What is Usury? "De Florijn" project and interest-free credit.

[btcbug]

https://realcurrencies.wordpress.com/2016/09/07/game-on/


The De Florijn project aims to be a new currency system. The heart of his idea seems to be based around the idea of interest-free credit.

His blog is filled with stuff about "usury" and he claims it’s the root cause of the world’s problems.

My economic views are based on free market capitalism and the idea that government as it exists is the root of the problem. Government by the Libertarian/Anarchist definition is a monopoly on the use of force over a certain geographical area. Most people conflate Government with societal organisation, which is understandable since it's all they know, however the two are not the same thing. It's more clear what Government actually is when framed as consensual vs non-consensual, voluntary vs involuntary, peace vs violence.

This guy, as intelligent as he sounds, seems to have a hate on towards Libertarianism (which even I can understand to a degree) and he goes by the Keynesian textbook definition of capitalism, which is what I consider to be crony-capitalism or socialism. So I have a high degree of scepticism, as he doesn’t seem to have grasped the idea that Economy is simply billions of voluntary, human interactions. A living entity on it’s own, that can be observed, but isn’t there to poke, prod and manipulate through violent intervention (government), as it will just route around this inconvenience anyway.

In a free market, if you want to extend credit to people at with Zero interest, be my guest, however demonizing interest just seems completely retarded to me. It’s as simple as asking yourself, if I have accumulated sufficient wealth that I’d consider lending it to others, am I willing to risk that time and energy on a promise? Sure, I understand lending to those you trust, but why is it evil to seek out credit and pay for it if one so chooses? We often destroy relationships when money comes into the picture. The saying, “don’t do business with family and friends”, seems to be reasonable.

So define “Usury” for me. I hear this word often and it's always some nebulous concept. His definition seems to be paying ANY amount of interest on borrowed money, which as I said, seems ridiculous.

I understand paying excessive interest on money feels "unfair", however in a (relatively) free market, by virtue of the fact that both parties are voluntarily consenting to the arrangement, there is no such thing as fair. Because fair would be to assume that we know better than those involved in the transaction. Defining usury in my opinion, is therefore the same as trying to define "fairness".

To sum it up, I agree with him to an extent. The system is rotten, but he comes across as another misguided Socialist.

I admit, I haven't read all of his stuff, so I will be spending more time trying to understand it. I just wanted to see if anyone else had come across this and had integrated it with their own knowledge on free markets, cryptos, etc. Sometimes it's not worth reading through pages of stuff when another member here might sum it up very easily.

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[HabBear]

Usury is the practice of charging interest at "unreasonably high rates" for loaning money.

The Muslim religion also considers usury a sin, it's part of their Shari'a law...interest is illegal. The question is what does one consider "unreasonably high rates"...it's so subjective.

In the world the act of charging interest does keep people from building wealth. But who is responsible for that - is in the people lending the money or the people that are seeking loans to pay for things. I believe it's the latter, each of is responsible to ourselves to manage our money (and our expenses and income) responsibly. There are consequences to every decision. Each of is can be more wealthy if we don't borrow money, the trade off is that we have to be disciplined to save the money and go without the thing we want to buy until we've saved the money.

Usury is not the root of the worlds problems. Interest (even at fair rates) is a contributor to some problems. E.g., without interest (and therefore borrowing) we'd all have less stuff but we'd all be a bit more wealthy. Also, the muslim community would have one less thing to look down upon the Western community for.

[btcbug]

Usury is the practice of charging interest at "unreasonably high rates" for loaning money.

The Muslim religion also considers usury a sin, it's part of their Shari'a law...interest is illegal. The question is what does one consider "unreasonably high rates"...it's so subjective.

In the world the act of charging interest does keep people from building wealth. But who is responsible for that - is in the people lending the money or the people that are seeking loans to pay for things. I believe it's the latter, each of is responsible to ourselves to manage our money (and our expenses and income) responsibly. There are consequences to every decision. Each of is can be more wealthy if we don't borrow money, the trade off is that we have to be disciplined to save the money and go without the thing we want to buy until we've saved the money.

