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Author Topic: Banning Usury will promote cryptocurrencies  (Read 4257 times)
pitham1
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December 25, 2016, 04:20:29 AM
 #21

You can not ban usury, but with bitcoin you can "ban" fractional reserve, and that's MUCH MORE important

You really cannot "ban" fractional reserve.
If banks/companies which are trusted start accepting bitcoins, people would be ready to deposit. A portion of this can be lent out by the companies. Voila - you have fractional reserves.

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December 25, 2016, 10:33:18 AM
 #22

You can not ban usury, but with bitcoin you can "ban" fractional reserve, and that's MUCH MORE important


You really cannot "ban" fractional reserve.
If banks/companies which are trusted start accepting bitcoins, people would be ready to deposit. A portion of this can be lent out by the companies. Voila - you have fractional reserves.

That's why to properly use btc you need to always be in control of your private keys, no matter if you trust a company or not

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December 25, 2016, 10:42:06 AM
 #23

usury is not the core of bank. and bank is the heart of economy for a country. it seem that a country can't ban the usury because if they do then their economy will be in danger, this world was growing wrong that usury now rule the whole economy and beat the non-usury thing. as you can see you can see it on many aspects even for shopping you must be offered an installments

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December 25, 2016, 04:37:00 PM
 #24

Interest rates aka usury implies that the borrower will get more money from the economy than he had put it. If half of the people would borrow someone else money, from where the additional percent of the money would come? From heaven? Or from nowhere because it is impossible.

 Interest rates and not printing new money leads to a complete disaster and lack of money. Sorry bitcoiners to burst your bubble but if the world would to be financially stable it cannot and will not use only bitcoins.
yes it is a fact but i think when bitcoin will become mature and when bitcoin will become more popular and all the people will start using bitcoin then i think bitcoin will certainly reduce the use of other fiat currencies.
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January 21, 2017, 09:57:24 PM
 #25

"Oh, Shit" said the King, and ten thousand arseholes heaved in the noonday sun,
for in those days the King's word was law, and the King ruled with an iron hand"
from, allegedly,  "The Night of the King's Castration" - anonymous authors.

If some recent data is correct, approximately 7 Billion bums are in danger of sunburn,
because this moment marks the beginning of the end of the Industrial Age, and sooner or
later, the world will be crapping itself.

http://www.economist.com/blogs/buttonwood/2017/01/light-bulb-moment
"Measuring productivity is far from easy; it tends to be the residual left over when all other factors have been accounted for. The OECD says it "can often be a measure of our ignorance". Still, the attached table is very striking. It comes from the US Conference Board (here's the link, with thanks to Gervais Williams of Miton and Andrew Lees of Macrostrategy Partnership for drawing it to my attention). And it shows that, at the global level, total factor productivity fell last year, was flat the two years before, and has barely budged since 2007. Before the crisis, it was growing at 0.9% a year."

I'll begin by thanking Coincube for the link to "Sacred Economics". I'd met Charles Eisenstein
briefly some years ago, before I had got a grasp of the numbers driving economics, so while
his thoughts on living in a world without money were interesting, I couldn't see his
philosophy surviving the wider community's onslaught. That vein of thought continues through
his arguments in that book for and against Usury, though very much biased toward doing right by
others and being able to assess the ultimate benefits to communities of any action. In some
ways it's Adam Smith's "Invisible Hand" but without the individual profit motive and with
limited competition.

We play games with winners and losers; we compete; in most cases we intuitively understand
the rules of the game. Hence when we play Monopoly, everyone knows here will be one
winner and many losers. We also understand that at the end of the game, when the winner is
declared, that the board folds, and together with the pieces, goes back into the box.
Nobody expects that the price of losing could be vital organs like kidneys, a liver, or
a heart.

Why should it be different in real life? Why participate in a system that creates unpayable
debt via Usury? Despite claims by some prominent Economists that our "debts don't matter",
any internet search for "India kidney Debt" will produce returns like this:
http://indiatoday.intoday.in/story/deep-in-debt-farmers-fuel-kidney-donation-racket-ap-india-today/1/256628.html
"According to Vijay Kumar, an employee working in Rentachintala milk chilling centre, there are at least seven other farmers who have been paid a few thousand rupees for "donating" their kidneys in Hyderabad. The reason for this alarming situation, Vijay said, is the big kidney sale racket that surfaced in the Palnad area between 1998 and 2000. The Palnad area, comprising Macherla, Kambhampadu, Rentachintala, Dachepalli and Piduguralla blocks, has mostly rain-fed cultivation. It is dominated by big farmers who lease out their land to landless farmers."

