"If banks can borrow money from the federal reserve at 3%, why cant we? Why do we have to go through a money changer to get access to capital? In all honesty for profit banking should be outlawed like for profit hospitals were before Nixon. Usury is the problem in our society. Not capitalism."

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[–]magnora7 5 insightful - 1 fun5 insightful - 0 fun6 insightful - 1 fun -  (14 children)

I agree. Usury is the main cause of debt slavery, because the high rates makes the debts almost impossible to repay.

Debt can be used to help grow societies, but not when they charge you 15% for it, of which you must pay the interest first before the principal is touched, and furthermore wages never go up.

If all debt was suddenly forgiven once, it would be one of the greatest gifts to humanity we could imagine. Think of all the stress it would relieve.

[–]worm 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (13 children)

Forgive me for saying so, but if all debt was forgiven at once I suspect that financial markets may break down overnight; which might bring much more stress than it would relieve.

Jokes aside, I don't see what you mean by usury being the cause of debt slavery - whatever you mean by both terms. Is there any way you could lay out the reasoning behind that for me?

[–]magnora7 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (12 children)

but if all debt was forgiven at once I suspect that financial markets may break down overnight

Probably true. It may cause a lot of short-term stress and the more responsible way may to be to do it gradually.

Debt slavery is when you cannot stop working because you must keep earning income to pay the debt on your house and credit cards and car. Usury (very high lending rates) causes this by greatly increasing the total amount of overall debt paid and amount of time needed to pay it.

[–]worm 1 insightful - 2 fun1 insightful - 1 fun2 insightful - 2 fun -  (11 children)

I don't really see the connection between usury and debt slavery; unless you're going to argue that borrowing is compulsory, it seems to me that those who live in debt slavery have nobody but themselves to blame for the weight of their debts.

Even a 12 year old is capable of understanding compound interest and how their debt would accumulate should they take out a loan. To argue that adults who took out unwise loans should somehow blame the lender rather than their own poor decision-making seems odd to me.

[–]magnora7 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (10 children)

So anyone who is tricked in to 20% APR should have to pay it? You're against Usury (overly-high interest) laws?

They basically are compulsory when the only other option is to lose your home. Which is the situation millions of Americans find themselves in, because wages are so poor they cannot buy a reasonable place to live.

Not to mention student loans, which are now over a trillion dollars, are basically demanded by society as well. So I'd argue that yes, it basically is compulsory from the standpoint of "the smart thing to do" as dictated by mainstream society and they're taking full advantage of that.

[–]worm 1 insightful - 2 fun1 insightful - 1 fun2 insightful - 2 fun -  (9 children)

Let's think about this for a moment. What is an overly-high interest rate? In the first place, if someone is willing to borrow even at such extortionate rates, then it would seem to me that the rates were not too high at all. If the rates were truly too high, then you would not have found anyone willing to borrow. The mere fact that people are still willing to take out loans, even at rates that you deem "too high", suggests that they would prefer to live with the interest and the results of their spending than without it.

But let's go back to the question you were responding to. When I asked you whether you assumed that people are forced to take loans, you answered that housing and education demand that people take loans. Let's assume for the moment that this is true.

If you were to prevent lending at reasonable, market rates of interest, then what I foresee is a collapse of lending to all but the most reliable of creditors. In other words, only those who already have considerable money and a stable income would be able to borrow money to fund the purchases of these "necessities" you have identified.

Maybe it would be a good way to force a population to spend within its means. It might even be a good way to prevent credit bubbles, for all I know. But I doubt that these are problems you set out to solve.

[–]magnora7 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (8 children)

Maybe it would be a good way to force a population to spend within its means. It might even be a good way to prevent credit bubbles, for all I know.

Yes of course it would.

But it's also a way to collapse the existing economy, and make literally millions of people instantly homeless. And stifle growth in the long-term.

So after the terrible transition period, it would probably work. But people would just start borrowing again, because who can turn down cheap/free money? The temptation is too great.

[–]worm 1 insightful - 2 fun1 insightful - 1 fun2 insightful - 2 fun -  (7 children)

And knowing all of that, you would still support a ban on usury? For that matter, you have not given any definition on what you would consider an overly-high interest rate to begin with. Would your definition perhaps be softened now that you've actually thought about what it would entail?

[–]magnora7 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (6 children)

There's already a ban on usury, I'd just advocate bringing the max interest rate allowed down gradually over time. I wouldn't just pull the rug out from under the existing system, it would have a 50-year wind-down plan if I were in control. And small interest rates would still be allowed.

[–][deleted] 3 insightful - 1 fun3 insightful - 0 fun4 insightful - 1 fun -  (4 children)

should have 4% or around there be max interest for all loans

I get that bankers need something for overhead but they don't need to be getting rich off this idea. Let them be middle class guys, make like 80k a year max.

[–]worm 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (0 children)

I'll assume that your citation of current laws (though I have no idea which jurisdiction you are in, and thus have no idea what those laws actually look like) means that you approve of the current definition of usury in some unnamed jurisdiction. But this is a rather lazy answer, isn't it? I don't see why the fact that we have such laws should necessarily mean such laws are wise laws.

The fact of the matter is that if interest rates were not high enough to offset the risk of lending, you would find fewer willing creditors and wind up with less credit. I would argue that the abolition of usury laws would in fact free up credit to those who need it the most, those who are otherwise too risky for creditors to willingly lend to.

You seem to be of the opinion that there are two types of lending: good lending, and bad lending. Good lending is good because the interest rates are low enough that they don't infringe upon the law. Bad lending is bad because the interest rates are too high. But such a simplistic definition inherently disregards the reason why people borrow in the first place; if someone borrows money, then regardless of the interest rates, the reason they are doing so is because they would prefer to have less money now rather than more money later, and it seems to me to be a perfectly fair goal to make this an available option to as many people as possible.