Usury is not the root of the worlds problems. Interest (even at fair rates) is a contributor to some problems. E.g., without interest (and therefore borrowing) we'd all have less stuff but we'd all be a bit more wealthy. Also, the muslim community would have one less thing to look down upon the Western community for.

Absolutely. Credit is a tool that as added immense value to the world. Pay interest on your credit or don't. It's a personal choice.

Is it currently illegal to extend interest free loans? To my knowledge, it's not. If it were, then once again I'd blame government intervention in the market for forcing people in one direction and granting the banks/loans industry a monopoly. Then in that case the author is justified in his anger against "usury", although it would still be misguided.

[merchantofzeny]

Sigh, I guess it's one of those utopianists again. Would any of you here lend me bitcoins without interest? I believe most of you would answer no. Why would anyone in their right minds loan out money without interest to strangers? I don't think lending for interest would disappear anytime soon. Even ancient people practiced it. If I remember correctly, there was one part in the Old Testament where it was said charge no interest to fellow Israelites but charge interest to gentiles.

For those who want money without having to be charged interest, I guess that's why you have stuff like Kickstarter. Just give your donors perks so that it was worth their while risking money on you.

[btcbug]

In his post, Rationalizing Usury: the Time Value Hoax, he talks about lending at zero interest.

https://realcurrencies.wordpress.com/2013/12/11/rationalizing-usury-the-time-value-hoax/

The idea that ‘the lender can’t use the money when he lends’ is the classical argument to rationalize Usury. But the bank doesn’t lend anything. It’s all credit by bookkeeping.

The ‘time value of money’ is the notion that holding money today is worth more than tomorrow. Between today and tomorrow there will be inflation and the missed opportunity of investing it.

It is at the core of modern theory of finance. It is the rationale for Usury, it can be heard each and every time when people defend it. It is the defining belief that creates acceptance for interest on loans of money.

Because Usury is supposed to be the compensation for the ‘lost’ ‘time value’ to the lender.

People will also point at risk, but there is no risk, there is collateral. Only bogus credit card debt and consumer loans are without collateral and the interest on these kinds of loans can be quite astonishing. But for serious credit, business loans, mortgages, there is collateral and there is no risk to the lender.

The fact that the time value idea still holds so much sway is quite astonishing, after 12 years of Truth Movement and mass exposure of fractional reserve banking.

Because the fact is: nowadays the creditors are usually banks and banks don’t lend anything. They create credit, by bookkeeping. That is what fractional reserve banking is: double-entry bookkeeping, in which debit and credit are implicit and automatic.

It is one thing with simply uninformed people, including most economists who are remarkable mainly for their ignorance in monetary matters. It is borderline bizarre with the Austrians, who are famous for their analysis of fractional reserve banking. But how can one on the one hand defend the ‘time value’ hoax and on the other hand explain that the banks create money and don’t have reserves for what they purportedly lend? It creates quite a cognitive dissonance.

The banks don’t lend and that’s why the ‘time value’ ‘argument’ is a total hoax. Utterly irrelevant. The bank wins nothing by creating money (other than the opportunity to extort the ‘borrower’, who doesn’t realize he isn’t borrowing anything real) and it gains nothing when the money is repaid: the bank takes it out of circulation and the money just ceases to exist as a concept. There is nothing in the books anymore.

The Austrians, and indeed also many paper money reformers, then go on to claim the problem is that the bank creates money! And that we will all feel much relieved when these are indeed savings when we borrow from the bank. Then our sense of ‘justice’ is satisfied.

This hoax is known as ‘full reserve banking‘ and nowadays there is a growing and unisono choir for ‘reform’ of banking based on this idea. The Financial Times’ Martin Wolf wants it. The Frankfurter Algemeine splashes a front page with this great idea. Dutch television is soon airing a major program defaming fractional reserve banking and hallowing our right to pay interest to ‘savers’ (the rich), instead of bookkeepers. The IMF is writing positively about it.

