To begin with, there are bigger ramifications to a top-down central banking structure than just the employment of usury. The method of employment - the so-called interest rate cycle - especially the expansion and contraction of the money supply... is far more devastating than the rates of interest on the economy. Worse yet, the employment of banking credit as currency, floating in value, destroys the ability of corporations to store value in the money; making trade haphazard and also eating away at profits every day it takes to finish a job... the main culprit that causes poor construction and half finished projects. On top of all that, the central banking model counters cost inflation with higher interest rates... so every time someone does manage to turn a profit, the cost of money rises to eat away that profit. So there is plenty to decry about the currency without whining about usury. But if you surf the internet, you will discover a multitude of rants against usury, usually preaching that usury is an evil that can not be contained and demands payment from money that does not exist.

If you go back in time, you will discover money systems that had no usury. But you will notice that they were set in cultures that were stoically opposed to open mindedness, features of the dark ages, feudal caste systems that never allowed upward mobility for individuals born into it. The money was stable, the culture was stable, and life was good... for the rich. The industrial revolution not only plowed under the feudal system and turned up new opportunities for talented people, it also raised up fractional banking which overthrew the rigid feudal money operations of the kings and Teutonic knights. Unfortunately, the bank credit money was so destructive, it eventually overthrew the precious metals it was based upon and this led to this giant money expansion that has popped in our collective faces... with no anchor to hold back the deflation. But, most of the arguments against usury on the internet are grounded in the stable manner of money that has no usury, and the mathematical impossibility of paying interest.

What gets lost in studying the tree of usury is the forest of the currency. Usury is part of a currency that folds up when the Loan contract that formed the money is cancelled. So, the mathematical idea that usury can not be paid is like an integral based equation that describes the arc of a tossed ball; in the real world too many other factors enter in to interact with the ball and it never travels precisely the way the math says it will. Usury is pushed, pulled, destroyed, re-created, a gazillion times, so no one really knows what the amounts of interest paid add up to in our economy each year. All we can do is generalize about it's effects. Along that lines, we tend to focus on one area and look at how interest is applied and what effect it is having. Here's an article that looks at how the Fed operates, making the point that their combative use of interest is directed against Labor.

There's the anti-Semite rant that usury was against the Law for jews to charge their fellow Israelites but legal to charge against the gentiles. That is an accurate reading of the Torah, but the rant fails to take in account that Jesus was a jew and Jesus told one parable where a slothful servant in the church age was punished at the judgment seat of Christ for hiding his talent (representing his measure of the gift of the holy spirit) instead of puting it to work. Jesus concludes that the servant should have at least brought his talent to the money changes so that his master could have collected the interest. whoa! so much for Jesus being anti-usury.

My own collective thoughts on usury is that it is a tool; it can be used to build up and it can be used to tear down. The money handling in today's world charges too much interest and it has thrown our money markets into chaos. Corporate greed has done a lot of damage to world banking. Our recent housing bubble was the product of interest rates mishandled. But the bigger problem is the very foundation of the housing market is askew because mortgage notes are charging interest in excess of 100%. All of my fixes, or attempts at fixes, employ Loans with interest structures that are somehow contained to reasonable levels. Even preaching this much against usury will cause someone to scream anti-Semite! We are all going to suffer a lot of pain from stupid Loan structures until the day comes when the idiots in power in our central banks finally come to grip with the need to scale back all the interest in our banking systems. This is not a religious matter, only the ignorance of scripture and the ignorance of the history of money can allow someone to think that money is jewish or christian or muslem in nature. Attaching religious fervor to usury has halted any progress that otherwise could be made in prudent banking.... progress that might have balanced the money with the economies it regulates. It is the gross imbalance between those two that is destroying the health of our economy. Reeling in interest is one item that was left undone... and by that, I mean, restructuring interest in the many forms it takes throughout the market. Usury by itself is not the problem, but the abuse of usury has become a big problem.

