Out of student loans and treehouse homes we all would take the latter
November 6, 2015 § 16 Comments
I recently discussed bank loans, usury, and the ‘creation of money’ in a thread at The Thinking Housewife which readers may find of interest. At the very least discussing the same subject matter with different words, and with different questions and answers, can sometimes be helpful.
To simplify matters, you can think of a bank – in the absence of usury – as a big pooling of claims against property. When a bank loan against property is made, that specific property is added to the pool of property against which the bank has claims, and the borrower is issued a deposit account of that same value in return. The deposit account is a generic claim against the whole pool of property. So the trade is that the bank gets to add the property to the pool, and in return the borrower gets a claim of equal value against the whole pool. Since the bank now has an ownership claim against the new-to-the-bank property while the borrower still gets to use that whole property, the bank charges the borrower rent for its share: interest.
The problem with a simple usurious loan is that there is no property; and with a collateralized usurious loan that the loan is made against “more” than just the property itself. The “more” is the borrower’s personal guarantee of repayment above and beyond forfeiture of the property. So in the usurious case it looks like the bank creates ‘money’ – a deposit account or part of a deposit account – out of nothing, by adding the promises of borrowers to repay to the pool of ‘property’ — a pool which is now partly composed of nothing but personally promised IOU’s.
This is important simply because it is true, of course, but also because it shows not only that the Church was for thousands of years more morally correct than the rest of the world but that the Church’s doctrine on usury continues to this day to be more financially correct than pretty much all of the modern world.
Post title swiped from twenty one pilots, who seem like nice kids:
A good illustration of the value of IOUs:
Following this logic, would it be fair to say that a nation’s sovereign debt is a guarantee of repayment backed by the future taxable earnings of the citizens? If so, it sounds like usury. I’d be interested to see an argument to the contrary.
Gabriel:
No.
I’ve discussed this quite a lot, but two places to start are here and here. Be sure to read the full comment thread between Kristor and myself in the former.
[…] Source: Zippy Catholic […]
Thanks for dropping by my place and contributing to my own post on usury. The more I have studied the topic, the more realize precisely how most denominations of Christianity have been compromised, corrupted and subverted into Churchianity.
Greetings and mahalo back at you Keoni Galt. I just returned from your beautiful islands less than two weeks ago, and the time I get to spend there is always too short.
Hey Keoni Galt, it’s nice to see you around here. Btw, who is that Polynesian Jason Segel-looking dude in your avatar? I’ve been meaning to ask you this for years.
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