We don’t realize that this means that we will continue paying the same amount of money. Why aren’t we asking ourselves the question ‘but if the bank creates the money by bookkeeping, why am I paying interest?’

That is of course the rational response to the awareness that money is created at close to zero cost.

But even if money was printed debt-free or if we use Gold to back all the money, usury would still be both wrong and unnecessary. Because why do people save? To use it later! They don’t want to use it now, otherwise they would not save! So they lose absolutely zero by not being able to use it now if they lend it out. Not using it now but later is the essence of saving! And if we are not going to use it now, why not let somebody else use it in the mean time??

And even when we think of inflation we are wrong: most ‘inflation’ in the sense of rising prices since the war was caused by ever higher interest charges passed on through prices. It was not caused by money printing, the extra money was printed to pay off the usury. Interest bearing money cannot exist without eternally rising prices (or eternal deflation when the money supply cannot grow, as is the case with Gold). Interest-free money, on the other hand, will see stable prices if managed correctly.

So there is no ‘time value of money’. The rich are just insanely addicted to money and they want more. So they have spin doctors and useful idiots (‘economists’) think up excuses to explain it’s all so necessary and pay them a few hundred grand per year to have it look good.

Inconvenienced millionaires
Why do people have difficulty to see the iniquity of Usury? Someone recently said it is because people don’t see themselves as poor, but as ‘temporarily inconvenienced millionaires’. We are all raised to work hard and expect ‘success’. And ‘success’ is making a bundle and then retiring, having other inconvenienced millionaires sweat away to service the loans we will be giving them through our mutual funds.

But: working hard has little to do with it. There would be many millionaires if working hard was leading to wealth. It’s true that genius expresses itself through a combination of talent and hard work, but most of us are just beta males and the opulent want us to lick their boots, not to join their ranks.

We are raised to be ‘responsible’ adults and are told frugality and saving are a real part of that. We are learned the magic of compound interest at school. Nobody is telling us some other guys have picked up this trick a few centuries ago and have a bit of a head start, ripping society apart with the trillions that compound interest is now making them yearly. We are not told that paying compound interest to the rich is what is keeping us poor. No, morons like Peter Schiff now say we need to save more and we need incentives for that: higher interest rates. Peter Schiff is not explaining how people, who already lose more than half of their income to usury (partly passed on in prices and taxes), are going to save more when they have to pay even more interest to the rich, while they are already living from pay check to pay check, as most Americans are today. Even a good man like Paul Craig Roberts falls for this. It’s our economic illiteracy, not understanding money and Usury.

Because the simple fact is: by saying ‘I wouldn’t lend without interest’, we relegate ourselves and our brethren to interest slavery. Because we don’t lend, we borrow. By not lending to our brethren, they will not lend to us. We will have to go to the rich and to the banks. Why was the middle class sending their children to the bank for a mortgage when they had the assets to set them up with a good start in life with an interest-free mortgage? Why are people worrying about their savings today, while at the same time their children face foreclosure? Why are these savings not sunk into paying off the banks to save the wider family from the losses to usury?

We talk about ‘corruption’ in finance but we don’t see that finance itself is corrupt.

By saying: I want interest, we say it’s alright that we pay 300k interest over a 200k mortgage over 30 years. We say: it’s grand that I lose up to 40% of my income to usury passed on in prices even if I have zero debts. We say: how splendid the Government is losing up to 450 billion per year on servicing the National Debt. How great that there is income tax to pay off this money to the ueber-wealthy. We say: how magnificent that the ultra poor nations lose up to ten times more to usury on their foreign debts than they receive in development aid. We say: ah, just don’t get into debt, even when there would be no money if there was no debt. We say: yes, let’s destroy all economies with insane austerity, because the interest on this freshly printed money must be paid off.

Because, hey, I wouldn’t lend without interest!

It sounds like his argument is basically that people should just be more altruistic.

His point about collateral makes sense. So basically we save money, which isn't being used, so why not lend it? We have no risk, as there is collateral. Ok great, maybe interest isn't just about compensating for risk.

