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Forbidden Usury

Dazz
Posts: 1,163
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9/24/2015 10:35:58 AM
Posted: 1 year ago
As in Islam, it's forbidden, what's the religious stance over usury in Christianity or Judaism? Actually I'm more interested in its economical impact [for research] than to know how religious you're personally.
Remove the "I want", remainder is the "peace". ~Al-Ghazali~
"This time will also pass", a dose to cure both; the excitement & the grievance. ~Ayaz~
Dazz
Posts: 1,163
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10/7/2015 2:46:18 PM
Posted: 1 year ago
Bump.

No answer?
Remove the "I want", remainder is the "peace". ~Al-Ghazali~
"This time will also pass", a dose to cure both; the excitement & the grievance. ~Ayaz~
Skepsikyma
Posts: 8,286
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10/7/2015 3:02:23 PM
Posted: 1 year ago
At 9/24/2015 10:35:58 AM, Dazz wrote:
As in Islam, it's forbidden, what's the religious stance over usury in Christianity or Judaism? Actually I'm more interested in its economical impact [for research] than to know how religious you're personally.

It was once banned in Christianity, and that fact was actually a big factor in Jews becoming involved in banking, and played into the roots of European anti-Semitism. The Vatican moderated over time (by the high Middle Ages), eventually allowing basically anything by only banning extortionate interest rates, which isn't really defined anywhere. Luther and Zwingli also condemned it (playing in to Luther's rabid anti-Semitism), but the condemnation didn't last. Switzerland became a banking capital, and Luther's influence gradually waned in Germany in the face of economic reality.
"The Collectivist experiment is thoroughly suited (in appearance at least) to the Capitalist society which it proposes to replace. It works with the existing machinery of Capitalism, talks and thinks in the existing terms of Capitalism, appeals to just those appetites which Capitalism has aroused, and ridicules as fantastic and unheard-of just those things in society the memory of which Capitalism has killed among men wherever the blight of it has spread."
- Hilaire Belloc -
Geogeer
Posts: 4,280
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10/7/2015 3:28:35 PM
Posted: 1 year ago
At 10/7/2015 2:46:18 PM, Dazz wrote:
Bump.

No answer?

http://canonlawmadeeasy.com...

Basically, it is a topic that has been grappled with for centuries. However, the summation is that the lender should be allowed to make a reasonable profit for his risk. However, the weakest people in society should be protected against being taken advantage of and being placed in a position of perpetual debt due to unreasonable interest rates.
SavvoyBrown
Posts: 11
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10/8/2015 5:33:57 AM
Posted: 1 year ago
At 9/24/2015 10:35:58 AM, Dazz wrote:
As in Islam, it's forbidden, what's the religious stance over usury in Christianity or Judaism? Actually I'm more interested in its economical impact [for research] than to know how religious you're personally.

Normally it would be used to cover the cost of inflation and to compensate for the risk factor. But things like credit cards which can charge large amounts is shameful. They trap people into it and hit them with fees and penalties. We used to guard against it to some degree, but now the laws allow for 30% or more in some cases! People can't get out of that kind of debt and the credit card companies know it. Scriptures refer to that kind of treatment of others as "digging a pit for your neighbor".
Dazz
Posts: 1,163
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10/8/2015 8:51:58 AM
Posted: 1 year ago
At 10/8/2015 5:33:57 AM, SavvoyBrown wrote:
At 9/24/2015 10:35:58 AM, Dazz wrote:
As in Islam, it's forbidden, what's the religious stance over usury in Christianity or Judaism? Actually I'm more interested in its economical impact [for research] than to know how religious you're personally.

Normally it would be used to cover the cost of inflation1 and to compensate for the risk factor2. But things like credit cards which can charge large amounts is shameful. They trap people into it and hit them with fees and penalties. We used to guard against it to some degree, but now the laws allow for 30% or more in some cases! People can't get out of that kind of debt and the credit card companies know it. Scriptures refer to that kind of treatment 3 of others as "digging a pit for your neighbor".

1) Interest is to compensate cost of inflation, that's a myth, because inflation is a price bubble whose cycle is short-term [manage the unbalanced cost or demand]. So contrarily, it's the interest rate growth that amplifies the inflation further, because the cost of investment has now been bumped up.