The consequences of unpayable debt are not always so extreme.
http://www.moonofalabama.org/2008/10/volkswagen-shor.html
"Shares in Volkswagen were nearly halved on Wednesday after the controlling shareholder, Porsche, took steps to ease a squeeze on short sellers that more than quadrupled the stock in days.

Porsche itself had prompted the meteoric rise in VW stock with its announcement on Sunday that it had effective control of 74.1% of VW, leaving less than 6 percent in the market.

"In order to avoid further market distortions and the resulting consequences for those involved," Porsche said, it intends "to settle hedging transactions in the amount of up to 5 percent of the Volkswagen ordinary shares.""

Thus an unpayable debt, a squeezed naked short, became payable though Porsche's
pragmatic decision to take its profits and sell some shares into the market.

"You can't get blood out of a stone/turnip" - Sayings like these, and the need for a fit
and healthy common man to fight wars, have, in the past, limited inhumanity's excesses.
Today, to judge by some of the more lurid posts om the internet, the profit from
harvesting the right cadaver could be over $100,000. Of course, things like Limited
Liability and Bankruptcy Law stand in the way of such excess profits. If it weren't for
these things companies could: grown and sell foods that over a lifetime, destroy organs,
creating a market for transplants; build transplant hospitals, prisons, airports, and
transportation; push the world's most impoverished people into unpayable debt via access
to credit; encourage governments such as that of India to declare fiat paper savings
worthless; make organ donor contracts enforceable in law.

Result : Profits! and Real Economic Growth! and higher GDP! What's not to like?

Well, generally, in the Western World, unpayable debt doesn't get paid, but that's
because Limited Liability and Bankruptcy Law have been grafted onto Usury. The system
still cranks out unpayable debt, and we've learned to live with it, mostly because
the economies have been growing, and inflation raises all the boats, just some more than
others. Banning Usury would reverse the flow of profit from the poor to the already
wealthy. It will not solve all our problems. There's more to this, but space, and time,
is limited.

The link above shows that world growth will probably reverse. I'm adding "probably"
because the world is in a place it's never visited before, a place with no foreseeable
good outcomes and unprecedented uncertainty.  A time when, if you can keep your
head when all around you are losing theirs, you haven't been fully  briefed.
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January 21, 2017, 10:34:48 PM
 #26

 I have no idea what is Usury. Can somebody explain me in a short word what is it?
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January 22, 2017, 05:51:30 AM
 #27

Where there's currency there's interest in offering and taking out loans. The challenge is ensuring that interest rates are fair to the borrower and the lender (for the risk they take on).

These things aren't influenced by the US economic health or deterioration.

Being against usury is great, but let the market decide what the rates should be. The borrowers can decide how much the loan is worth to them. And certainly don't ban lending. Lending keeps the economy growing. And smart borrowing keeps people out of trouble.
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January 22, 2017, 06:02:56 AM
 #28

Usury is not about not charging interest. It is ensuring that the interest charged is not exorbitant.
If you think of an interest-free, debt-free world, you are living in a fool's paradise. This is not going to happen, whether Bitcoin succeeds or not. There are always those who are in need of money and there will be others who are ready to lend for a small price. There is no case for "banning" the transaction between the two.
That is the current definition but in the past any charged interest in the principal was consider usury, and it is not difficult to understand why since in the past coins were made of gold so it made sense you received the same amount back but in this era of fiat that losses value every second then charging interest it is a must.

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January 22, 2017, 06:22:28 AM
 #29

Usury is a action where loan is given to person based on the condition that he should pay a certain percent of amount as interest irrespective of whether he gains profit or not.If usury is banned and interest free loans are given, it will be good but today we dont find any such options.In some islamic countries,islamic banking system is followed as an alternative option. I dont know how banning usury will promote crypto currencies because usury is a financial option and crypto currency is a trading option.They are not inter related to each other.
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January 22, 2017, 08:19:46 PM
 #30

"I dont know how banning usury will promote crypto currencies because usury is a financial option and crypto currency is a trading option.They are not inter related to each other."

