interest for 4 1/2 years. The amount of interest paid will be $4661.75.
So, is the amount of the interest rate really the problem? Sure, the payment will be larger for the shorter term, higher interest rate loan, but does that really mean that 18% is that much worse or more usurious then 8%? No."
And as for the other discussion on the value of interest rates, I invite you to watch a few videos on my blog. While you're at it. Learn how your money is all based on debt, or rather just the principal amount of this debt, and you'll begin to ask, "Where's the Interest?"
However, if you have $10,000 in medical debt at 8% interest you have agreed to pay off in 10 years BUT you pay it off in 4 1/2 years, you will have paid substantially less interest than for the 18% loan, especially if you paid it off in chunks big enough to re-ammortize the load along the way.
If I agree to pay $10,000 at 8% in 10 years, and I make larger payments (so it's paid off in 4.5 years) then the total interest I pay is a lot less. "Total interest paid" is irrelevant, money has time value.
Or would you consider that lending somebody $10,000 at 1% interest, with only interest payments ($100/year) due for the next 10,000 years, is evil because the total interest payments will be $1 million?
Go win the Russian million-dollar lottery and report back.
Money does not have time value. You think that because inflation is involved. How do we get inflation? Too much money in the system.
Money is based on work or production. If you work and produce something and get paid for it, the same amount of work and production should hold its value even 50 years later. But it doesn't since someone robbed you with inflation.
And the people who rob you of your work are the same people who have you snowed into thinking that usury is just excessive interest. They take your money by charging you interest on the money you use and they inflate the money to make you work even more.
Actually, 'too much money' is only part of the cause of inflation. One other obvious piece is the desire of sellers to increase their profit - they will constantly test what price a given market will pay for their product. There are other not-obvious causes of inflation, such as interest rates and finance charges. So, 'too much money' severely oversimplifies the situation.
1. The seller will always try to increase price, but without more money in the system, the buyer than has to take money away from purchasing other things (deflationary) to pay more for the other product (inflationary). Net effect is 0 inflation.
2. "There are other not-obvious causes of inflation, such as interest rates and finance charges." Yep, there's the interest again. So, why is that good?
The classic definition of inflation is an increase in money AND credit. The increasing price effect that you speak of follows any period where money and/or credit is increased as long as it is spent into the economy. The world has now ballooned the available credit, but if nobody borrows the money into existence then prices will stay flat or most likely decline.
Our money is equal to debts held at banks. And it is only the principal amounts at these banks. The banks haven't created the money for us to pay interest. Even worse when you pay off your loan including interest, you've just taken money away from someone elses ability to pay just their principal. So, let's all ask, "Where's the Interest?"
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.
"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.
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.
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.
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.
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?
Re: All interest is usury to people of silly religions
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.
Re: All interest is usury to people of silly religions
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.
"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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All interest is usury
From my blog:
"Let’s crunch some numbers. Say you have $10,000 in medical debt at 8% interest and you agree to pay this off in 10 years. You’ll pay $4559.31 in interest over that time. Now, how about we change the terms to 18% interest for 4 1/2 years. The amount of interest paid will be $4661.75.
So, is the amount of the interest rate really the problem? Sure, the payment will be larger for the shorter term, higher interest rate loan, but does that really mean that 18% is that much worse or more usurious then 8%? No."
And as for the other discussion on the value of interest rates, I invite you to watch a few videos on my blog. While you're at it. Learn how your money is all based on debt, or rather just the principal amount of this debt, and you'll begin to ask, "Where's the Interest?"
http://www.wherestheinterest.com
Re: All interest is usury
Re: All interest is usury
Or would you consider that lending somebody $10,000 at 1% interest, with only interest payments ($100/year) due for the next 10,000 years, is evil because the total interest payments will be $1 million?
Go win the Russian million-dollar lottery and report back.
Re: All interest is usury
Money is based on work or production. If you work and produce something and get paid for it, the same amount of work and production should hold its value even 50 years later. But it doesn't since someone robbed you with inflation.
And the people who rob you of your work are the same people who have you snowed into thinking that usury is just excessive interest. They take your money by charging you interest on the money you use and they inflate the money to make you work even more.
Wake up. You're being lied to.
Re: All interest is usury
Re: All interest is usury
2. "There are other not-obvious causes of inflation, such as interest rates and finance charges." Yep, there's the interest again. So, why is that good?
Re: All interest is usury
You're asking the wrong guy... see my other posts on this topic. :-P
I wasn't saying interest is good... just saying that "too much money" grossly misrepresents the causes of inflation.
Re: All interest is usury
The classic definition of inflation is an increase in money AND credit. The increasing price effect that you speak of follows any period where money and/or credit is increased as long as it is spent into the economy. The world has now ballooned the available credit, but if nobody borrows the money into existence then prices will stay flat or most likely decline.
Our money is equal to debts held at banks. And it is only the principal amounts at these banks. The banks haven't created the money for us to pay interest. Even worse when you pay off your loan including interest, you've just taken money away from someone elses ability to pay just their principal. So, let's all ask, "Where's the Interest?"
http://www.wherestheinterest.com
Re: All interest is usury
The other created his LJ account today.
You're not even getting Marx right.
Re: All interest is usury
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.
Re: All interest is usury
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.
Re: All interest is usury
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?
Re: All interest is usury
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.
Re: All interest is usury
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.
Re: All interest is usury
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.
Re: All interest is usury
"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?
Re: All interest is usury to people of silly religions
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.
Re: All interest is usury to people of silly religions
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.
Re: All interest is usury
(Anonymous) 2009-02-07 05:13 am (UTC)(link)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.