Usury is so gay

November 7, 2015 § 27 Comments

Dante did not put usurers and sodomites into the same circle of Hell by accident.

Reality always asserts itself, so nobody can get away with comprehensively ignoring reality all the time.  When I say that all modern economic theories (including the ones you like, not just the ones you dislike) are anti-realist, I do not mean that they are postmodern. Postmodern theories look at the hopelessness of the positivist project – which is an anti-realist project, since it attempts to fully capture reality in formal representation, to reduce some demarcated part of reality to nothing but symbolic representation or a metaphysically neutral verification procedure – and pretend to give up on objective reality altogether. This becomes immediately rather ridiculous to sane and well adjusted onlookers, because directly and explicitly rejecting reality is something that it takes a peculiarly pointy-headed intellectual form of sociopathic stupidity to do.

Anti-realist economic theories (which is to say, all existing economic theories of which I am aware) therefore are not entirely disconnected from reality. There are true things which can be learned even from wrong theories: stopped clocks and all that. The sodomite’s understanding of reality is not comprehensively wrong in every respect: his understanding is a distorted and disordered view of reality, not a beaker of distilled and purified falsity. Every lie has to have some grounding in the truth in order to get any traction at all; although the more lies take hold, the less that is the case.

The thing that distinguishes anti-realist economic theories from a realist theory of economics, which as far as I know does not exist, is that anti-realist theories attempt in various critical places to reduce value and/or property to nothing but the projection of subjective human intentions, understandings, preferences, will, or desire.  What you may notice is that this often involves abstracting together unlike things as if they were the same kind of thing: securitizing unreality, if you will, at least metaphorically speaking but sometimes literally. A realist perspective, in contrast, does not deny the importance of the subjective and psychological but recognizes that there is an irreducibly objective aspect at work too. (This is true in moral theology as well, where the morality of human action cannot be reduced to nothing but subjective intentions). As with all lies anti-realist economic systems would fall apart immediately if they were pure nothingness: if there were not some anchor in reality. So the thing to look for, if you really want to take the economic version of the ‘red pill’, are the places where metaphysically anti-realist finance marbles together the irreducibly real with the purely subjective into a thing it calls ‘cake’, and which it says we must all eat.

In sex, analogously, look at the manifest conflation of sodomy with intercourse. Look at the manifest conflation of the masculine with the feminine. Look at the more subtle conflation of ‘dating’ and serial fornication (as opposed to parallel fornication, which is Really Bad, at least for now) with marriage. Look at the conflation of self sacrifice (what a husband and father owes his family) with authority (the obedience the family owes to the father), and the labeling of these entirely unlike things ‘mutual submission’. Look at the conflation of committed self-sacrifice with fickle and fleeting emotions, both under the label ‘love’.

And continue looking from there, because the most important thing that waking up to the obvious examples shows is that we can be fooled by the obvious. Nominalist pseudo-categories conflating things rooted in reality with what human subjects want, intend, or expect are absolutely necessary for the lie to continue.  This only works as long as most people carefully avoid noticing the introduction of anti-realist poison into their thoughts: as long as repentance is avoided at all costs.

It may help to think of accounting as the mathematics of property; of finance as the physics and engineering of property; of economics as the meteorology of property. In modern accounting, an “IOU” or “note receivable” can mean a claim against some actual pool of property, or it can mean the securitization through usury of nothing but a promise made by a borrower to personally repay. Said sightly differently an entry on the asset inventory of a balance sheet can mean a claim against some actual pool of property, or it can just be the counter-entry to a personal IOU.  A note payable can mean the impairment of some actual property, or it can mean that a person is on the hook to come up with some amount of money — an IOU.  The ‘fractional reserve’ is either cash and equivalent liquid property kept on hand that a property aggregator/securitizer (bank) can use to satisfy demand deposits under normal operating conditions, or it is a magical delegation of power by the sovereign which permits banks to create currency out of nothing but personal IOU’s through an accounting trick[1].  You aren’t supposed to notice the difference; because as soon as you notice the difference, the jig is up.