I have two answers to your concern. The first derives from Gresham's Law, and my
observation that Nations have been for some time in a competitive devaluation, a race
to the bottom, an attempt to weaken their currency, in effect to counterfeit their money.
In a market where no-one knows the fair value of a good, the price of the good falls.
There are other matters relating to the expansion of the money supply, but leave that
aside for now. Banning usury will strengthen fiat currencies, hence reducing their
competitive advantage against cryptocurrencies. The exact mechanism is open to debate.
It will move the balance of power from the banks toward the common people.

The second answer is that prior to a ban on Usury there would have to be a process
of education for the general public explaing precisely how fiat currencies and the
credit mechanism weaken the financial power of the common man. Despite all the turmoil
of the recent decade, some seem woefully illiterate in matters financial.

I may have misread your intent, but you seem to equate fiat currency and Usury in the
above quote. Also, you seem to have entirely missed my point that global growth is
no longer assured. 
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January 22, 2017, 10:01:30 PM
Last edit: January 22, 2017, 10:58:00 PM by CoinCube
 #31


I'll begin by thanking Coincube for the link to "Sacred Economics". I'd met Charles Eisenstein
briefly some years ago, before I had got a grasp of the numbers driving economics, so while
his thoughts on living in a world without money were interesting, I couldn't see his
philosophy surviving the wider community's onslaught. That vein of thought continues through
his arguments in that book for and against Usury, though very much biased toward doing right by
others and being able to assess the ultimate benefits to communities of any action. In some
ways it's Adam Smith's "Invisible Hand" but without the individual profit motive and with
limited competition.

We play games with winners and losers; we compete; in most cases we intuitively understand
the rules of the game. Hence when we play Monopoly, everyone knows here will be one
winner and many losers. We also understand that at the end of the game, when the winner is
declared, that the board folds, and together with the pieces, goes back into the box.
Nobody expects that the price of losing could be vital organs like kidneys, a liver, or
a heart.

Why should it be different in real life? Why participate in a system that creates unpayable
debt via Usury?

You are very welcome. I am actually still in the process of reading this book having only gotten up to the chapter on usury which it nails. It has the best description of the cost and consequences of usury that I have read anywhere. I cannot comment yet on the later chapters.

The book is available for free to read online from the author here:
http://sacred-economics.com/read-online/

Or it can be purchased here:
https://www.amazon.com/gp/product/1583943978/ref=as_li_qf_sp_asin_tl?ie=UTF8&tag=theascentofhu-20&linkCode=as2&camp=217145&creative=399349&creativeASIN=1583943978

I read it up to chapter 6 online and then bought a copy. I am waiting for my hard copy to arrive to finish the rest.

Why participate in a system that creates unpayable debt via usury? The answer of course is that we should not its dumb if we value the long term success and progress of society. However, large scale change on this issue is probably not going to happen in our lifetimes usury is very profitable. Change would require a degree of wisdom that we do not yet have. Indeed the idea is not even conceivable without a currency system that does not have usury at its core and does not easily facilitate usury. Bitcoin is interesting as an option along these lines. Charles Eisenstein argues for a gift economy but I have not read those later chapters yet.


Why not ban Usury?

Because our entire economy is now dependent on it. We cannot simply get rid of it without economic collapse which would just lead back eventually to usury again. We can no more top-down abolish usury then the Roman empire could have abolished slavery. We must develop a functioning alternative first and then out-compete usury. Does the economics of cryptocurrency help provide an alternative and thus the ability to route around usury? I believe the answer to this question is quite possibly yes. This is one of the reasons I have an investment in bitcoins.


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January 23, 2017, 09:35:57 PM
 #32

" Does the economics of cryptocurrency help provide an alternative and thus the ability to route around usury? "

I've also bought the book, and am in much the same place as yourself.

I'm less hopeful that cryptocurrency can route around Usury. As I said, Greshams Law suggests
that bitcoin will not replace counterfeit money without help. Maybe if another cryptocurrency was
specifically designed to tackle the problem, it might succeed, but its a bad idea.

I noted something in today's papers to the effect that "we" all want to eliminate fraud, dishonesty,
and cold-calling but the loss of thousands of jobs is a major and unacceptable consequence.
Does this sound much the same as banning Usury?

I'm intending to research some other relevant material:

A) The theological perspective - why Usury is acceptable today, and also its practice in the
Byzantine Empire.