My biggest question is that if I have $100k lying around, why would I lend it for zero interest if I can invest in stocks, real estate, businesses, etc. All of which will pay me ROI. Businesses pay lenders with equity or interest. I don't get equity in borrowing somebody $20k to buy a car or house.

Conclusion
There is no ‘time value’ of money. It is all created by bookkeeping and the bank loses nothing. It creates the money when lending and retires it when repaid. But even when we talk about savings, there is no real ‘time value’.

Meanwhile, when we say ‘I wouldn’t lend without interest’ we are just parroting the line of the rich. We don’t realize that we are the ones paying and that we should be saying: “hey, I’m an interest-slave, how do we bust this ‘time value’ hoax, I need interest-free credit, I don’t want to be a slave.”

But for that we have to rid ourselves of the slaver in our selves. We must abandon the American Dream. That nightmare of striking it rich and putting our own boot on the face of our brother.

Credit can be interest-free if it’s mutual. I give you credit, if you give me some. We don’t even have to give up any real money: we can have a credit facility keep the books at cost price. Credit and Debit are just two sides of the same coin in double-entry bookkeeping.

Yes, it requires a little new thinking, a little shedding of wrong beliefs. But the poorest 80% (us) are paying up to 10 trillion in usury per year globally to the richest 10% and most of this money actually ends up with the 1%. That 1% now owns 43% of all assets in the world and the poorest 80% (us) own only maybe 10% if we’re lucky. Usury is what is causing this. Even if we have zero debts, 40% of our disposable income is lost to usury passed on in prices, so it has nothing to do with ‘personal responsibility’. It is the System that we prop up that is keeping us down.

It is when we start to see this, when we start to see what exactly is making these ghouls in London and Wall Street so incredibly wealthy, that we can begin to mend the destruction that the Money Power has been wreaking for many centuries now.

I agree with his points about the banks. Why are we paying them insane amounts of interest for printing money out of thin air? However, isn't that just a problem with the banking system? I also still think there is enough of a free market that banks have to compete. So if it were truly usury (absurdly high interest rates) then how would they compete? Shouldn't they be getting undercut by other wealthy people wanting to lend out their money? On top of that, I believe Martin Armstrong talks about how current rates are some of the lowest in recorded history.

[mizrak]

As far as i know in Sharia law usury is forbidden , so how will the economy would work?

1-According to scholars you should give poor people your %2.5 of your wealth after deducting your basic needs.  This would make more sense if you are million-er or billionaire
2-Help people in need , without waiting a financial benefit.
3-instead of giving money with interest ,  be a shareholder of a project you like.
4-be part of crowdfunding projects
5-Lend some money to the right people  without waiting an interest.
6-Do some charity work.

Then we would have second to best economical model

But most importantly whatever you do , be honest and helpful and be merciful to those who let you down during your life.

That`s all i know.

[dinofelis]

Interest is essentially the price of trust and liquidity (which is very similar !).

Why do I need a "loan" ?  What is a loan in fact ?  It is the exchange of a promise of mine against "money", which I will use to buy something ; say, a car.  Now why would the car salesman not accept my promise, but accept money ?  Because the car salesman has more trust in the money system than in me ; which indirectly means, that he has more trust in the issuer of the money (and in all people trusting this), than in me directly.  Note that the car salesman can perfectly accept my own promise, and doesn't need me to go getting a loan !  If I buy a car on credit directly with the car salesman, I have in fact short-circuited the lending circuit of money.  But in many cases, I need money and I can't buy it with my promise directly, because my promise is trusted less than money from a bank.

When I exchange a promise (to pay back) against money, I exchange a "low value trust" asset (my promise) against a "high value trust" asset (money).   The interest is the price I have to pay to the detainer of "trust" to use his trust.  His trusted issuing of money has more trust (and hence liquidity - no discussions to be had, everybody accepts it) than my issuing of promises ; so me exchanging my promise for his money is what I need to pay with interest.  