The conflation of reality with unreality doesn’t just make folks think that unreal things are real though.  It also makes folks think that real things are unreal. A husband and father’s authority is just tyranny, because people don’t feel like they should be morally obliged to obey flawed human beings (unless they agree with the command; that is, unless it isn’t a command). The wife’s commitment to satisfy the marriage debt is rape. Taxation is theft, because the sovereign’s role in the functioning of industries, markets, and property in general doesn’t exist. And sovereign currency is mere fiat not a security against actual valuable property[2], even though it actually does entitle the bearer to the settlement of tax liabilities which he incurs in carrying out public commerce in the sovereign’s marketplaces. (More on the backward troglodyte financially ignorant medieval perspective on sovereign marketplaces can be explored here).

Once the ‘red pill’ hits you, though, you’ve got a choice.

You can plant your triumphant flag right there at the starting line, next to the naked emperor and the madmen wandering about in the desolation, and enjoy the delightful company of fellow sociopaths.

Or you can start looking for the more subtle ways in which unreality has been mixed into your reality. You can become a digger.


[1] and [2]: The ‘fiat currency isn’t real’ crowd, it seems to me, is rather too credulous about the willingness of private bankers to accept payment in literally meaningless bits of paper or numbers in computers which represent nothing but themselves, on nothing but the sovereign’s say so. I’ve never known a banker, of all people, to hand out actually valuable property in exchange for something literally worthless. That is the domain of timeshare purchasers and other victims of hucksters. Bankers may often be evil, but they are not stupid.

§ 27 Responses to Usury is so gay

  • Svar says:

    I’m still wondering about the other economic sins that are not considered usury but are worse. One example would be the sliminess of pharm companies. I recently learned that a pharm company took opium tincture, an very old medication, “reformulated” it, hiked up the price drastically and now it costs 1000$ a month for poor people, the working/middle class, and the eldery to buy a medication that anyone can make with about 30 bucks to last them a few months (of course, no normal person wants to make their own drugs so this causes the right people to suffer even more).

    That has to be in a circle of hell far worse than usurers or queers. What is the word for a sin that consists of general economic sliminess?

  • Svar says:

    The best example is that if usury is gay, than what I described is equivalent to pedophilia or zoophilia.

  • mickvet says:

    A question, Zippy. I am a veterinarian and run a small veterinary business. Most of my work is to farmers, a minority who are slow to pay their bills for various calls done. I charge late fees. Am I guilty of usury, in your definition of the word?

  • […] Source: Zippy Catholic […]

  • Zippy says:

    mickvet:
    We discussed that here.

    One of the ‘levers’ usurers have used is to conflate what is intrinsic to the contract with what someone is entitled to in justice when the other party breaks the contract. If your agreement with your customers is “sure, go ahead and pay late, but if you do then pay me the interest/penalty” then that is usury. On the other hand if you would be entitled in justice to a penalty even if that was not in the contract, because the customer is in fact breaking the contract, then it would not be usury.

    In your situation what I would recommend is writing it explicitly that way: “if you break this contract and fail to pay net 30, a $x penalty will apply and criminal prosecution for theft of services may also apply”. Then donate the proceeds from any actual assessed penalties to the Little Sisters of the Poor, just to be sure.

  • mickvet says:

    Thanks for your reply. Of course, I do not want my customers to pay late, I just want to get paid within a month of doing the work. However, if I didn’t apply penalties I would soon run into cash-flow difficulties. These debtors are a nuisance and consume a considerable amount of staff time both re-invoicing them and chasing them. Upon eventual payment, there is generally a degree of haggling and a mutually agreeable settlement, but it is all quite embarrassing and there is no question but that I do not encourage late payment simply to bank the interest. I am a bit confused by your suggestion of donating the proceeds to charity. This seems to condemn my actions no matter where I stand. I’m damned if I am usuring and damned if I’m not.

  • mickvet says:

    Further clarification of my position. I never sought agreement from my customers regarding charging penalties (I have always up to now called this “interest” in my ignorance). It is something I have always unilaterally imposed. Nor have I ever said to a client at the end of a call or any other time that he can pay whenever he likes and that I’d just take some interest if he was late. I actually never speak about payment, but my silence contains the implicit understanding that such payment would be prompt. I have no desire to be a banker.