2) The risk factor_ default of the debtor, can be offset through asset-backing or personal guarantees, whereas naming interest charge as risk shield is a farce.

3) As per definition of usury, I think that's perfectly fit for "Interest". [Anything excess over your debt without engaging in any economic activity on your part.]
Remove the "I want", remainder is the "peace". ~Al-Ghazali~
"This time will also pass", a dose to cure both; the excitement & the grievance. ~Ayaz~
Dazz
Posts: 1,163
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10/8/2015 9:16:53 AM
Posted: 1 year ago
At 10/7/2015 3:28:35 PM, Geogeer wrote:
At 10/7/2015 2:46:18 PM, Dazz wrote:
Bump.

No answer?

http://canonlawmadeeasy.com...

Basically, it is a topic that has been grappled with for centuries. However, the summation is that the lender should be allowed to make a reasonable profit for his risk.
Look. Risk should always capture profit is not true. And interest can reverse the risk is a fallacy. What would you get if the debtor defaults [after some periods]? You loose your principle, and what you get is a meager %age of interest which you have received in previous periods luckily, say it more or less, but it normally don't surpass your principle amount to offset the default risk of principle. So through interest you actually can't withstand the default if it occurs. And to add, what if debtor get defaulted not even able to pay your interest payments? [leave aside the principle].

Secondly if you say, interest is the cost of investment that you forgo by lending your savings [profit that you could have gained if had invested your lending amount], this argument is not valid too [in all cases], because debt without interest would be same as your money in your drawer or bank account, you can still loose your money value via theft, accident, business loss or inflation, so risk exists here too, what to charge the debtor for, then?

However, the weakest people in society should be protected against being taken advantage of and being placed in a position of perpetual debt due to unreasonable interest rates.
And how to actually achieve that is important.
Remove the "I want", remainder is the "peace". ~Al-Ghazali~
"This time will also pass", a dose to cure both; the excitement & the grievance. ~Ayaz~
Dazz
Posts: 1,163
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10/8/2015 9:26:46 AM
Posted: 1 year ago
At 10/7/2015 3:02:23 PM, Skepsikyma wrote:
At 9/24/2015 10:35:58 AM, Dazz wrote:
As in Islam, it's forbidden, what's the religious stance over usury in Christianity or Judaism? Actually I'm more interested in its economical impact [for research] than to know how religious you're personally.

It was once banned in Christianity, and that fact was actually a big factor in Jews becoming involved in banking, and played into the roots of European anti-Semitism. The Vatican moderated over time (by the high Middle Ages), eventually allowing basically anything by only banning extortionate interest rates, which isn't really defined anywhere. Luther and Zwingli also condemned it (playing in to Luther's rabid anti-Semitism), but the condemnation didn't last. Switzerland became a banking capital, and Luther's influence gradually waned in Germany in the face of economic reality.
So you implying that Jews inflated interest and Christian world couldn't resist it?
Remove the "I want", remainder is the "peace". ~Al-Ghazali~
"This time will also pass", a dose to cure both; the excitement & the grievance. ~Ayaz~
bulproof
Posts: 25,274
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10/8/2015 1:17:00 PM
Posted: 1 year ago
At 10/8/2015 9:26:46 AM, Dazz
Explain the Islamic money lending regime, does it involve an agreement regarding how much money will be repaid compared to the amount borrowed or does it involve the lender receiving his stake back and also collecting 50% of the borrower's profits and if so for how long does he demand that share?
Religion is just mind control. George Carlin
Dazz
Posts: 1,163
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10/8/2015 4:10:15 PM
Posted: 1 year ago
At 10/8/2015 1:17:00 PM, bulproof wrote:
At 10/8/2015 9:26:46 AM, Dazz
Explain the Islamic money lending regime, does it involve an agreement regarding how much money will be repaid compared to the amount borrowed or does it involve the lender receiving his stake back and also collecting 50% of the borrower's profits and if so for how long does he demand that share?