The free market sets this interest rate.  In as much as I think that in the end, his trust is over-rated, and the car salesman will accept my promise directly (direct credit with the car salesman !), I don't take his high-interest loan.  In as much as I really depend on his trusted money and nobody accepts my promises directly, I'm obliged to accept high interest.

In fact, the whole fiat system is based upon a layered system of trust like this, where money is issued on a higher layer (central bank, say) is issued against promises of higher quality down to promises issued by individuals against loans.

[davis196]

Interest-free credit is a total nonsense.Nobody would give a loan without any interest.
This guy doesn`t know anything about economics and finance.
Is this Usury thing some other altcoin?

[rokkiBalboa]

Interest-free credit is a total nonsense.Nobody would give a loan without any interest.
This guy doesn`t know anything about economics and finance.
Is this Usury thing some other altcoin?

Some banks have now provided a service to their customers, which enable the client to take a certain amount of money for six months, for example, with a return every month in equal parts. Maybe it was this moment?

[Kakmakr]

In a sense, "charging interest" is one of the core contributors to the debt problems of this world. The problem is not just the interest, but the exorbitant interest being charged on money you do not have. < Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, and holds reserves equal to a fraction of its deposit liabilities. Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank. >

This practice should be stopped and high interest rates and hidden administration fees should be addressed by our governments, but they prefer to look the other way and when the shit hits the fan, they bail out these banks with our tax money. ^grrrrrrrr^

[panju1]

Interest-free credit will work for banks / financial institutions when depositors stop expecting interest on their deposits. 
This will break the business model of banks and won't happen anytime in the real world. When there are people who are ready to pay interest for loans and there are people who are ready to give loans for interest, economists shouldn't be preaching to them.

[btcbug]

Interest-free credit is a total nonsense.Nobody would give a loan without any interest.
This guy doesn`t know anything about economics and finance.
Is this Usury thing some other altcoin?

Well to be fair, I think some people would lend money interest free. For example, I bought a car from my parents and instead of paying them they allowed me to make monthly payments with zero interest. Of course, they trust me and that's sort of the core of the issue I think, as @dinofelis said.

[Ayers]

Interest-free credit is a total nonsense.Nobody would give a loan without any interest.
This guy doesn`t know anything about economics and finance.
Is this Usury thing some other altcoin?

Well to be fair, I think some people would lend money interest free. For example, I bought a car from my parents and instead of paying them they allowed me to make monthly payments with zero interest. Of course, they trust me and that's sort of the core of the issue I think, as @dinofelis said.

but that is different, with your parents it's not only abotu trust but favor or gift, there is no same thing when you deal with a stranger, i also give money to my family and i don't want any interests for that of course, it's my family, would be terrible to demand interests from that, in some case i don't even want the money back

[btcbug]

Interest is essentially the price of trust and liquidity (which is very similar !).

Why do I need a "loan" ?  What is a loan in fact ?  It is the exchange of a promise of mine against "money", which I will use to buy something ; say, a car.  Now why would the car salesman not accept my promise, but accept money ?  Because the car salesman has more trust in the money system than in me ; which indirectly means, that he has more trust in the issuer of the money (and in all people trusting this), than in me directly.  Note that the car salesman can perfectly accept my own promise, and doesn't need me to go getting a loan !  If I buy a car on credit directly with the car salesman, I have in fact short-circuited the lending circuit of money.  But in many cases, I need money and I can't buy it with my promise directly, because my promise is trusted less than money from a bank.

When I exchange a promise (to pay back) against money, I exchange a "low value trust" asset (my promise) against a "high value trust" asset (money).   The interest is the price I have to pay to the detainer of "trust" to use his trust.  His trusted issuing of money has more trust (and hence liquidity - no discussions to be had, everybody accepts it) than my issuing of promises ; so me exchanging my promise for his money is what I need to pay with interest.  