B) The impact of Usury on poverty - microfinance seems to be the main topic
(see WP39_microfinance.pdf) - though remittances are also an area of concern.
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January 24, 2017, 02:17:46 PM
 #33

" Does the economics of cryptocurrency help provide an alternative and thus the ability to route around usury? "

Yes, but mainly via education.

Consider the resistance that would form against a fractional reserve bitcoin bank.
Ultimately the transparency of the blockchain and the ability to securely hold your own funds offchain would make this much harder to pull off than with fiat or gold. Not impossible but harder and thus less profitable. Cryptocurrency helps illuminate the nature of usury. Ignorance is the foremost enemy of progress.

The best parallels for how we can move beyond usury can likely be found in two prior historical transitions.

A) The transition from economies of slave labor to economies of surfs and feudalism.

B) The transition from feudalism to republicanism.

Ultimately, the process of moving beyond usury will probably be similar to those prior transitions. Painful, slow,  halting and unlikely to be completed in our lifetimes.

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January 24, 2017, 09:22:42 PM
 #34

Interest rates aka usury implies that the borrower will get more money from the economy than he had put it. If half of the people would borrow someone else money, from where the additional percent of the money would come? From heaven? Or from nowhere because it is impossible.

 Interest rates and not printing new money leads to a complete disaster and lack of money. Sorry bitcoiners to burst your bubble but if the world would to be financially stable it cannot and will not use only bitcoins.

This kind of discussion would have to depend on the means of repayment enforcement.  Let us for now assume the mechanism is just like today (which BTW I believe is OK morally and technically): if the borrower can't repay, basically, too bad for the creditor.

Under this mechanism, the problem of too much debt would simply lead to debt value implosion, and debts would disappear through default.  Morally speaking, the lender should have been careful, since they knew there would be no enforcement from the start.

In an ideal world, that is, without the state-bank alliance manipulating the values of debts, people would be very careful to lend under this mechanism, so we should not have debt implosions on an economy-wide basis.  (This world last existed in the Italian Renaissance.  And interest was VERY high by today's standards.  The economy did more than OK.)

So Bitcoin should not have the problem you mention, any more than gold and silver did during the Renaissance.

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BobK71
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January 25, 2017, 02:08:30 PM
 #35

@BobK71 - I have a problem with the morality of Usury. Usury can create a situation where
the borrower is unable to ever make good on the debt. Legally, the law is on the side
of the Lender, but that tends to encourage excessive risk taking. This seems wrong
from both a moral (and a technical) point of view.

I reach a diametrically opposed view on credit creation. Credit flows from it's source
to a sink, be that bankruptcy or discharge, and wealth provides the reverse circulation.
If anyone could set up a bank, and or print their own money, this would be less of a
problem because there would be competition to provide loans in various formats, much
like today's altcurrencies. The problem begins with the creation of a legal monopoly
on the printing of money. There seems to be some jumps in your logic where your
intermediate steps need to be validated before your conclusions can be reached. I
suspect your solutions only apply in a very narrow set of prior conditions.

We need to talk more about the constant-money-supply, but let's take one step at a time.

We should talk more, definitely.

I understand that debt is a form of investment where there is no legal, built-in adjustment as the hope of repayment goes down.  However, to be considered immoral, it has to break a well-defined moral code.  It's hard for me to find such breakage when both parties go into the deal freely and with knowledge of the enforcement mechanism.

FWIW, I'm intuitively in favor of the current enforcement mechanism in most of the West, ie the creditor is basically on their own.  Breaking a promise is no problem when both parties are aware of its possibility from the start.  (This is only true in and of itself.  Combine this with the modern system of state-driven asset inflation, and there IS a problem.)

I think I addressed the systemic-technical issue with usury in my posting above.

I guess I'm not totally understanding your point about credit and wealth.  Assuming you mean there can be no credit growth without wealth growth (ie growth in supply of actual money,) I'll say that your view may be colored by the past 4 centuries of more or less elastic money.  (Under metallic standards money was also issued out of thin air via public power, just slower.)  For many it's hard to imagine a different world, given this history.  Perhaps you have a logical model that proves your point, but I haven't seen or imagined one.

To me, the Italian Renaissance world of constant money showed growth could be driven by credit alone, even though far less credit was issued than by today's standards.  Also, the only legitimate (ie non-theft-based) driver of credit are actual economic facts and the response to them by actors free of state intervention.  If better and safer ships are invented, savers will be happier to lend to cross-ocean traders.  Absent that, there is no reason for this credit expansion.  It is therefore not up to any authority or expert to say how much credit growth there should be.  Only the myriad price signals in the free market can determine the proper level of growth.