Probably the agreement you're referring to is Ijara, where shareholders participate; one with capital and one with expertise to manage, & profit ratio is prefixed on a mutual consent level [whereas losses are borne by the capital holder, thus it's different from usury]. About time period, that's dependent upon contract parties' consent.
Remove the "I want", remainder is the "peace". ~Al-Ghazali~
"This time will also pass", a dose to cure both; the excitement & the grievance. ~Ayaz~
Dazz
Posts: 1,163
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10/8/2015 4:12:18 PM
Posted: 1 year ago
Probably the agreement you're referring to is Mudarba, where shareholders participate; one with capital and one with expertise to manage, & profit ratio is prefixed on a mutual consent level [whereas losses are borne by the capital holder, thus it's different from usury]. About time period, that's dependent upon contract parties' consent.

*Correction
Remove the "I want", remainder is the "peace". ~Al-Ghazali~
"This time will also pass", a dose to cure both; the excitement & the grievance. ~Ayaz~
Skepsikyma
Posts: 8,286
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10/8/2015 11:04:32 PM
Posted: 1 year ago
At 10/8/2015 9:26:46 AM, Dazz wrote:
At 10/7/2015 3:02:23 PM, Skepsikyma wrote:
At 9/24/2015 10:35:58 AM, Dazz wrote:
As in Islam, it's forbidden, what's the religious stance over usury in Christianity or Judaism? Actually I'm more interested in its economical impact [for research] than to know how religious you're personally.

It was once banned in Christianity, and that fact was actually a big factor in Jews becoming involved in banking, and played into the roots of European anti-Semitism. The Vatican moderated over time (by the high Middle Ages), eventually allowing basically anything by only banning extortionate interest rates, which isn't really defined anywhere. Luther and Zwingli also condemned it (playing in to Luther's rabid anti-Semitism), but the condemnation didn't last. Switzerland became a banking capital, and Luther's influence gradually waned in Germany in the face of economic reality.
So you implying that Jews inflated interest and Christian world couldn't resist it?

No, rather that Western society needed usury as mercantile societies developed, and that Jews, being non-Christians, provided that service even as they were reviled for doing so by the powers that be.
"The Collectivist experiment is thoroughly suited (in appearance at least) to the Capitalist society which it proposes to replace. It works with the existing machinery of Capitalism, talks and thinks in the existing terms of Capitalism, appeals to just those appetites which Capitalism has aroused, and ridicules as fantastic and unheard-of just those things in society the memory of which Capitalism has killed among men wherever the blight of it has spread."
- Hilaire Belloc -
Geogeer
Posts: 4,280
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10/10/2015 11:44:53 AM
Posted: 1 year ago
At 10/8/2015 9:16:53 AM, Dazz wrote:
At 10/7/2015 3:28:35 PM, Geogeer wrote:
At 10/7/2015 2:46:18 PM, Dazz wrote:
Bump.

No answer?

http://canonlawmadeeasy.com...

Basically, it is a topic that has been grappled with for centuries. However, the summation is that the lender should be allowed to make a reasonable profit for his risk.
Look. Risk should always capture profit is not true. And interest can reverse the risk is a fallacy. What would you get if the debtor defaults [after some periods]? You loose your principle, and what you get is a meager %age of interest which you have received in previous periods luckily, say it more or less, but it normally don't surpass your principle amount to offset the default risk of principle. So through interest you actually can't withstand the default if it occurs. And to add, what if debtor get defaulted not even able to pay your interest payments? [leave aside the principle].

That is all part of the calculation. It is why when I take out a mortgage the bank will give me a good rate up to 75% of the value of my house. Beyond that it gets more expensive. The bank is sure it can take my house and sell it and get at least 75% of the current market value for it. I buy a car, the bank wants a higher rate of return, because cars depreciate much quicker and minor damage can have a major effect on the resale price.

Under the modern forms of muslim lending it is the same, just hidden. If I want a loan to go and buy a car, the lender will buy the I want car, mark it up by whatever percentage is agreed upon and then sell it to me at a higher price. I make payments until I have payed off the higher price. If I cannot make my payments, the car is repossessed and sold by the lender. It is the same thing.

Otherwise, nobody would lend out money. Why take any risk when I can invest the money in myself?

