"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 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (3 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 -  (2 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 -  (1 child)

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.

[–]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.