The legal monopoly of money issuance is certainly a problem, but that is only one form of exploitation by the modern state-bank alliance.  The general problem is, as I mentioned, the artificial propping up of asset values by the alliance.  During the Spanish Empire of the 16th century, money was only gold and silver, but essentially the same modern problem existed, where the avenue of asset inflation was sovereign debt payable in gold and silver.

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January 26, 2017, 09:30:24 PM
 #36

@BobK71 - "It's hard for me to find such breakage when both parties go into the deal freely and with knowledge of the enforcement mechanism."

In an ideal world a negotiation between two parties would result in an equitable and
moral deal: the party which gained most from the deal would offer the best terms for
settlement; and vice versa. That's economics. But this is only one of perhaps four
different outcomes in game theory and it assumes both a win-win dynamic and an equal
balance of power.

For a real world example, consider my broadband contract: I provide my ISP with three
months credit by paying in advance; I receive a weeks' credit in return. If I do
not pay within a week, my online existence is cut short. This is an existential threat.

A similar existential threat is implicit in all negotiations with the State, for the
State has a monopoly on legal violence. I'll also point out that as productivity and
GDP declines, the opportunities for win-win outcomes diminishes.

Much of the real world implications of this, and my earlier reference to flows of
wealth and credit are exposed in the dealings of microfinance - see WP39_microfinance.pdf

I think it's evident that wealth flows to the wealthy, and credit flows to those sinking
deeper into debt. The exact mechanisms vary for each individual. Some are plainly wrong.
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January 28, 2017, 09:06:45 PM
 #37

"The idea that people can live off the interest of their mutual indebtedness, ......
is just another perpetual motion scheme - a vulgar delusion on a grand scale. Soddy
seems to be saying that what is obviously impossible for the community - for everyone
to live on interest - should also be forbidden to individuals, as a principle of
fairness." Daly, "The economics of Frederick Soddy" p475 quoted by
Charles Eisentein in "Sacred Economics" p134

There are a simpler explanations, just ask - "Cui Bono?"
The effects of American gold and silver imports in the 16th Century are well known.
Those closest to the source of inflation benefit most. Thus Banks, and credit card
companies, as the source of credit-as-money benefit fully from the inflation of the
monetary base. Those receiving credit are incentivised to spend quickly. For as long
as the Ponzi scheme expands, savers lose out to the extent that inflation exceeds the
interest paid on their savings. Monetary expansion is limited in theory by our
ability to collateralise resources, but once again practice differs from theory.

So much for the Macro Economy. What about the Micro Economy, and Who Loses?
In a strange sort of way, the supply of money creates its own demand, it's own
scarcity. The practice of Usury creates more debt via interest than there is
wealth to extinguish it, hence there is always someone in need of money. It follows
that the greater the scarcity, the greater the excess debt, the greater the risk,
and hence the higher the interest rate demanded. Thus those with the weakest
negotiating position, probably the poorest in the community, are the least able to
avoid being in debt and their risk of losing everything is higher.

When gold and silver coins were money, there was a natural limit on the extent to
which the common man could be exploited. When the King or Queen mismanaged the
economy, banks and governments went bankrupt. Along came fractional reserve banking,
and then fiat currencies. Both were an attempt to introduce a self-regulating system
while preserving Usury. As can be seen above, self-regulating Usury is an oxymoron.

Unfortunately, with another system failure about to be exposed, TPTB are placing
their hopes on restrictions on fiat currency, and when that fails, on banning cash
entirely.

Once inflated, nothing can stop a Ponzi scheme from imploding, hence arguments for
continuation are wasted. More relevant arguments for Usury stem from personal freedoms,
and that needs to be discussed further.
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January 30, 2017, 01:55:13 PM
 #38

I've been remiss and not had time to read the microfinance paper, but I'd like to keep what is a productive discussion going by offering what I have.


In an ideal world a negotiation between two parties would result in an equitable and
moral deal: the party which gained most from the deal would offer the best terms for
settlement; and vice versa. That's economics. But this is only one of perhaps four
different outcomes in game theory and it assumes both a win-win dynamic and an equal
balance of power.