The free market sets this interest rate.  In as much as I think that in the end, his trust is over-rated, and the car salesman will accept my promise directly (direct credit with the car salesman !), I don't take his high-interest loan.  In as much as I really depend on his trusted money and nobody accepts my promises directly, I'm obliged to accept high interest.

In fact, the whole fiat system is based upon a layered system of trust like this, where money is issued on a higher layer (central bank, say) is issued against promises of higher quality down to promises issued by individuals against loans.

I think that's a great way of stating it.

The author spoke of the theory of "time-value" and also "risk", as two reasons for interest. He says time-value is non-sense:

There is no ‘time value’ of money. It is all created by bookkeeping and the bank loses nothing. It creates the money when lending and retires it when repaid. But even when we talk about savings, there is no real ‘time value’.

Of course for banks printing money that may be true. For people with savings, afaics, he's saying the fact we're saving means we're not presently using, therefore can lend to somebody who will use.

Because why do people save? To use it later! They don’t want to use it now, otherwise they would not save! So they lose absolutely zero by not being able to use it now if they lend it out. Not using it now but later is the essence of saving! And if we are not going to use it now, why not let somebody else use it in the mean time??

What are your thoughts on that? Personally, there are many things I could do with my money. Invest it real estate, stocks or businesses, where I'd earn ROI or receive equity for example. Why would I lend it for nothing? (exceptions being those close to me)

To me his interest free credit idea is a niche. I'd like to see it be successful, but I have my doubts of it becoming very large. It would be nice to see, as I think there would be greater accountability when dealing with already established relationships vs large faceless banks.

Are you familiar with Ripple? I think the Ripple network sort of technologically represents this network of trust idea, although I don't understand Ripple that well. I know that you can extend certain amounts of trust (credit) to people, who in turn trust others.

[merchantofzeny]

Interest-free credit is a total nonsense.Nobody would give a loan without any interest.
This guy doesn`t know anything about economics and finance.
Is this Usury thing some other altcoin?

Well to be fair, I think some people would lend money interest free. For example, I bought a car from my parents and instead of paying them they allowed me to make monthly payments with zero interest. Of course, they trust me and that's sort of the core of the issue I think, as @dinofelis said.

They're family sir. Banks deal with strangers. This is why I think there should be more focus on platforms similar to Kickstarter and Indiegogo. By spreading out the source of funding, the borrower can get a larger amount of money and lenders don't take much risk because they only give a small amount of money. It's this moments that I wish I can as 50 cents from each working person on the planet. 

To bad we can't have microtransactions now. I while ago I was thinking of sending a Youtuber a dollar but when I checked the total cost in the exchange, the fee was around 87 cents. Ridiculous. I was late to bitcoins, I've heard it was a good platform for donations in the past.

[btcbug]

Interest-free credit is a total nonsense.Nobody would give a loan without any interest.
This guy doesn`t know anything about economics and finance.
Is this Usury thing some other altcoin?

Well to be fair, I think some people would lend money interest free. For example, I bought a car from my parents and instead of paying them they allowed me to make monthly payments with zero interest. Of course, they trust me and that's sort of the core of the issue I think, as @dinofelis said.

They're family sir. Banks deal with strangers. This is why I think there should be more focus on platforms similar to Kickstarter and Indiegogo. By spreading out the source of funding, the borrower can get a larger amount of money and lenders don't take much risk because they only give a small amount of money. It's this moments that I wish I can as 50 cents from each working person on the planet. 

To bad we can't have microtransactions now. I while ago I was thinking of sending a Youtuber a dollar but when I checked the total cost in the exchange, the fee was around 87 cents. Ridiculous. I was late to bitcoins, I've heard it was a good platform for donations in the past.

Of course, I was just pointing out that, "nobody would give a loan without interest" is false. It has to do with trust.

I think all of these new platforms will be good. The more choices the better.

[minor-transgression]

Thanks for the link, there seems to be some interesting reading there.

To answer your first question, Usury is a financial system whereby money,
debt and credit have an attached interest burden. Some on this thread seem
shocked by the idea that money could be lent without interest. That, in
itself, is interesting, especially since many people view the current
financial system as entirely rotten, but cannot conceive any alternative.