  • Zippy says:

    mickvet:
    Sounds to me like you are OK.

  • mickvet says:

    Zippy, I thank you. You have certainly got me thinking about something which I had never given a second thought. I must watch my step with this. I will certainly bring it up with my confessor at the next opportunity.

  • buckyinky says:

    Zippy, your further thoughts here are very helpful.

    The accountant might innocently look at an unsecured loan recorded as a receivable in the asset section as simply a means of keeping track of to whom money was lent, and who is obliged to pay it back. There may be no income statement/earnings effect (usury) from this loan, and it may be entirely offset in the liabilities section so that that the net effect is null as to value (equity: stock, retained earnings, other capital) reported by the company in itself.

    Still there is a problem inherent in having to follow these rules in that the classification of a customer’s promise to pay in the asset section gives it the appearance of value, even if it’s nullified entirely by the liability section without even touching the equity through earnings. GAAP blithely requires the accountant to communicate it as a thing of value. More just would be a requirement to make the contra- account reside in the asset section in immediate proximity to the receivable so that the net effect on the asset section is null. Of course the obvious (and reasonable) question to ask then is why report the receivable at all?

    Isn’t it impossible in this society not to speak the language of Mordor? It appears the best we can do is not to be deceived into thinking we aren’t speaking it, and do our best to recognize it when we are.

  • Zippy says:

    buckyinky:

    Of course the obvious (and reasonable) question to ask then is why report the [unsecured, personally guaranteed] receivable at all?

    That may be why St. Francis Xavier, in his instruction to confessors, refers to it like this:

    Ask them what profits they make, how, and whence? what is the system that they follow in barter, in loans, and in the whole matter of security for contracts?

    [Emphasis mine].

    At the very least an improved accounting system – which is to say, one which more accurately records and presents reality – would not put unsecured personal IOU’s/receivables under assets. “Personally guaranteed receivables” should really be its own category, because they sure aren’t actual property.

    It may be inevitable that in between the time the haircut is complete and the customer reaches the cash register with his wallet there is an unsecured debt in play. Some of those may remain outstanding when the discrete cutoff for a quarterly statement or report arrives, so I don’t begrudge accountants recording them at all. Ignoring them would be its own sort of unreality. Human beings exist in time and therefore transactions are not instantaneous.

    But the ideal case, which would better avoid opportunities for ‘hidden usury’, would be a kind of escrow or bonded transactions where the purchaser of product or labor posts his security before consuming the product or labor. Basically, if customers have to pay or post security up front before actually consuming property or labor, that eliminates the problem.

    In business-to-business transactions this is for the most part already implicitly the case, because a company’s balance sheet just is the security on the contract and defines its explicit limits.

    But in consumer transactions this is not the case: consumer transactions are by definition a transaction wherein at least one party is an individual. When you pay up front that doesn’t involve making any personal guarantee though.

  • Zippy says:

    buckyinky:
    A further thought:

    I’ve been known to somewhat sarcastically summarize what you learn in getting an MBA as “buy low, sell high; collect early, pay late”.

    The reason ‘collect early, pay late’ works — this is frankly the main reason Amazon survived its early years — is because that receivable, even when it is securitized/secured, isn’t really the same thing as having possession of actual property. Net 30 receivable terms paired to net 90 payables produces 60 days worth of assets-in-possession that you don’t really own but for which you are not charged rent; “free” assets you get to use productively in your own business.

    As with many ‘not technically usury’ practices this isn’t necessarily morally just.

    So a “better” philosophically realist accounting would treat unsecured receivables, secured receivables, and actual property as the distinct things that they are. That would also make it a lot harder for investment bankers to engage in shenanigans like circular balance sheet securitization.

  • Mike T says:

    Zippy, your further thoughts here are very helpful.

    I’ll second that. Your posts on usury have been influential on me and my wife on how we deal with banks. I had started shying away from the conventional wisdom about “money in the bank” before your posts on usury, but your posts really drove home the extent to which demand deposits can be precisely as dangerous as any other form of investment.

  • Zippy says:

    I’m actually not that happy with my characterization of accounting in the OP.