For a real world example, consider my broadband contract: I provide my ISP with three
months credit by paying in advance; I receive a weeks' credit in return. If I do
not pay within a week, my online existence is cut short. This is an existential threat.

With truly free competition, any side that loses can walk out and choose another counterparty, so only win-win deals can be agreed.  I'm not exploited by my local pharmacy which is bigger than I.  But if there is some state-sanctioned anti-competitive behavior involved, then I can be.  The goal of society can only be to perfect free competition, when there are problems with it, and not to tie up the system in yet more state-sponsored knots.


A similar existential threat is implicit in all negotiations with the State, for the
State has a monopoly on legal violence. I'll also point out that as productivity and
GDP declines, the opportunities for win-win outcomes diminishes.

This is true, and is why money can't be left to the state.  The growth of money and financial assets matches productivity and real-wealth growth when there are free supply and demand for them.  When the state is involved, the incentives for the elites are always to issue more money and debt while the system is stable, and destabilize the system, and/or exploit the rest of the population/world.

Much of the real world implications of this, and my earlier reference to flows of
wealth and credit are exposed in the dealings of microfinance - see WP39_microfinance.pdf

I think it's evident that wealth flows to the wealthy, and credit flows to those sinking
deeper into debt. The exact mechanisms vary for each individual. Some are plainly wrong.

A quick scan through the paper suggests that microfinance is just another way powerful players who issue financial assets (which are ultimately backed by state or imperial power) to victimize the less powerful by forcing debt and inflation down their throats.  For the powerless, the proposition is lose-lose.  If you stay safe, you lose to inflation.  If you borrow or lend, you risk losing a lot in a crash of an artificially propped-up system.  Microfinance is just another way to find initial demand for the assets.  If so, this would be no different from the relationship between banks and people, or that between countries at the center vs. the periphery of the imperial system.  The key culprit, as always, is the state-bank alliance, which is in turn enabled by the state control of money.

I'm hoping to read the paper and comment afterwards.

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January 30, 2017, 02:21:22 PM
 #39

...Monetary expansion is limited in theory by our
ability to collateralise resources, but once again practice differs from theory.

So much for the Macro Economy. What about the Micro Economy, and Who Loses?
In a strange sort of way, the supply of money creates its own demand, it's own
scarcity. The practice of Usury creates more debt via interest than there is
wealth to extinguish it, hence there is always someone in need of money. It follows
that the greater the scarcity, the greater the excess debt, the greater the risk,
and hence the higher the interest rate demanded. Thus those with the weakest
negotiating position, probably the poorest in the community, are the least able to
avoid being in debt and their risk of losing everything is higher.


Felix Martin in 'Money: The Unauthorised Biography' mentions that debt does not become money until it is made transferable.  My expansion on this insight is that debt in its natural state is highly individual and depends on the particulars of each investment and the circumstances of each lender.  Truly free-market debt is thus highly non-transferable.  Debt becomes transferable only when the state backs it in some fashion, and from that point on, debt values are no longer based on their real-economy merits but on a bubble created by state power, and from this flows all our ills.  (The system always becomes a bubble because of the incentives faced by the powerful.)

When the state is not involved in 'managing' (read 'inflating') money, debts are only agreed when merited by growth of real wealth or productivity.  Interest is thus the reward for those investing wisely.  System-wide, debt would be at a much lower level than toady.  Under constant money supply, there would be a gentle and gradual deflation as real wealth/productivity grows via investment.  When there happens to be no growth to be had, there is no debt (ie everyone doing the same thing as yesterday.)  This must have been what Renaissance economies looked like.

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January 30, 2017, 02:50:22 PM
 #40

Interest rates aka usury implies that the borrower will get more money from the economy than he had put it. If half of the people would borrow someone else money, from where the additional percent of the money would come? From heaven? Or from nowhere because it is impossible.

The flaw in this oft-repeated fallacy is that it ignores the fact that money is a medium-of-exchange. Value is produced and consumed in an economy. As long as borrowers can produce enough value, loans can be repaid. It doesn't matter if there is a finite amount of money -- money is a tool used to exchange value. A loan can potentially be paid back using the same dollar over and over again

Could you expand more on this?

Personally, I don't quite understand what you mean. If there is no new money entering or being created in the economy (and there are no defaults of the borrowers either), the debt system is not sustainable in the long run. In other words, one day there won't be enough money to pay the interest, and that would eventually cause the system to get reset writing off all or most of the debts

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