I leave it to the reader to continue his education in economics. I'll
suggest you might arrive here: If you can control the price of credit
(interest rates) tomorrow, or in three month's time, then you are in a
position to make vast profits from bets on the trillions in derivatives
bought and sold every day in the credit markets.   

Here's another question for you: Why would anyone cancel a debt?

[btcbug]

Thanks for the link, there seems to be some interesting reading there.

To answer your first question, Usury is a financial system whereby money,
debt and credit have an attached interest burden.

Well that is a slightly different definition than I'm familiar with (lending money at high rates), but probably makes more sense as at least it's more clearly defined

Some on this thread seem
shocked by the idea that money could be lent without interest. That, in
itself, is interesting, especially since many people view the current
financial system as entirely rotten, but cannot conceive any alternative.

True

I leave it to the reader to continue his education in economics. I'll
suggest you might arrive here: If you can control the price of credit
(interest rates) tomorrow, or in three month's time, then you are in a
position to make vast profits from bets on the trillions in derivatives
bought and sold every day in the credit markets.  

Just because you can control interest rates doesn't necessarily mean interest is the root of the problem. In my view, the banks are essentially granted a monopoly by the state. Lack of a free market in currencies seems to be the bigger issue.

I just don't see a situation where there would be zero demand to borrow and to pay for the option with interest. It seems like a reasonable option imo. If it's a free market in lending, then I also don't see any issue with it between two consenting parties. That's why lending at high rates just seems like a non-issue to me. I maybe don't prefer it, but it's certainly not immoral as people claim.

Here's another question for you: Why would anyone cancel a debt?

I'm not sure what you're asking. I guess if someone defaults on their debt?

[Przemax]

Every loaning on % has one mathematical problem. You are lending 100% of something and you expect the 105% of the same. Where are you going to take this 5% from? Many would say that they will take that money from the market, or from the estimated market growth. That kind of behaviour is called an exteriorization of the costs. The cost of transaction between the two individuals are being financed by the society and its need of growth to make the loan even physicly possible without causing the deflation.

You can not have a healthy economy where everybody else but me must pay the costs. Sooner or later such a kicking away the ball must end bad as there will be noone else to exploit. Thats the moment when the empires, by the way always builded on the usury, fail.

[btcbug]

Every loaning on % has one mathematical problem. You are lending 100% of something and you expect the 105% of the same. Where are you going to take this 5% from? Many would say that they will take that money from the market, or from the estimated market growth. That kind of behaviour is called an exteriorization of the costs. The cost of transaction between the two individuals are being financed by the society and its need of growth to make the loan even physicly possible without causing the deflation.

You can not have a healthy economy where everybody else but me must pay the costs. Sooner or later such a kicking away the ball must end bad as there will be noone else to exploit. Thats the moment when the empires, by the way always builded on the usury, fail.

It sounds like you're talking about the issue of debt based money. If the FED creates $100 from nothing, then loans it to the US government at 5% interest or whatever, then a debt has been created on the books. The government then has to pay back $100 plus $5 interest, so where does the additional $5 come from when? Well, since the government doesn't have fiat money they'd need to have it created for them, but again, there would be additional interest. So yes, I agree it's a fucked up system.

I believe much of the national "debt" is simply just money supply and it was never intended to be paid off. In fact, as you said, it can't be. Why do they always talk about the national debt as if it is something that we owe? If the national debt was completely paid off (which is physically impossible) it would wipe out all of the currency supply.

Some of it was legitimately borrowed from the accumulated wealth of other governments, investors, etc., but I think printed money vs actual borrowed money are two different things with no real distinction and simply lumped together as the national debt.

If you legitimately save $10,000 and lend me $5000 at 5% per year, then that is a different idea. The additional 5% interest I pay you comes from my future productivity. It's no different than if you have a stockpile of Oranges. I can consume a few of your Oranges now without a problem, because next year I will grow a surplus from which I will pay you back.