    Math is just math. I think the correspondence should be that accounting is the applied mathematics and physics of property, finance is the engineering and farming of property, and economics is the meteorology of property.

    Present day accounting isn’t awful, but it could be very much improved — largely because it is strongly influenced by pervasive anti-realism in finance and economics.

  • Mike T says:

    I had another realization last night about usury. It indirectly is the enabler of most of our identity theft problems. Since loans don’t have to be tied to an actual existent piece of property, there is no incentive to ascertain the identity of the lendee beyond a reasonable doubt. A preponderance of evidence that it is not fraudulent is enough for the lenders.

    Now you can bet your ass that if credit card companies had to actually tie your account to a car title or something of reasonably high value they’d want you to notarize it, have witnesses and put a lien on the property. Not fun stuff, not conducive to them pushing cheap credit like an up and coming heroin dealer trying to corner a market.

  • Mike T says:

    Not that it would solve all identity theft issues, but outlawing usury or making it unenforceable would do wonders to make the industry self-police. I bet they’d care 5x more under that regime than under some heavy-handed bureaucratic ruling that merely added a burden to them to prove identity to the existing system.

  • Zippy says:

    Mike T:
    It is an interesting line of inquiry. It seems true that a move away from usury would entail a move away from identity theft, but it might result in more fraudulent ‘impersonation of property’, sawdust in the gearbox or things like impairing the same property multiple times without revealing all of the impairments to counterparties. Although that sort of thing also happens already.

    Keep in mind that usury is about what is intrinsic to contracts: it is about what it is morally licit / illict to insist upon contractually with a counterparty, even when the counterparty agrees. Theft, fraud (including identity theft), negligence, etc are extrinsic to contracts: they are by definition not things to which the parties agreed.

  • Mike T says:

    I understand. I think the reason why the system would not work that well for them without usury is that without a valid, registered lien on property then the loan would be pointless. They’d have to go to the courthouse and defraud the court about my home which would add a slew of additional criminal offenses and dangers to them.

    Probably the greatest bleating about that being unfair would be from smaller companies that don’t want to have local agents who review loans, notarize property transfers and liens, etc. It would increase the industry’s bureaucracy, but that’s just as well because of what is at stake.

  • Zippy says:

    Mike T:

    It would increase the industry’s bureaucracy, but that’s just as well because of what is at stake.

    Yes. Said differently, it means that people who invest would be taking more risk if they can’t be bothered to understand what they are actually buying. And on the macro scale that might not solve ‘boom and bust’ cycles, but it would mean that the ‘boom’ side would have to be rooted in property claims not open-ended claims against individuals.

  • Gabe Ruth says:

    Got a good example of squid-ink in the service of promoting anti-reality:

    http://theweek.com/articles/449193/war-ever-morally-justified
    http://theweek.com/articles/448578/why-christianity-demands-pacifism

    Find a patsy who will assert that the Iraq war was a just war by the standards of Christian teaching, and praise his erudition and command of the facts; claim that this line of thinking is basically the cause of the USG’s militarism; just war is indefensible.

    Damon Linker isn’t worth anybody’s time, but I do find it interesting how some people seem to go out of their way to return anti-semitism to its wild popularity of old.

  • […] feel entitled to functioning sovereign marketplaces and communities with low or nonexistent taxes; usurers feel entitled to profits without the concomitants of investment in property; and in general people […]

  • […] of financing business ventures than any of the modern financial anti-realists; financial anti-realists who literally cannot tell or pretend to be unable to tell the difference, whose economic theories […]

  • […] profit from mutuum loans.  As is the case with most modern pro-usury apologetics, this rests on an equivocation which studiously fails to distinguish between mutuum loans (personal IOU’s) and other […]

  • […] of the Dumb Ox behind the book’s liberal presentation of usury as something manifest, not in objective behaviors, but in bad intentions; but notably absent is Aquinas’ unequivocal condemnation of profit on […]

  • […] of whatever to moral doctrine makes a nice smokescreen, kicking up dust and hiding the writhing usury-sodomy nest from […]

  • ProtegeAA says:

    Late to the party, but having moved beyond the simple Austrian understanding of money and debt, and value, I’ve found Debt by Graeber a very interesting read.

    Do you recommend any others?

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