Secondly if you say, interest is the cost of investment that you forgo by lending your savings [profit that you could have gained if had invested your lending amount], this argument is not valid too [in all cases], because debt without interest would be same as your money in your drawer or bank account, you can still loose your money value via theft, accident, business loss or inflation, so risk exists here too, what to charge the debtor for, then?

So, instead of putting my money in the bank and letting him use my money to buy a house, I could buy the house and rent it out to him. This is because I have the capital and he needs somewhere to sleep. Since he cannot raise sufficient funds to pay the full amount of a roof over his head for 30 years he must pay me instead. I get my money either way and he is without assets - in fact he has to worry about his money, that he is saving for a house, of being stolen.

The changing nature of the world, technology and business necessitated different forms of financial instruments. This has created wealth. Heck we even have bankruptcy laws and the likes which protect the weakest and most unfortunate. Back in biblical times, when one had debts they could not pay, they had to sell themselves into slavery.

However, the weakest people in society should be protected against being taken advantage of and being placed in a position of perpetual debt due to unreasonable interest rates.
And how to actually achieve that is important.

Yes it is.
Dazz
Posts: 1,163
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10/10/2015 5:49:55 PM
Posted: 1 year ago
At 10/10/2015 11:44:53 AM, Geogeer wrote:

That is all part of the calculation. It is why when I take out a mortgage the bank will give me a good rate up to 75% of the value of my house. Beyond that it gets more expensive. The bank is sure it can take my house and sell it and get at least 75% of the current market value for it. I buy a car, the bank wants a higher rate of return, because cars depreciate much quicker and minor damage can have a major effect on the resale price.

Under the modern forms of muslim lending it is the same, just hidden. If I want a loan to go and buy a car, the lender will buy the I want car, mark it up by whatever percentage is agreed upon and then sell it to me at a higher price. I make payments until I have payed off the higher price. If I cannot make my payments, the car is repossessed and sold by the lender. It is the same thing.
Nominal difference that I hope you can conceive is mode of the transaction. One is usury where money buys money in terms of 'interest', other is sale of car.

So to explain, real difference is of ownership and risk. In a sale case, ownership relies with selling bank until execution, so if buyer is paying higher price, bank is also at stake. What if after signing the contract, price of that car bumps up in market too high to cause a potential loss to bank & margin profit to buyer? What if car is destroyed or stolen [accidently in good faith] before due date of ownership transfer to purchaser?

On contrary, in conventional car financing, bank has no concern to market price or cars, bank makes you liable to repay principle plus interest [loan], indifferent to what happens to your investment. In case borrower defaults on underlying security, buyer is held liable for more than what he got as loan, & in case of absolute default, bank gets nothing back. So interest neither hedge default risk for bank nor provides security to borrower against investment risk. In contrast, in Murabaha [sale contract], risk has a definite measurement known to both parties.


Otherwise, nobody would lend out money. Why take any risk when I can invest the money in myself?
Good. It would boost investment among risk averse mindsets. Lending would be done based upon risk-sharing basis by risk-takers only. And risk-indifferent people [philanthropic in psychological terms] would lend regardless. But if you lend money for interest & borrower lend it further for next higher interest & process continues, you loose a huge bunch of money concentrated where the burst of interest balloon in chain becomes inevitable. And economy remains void of any effective resource employment.

So, instead of putting my money in the bank and letting him use my money to buy a house, I could buy the house and rent it out to him. This is because I have the capital and he needs somewhere to sleep. Since he cannot raise sufficient funds to pay the full amount of a roof over his head for 30 years he must pay me instead. I get my money either way and he is without assets - in fact he has to worry about his money, that he is saving for a house, of being stolen.

The changing nature of the world, technology and business necessitated different forms of financial instruments. This has created wealth. Heck we even have bankruptcy laws and the likes which protect the weakest and most unfortunate. Back in biblical times, when one had debts they could not pay, they had to sell themselves into slavery.

However, the weakest people in society should be protected against being taken advantage of and being placed in a position of perpetual debt due to unreasonable interest rates.
And how to actually achieve that is important.

Yes it is.
Remove the "I want", remainder is the "peace". ~Al-Ghazali~
"This time will also pass", a dose to cure both; the excitement & the grievance. ~Ayaz~