Usury should be in perfect harmony with growth, and to be fair, it should lag growth. But we have Loan structures that calculate usury into the future and then apply it as if it was already accumulated... making a mockery of the word "interest" because the time has not passed that produced the interest. In other words... what we have is no longer usury, we just go on using that word, but the practices of today's market make the idea of usury obsolete. Or we have interest being charged ten times in excess of growth; either way, we have created a monster that is destroying the fabric of society and tearing down the economy. It isn't a jewish thing, it is a banking thing.... and it is the culprit behind many of the evils happening in the world at large. Our leaders have utterly failed us, they are not regulating banking, banking is regulating them, and the banks have utterly failed themselves. It is a giant cluster fuck and the ignorance of usury is one of the reasons it continues to be such a mess.

Usury is what you pay to use money. In order for that to be profitable, the use of money has to be profitable... if the use of money is not turning a profit, usury is a moot point... that's where stagflation has brought us. If we ever fix the money system and rebuild the corporate ventures around it, we will need to adjust interest structures to reasonably allign with the use of money. We need to see usury for what it is; a tool. Usury is a tool that needs to be closely monitored, once the usury charged loses a proper relationship with the return of money in a market place, someone is cheating someone. Usury should not eat up all the profit in doing business. Neither should the accumulated usury of banks, corporations, taxes, brokers, et all, add up to something ridiculously larger than a fair portion of the laborwer's yearly income. Usury demands fairness. The abuse of usury exposes greed. When a culture has so much greed and unfairness, it is bound to be devisive about usury. Usury exposes our collective sins; maybe that's why we hate talking about or adjusting usury. Unfortunately, only the folks who are abusing usury know all about it; so it is an issue that gets buried and gets attacked when you look into it. Usury is the active practice in place in the market of the moment, so it changes at the speed of light, but it is also the structure of those practices, which, amazingly, have not changed hardly at all, even though the market has changed much.

Fascinating post. Thanks.

That was an incredible rant. I want to ask you one simple question:

Do you think the expansion of the money supply over the last 30 years or so helped or hurt the global economy?

...yes, the expansion built up the global economy, but expansions of money supply always build in the short term, yet the same global economy that was built by that expansion is now going into a severe global recession which is absolutely due to the contraction in money supply brought on by the expansion. You want to look at the total effect of that expansion on the global economy which will include a time of great tribulation already taking hold. Overall, it is a sad condition to be watching periods of recession and loss of work even while the earth's population was growing. The only reason for those contractions is the design of central banking currency; any type of money would have expanded, but this super high interest money over expanded and did that in cycles like clock work and resulted in contractions due entirely to the performance of the currency... and again, those contractions happened in cycles like clock work.

So the best answer to your question would have to be; hey, this was the only money in the banks... the better question should be to ask what could have been possible with money that stored value and still met the supply needs of world trade? Two steps forward and three steps back is not sterling progress for a world that was growing exponentially in population over the same 30 years.

Nice post in many ways, showing your strengths as a writer: compassionate, broadminded, historical, see the forest for the trees, justice-oriented. You seem to admit the class-warfare element in economic trade, of which usury may be a part. The Jews have been associated with usury in the mass mind of the West, as have the Chinese in the East. To this day Jews do run a lot of the banks, central banks, and world banks. Many are greedy, a few are benevolent, and some are both. You say that usury should reflect a balance in society and should be controlled, but this is rarely possible. Indeed, usury seems to have gotten worse; while banks before were limited to 18% interest on credit cards, now they may charge 28% or 35% per annum. But compare even the latter to the informal loan sharks of yore--who would break your fingers if you didn't pay them--or perhaps even go after your family. The usurer usually ends up destroying his debtor, and thus the debt. It is short-sighted.

Woolley:

That was an incredible rant. I want to ask you one simple question....

Ironic, considering that the TP doesn't even understand the basics of simple interest......

He uses the term "usury" as a substitute for interest. I was pretty sure my definition of this word was different so I looked it up. Here it is:

USURY - The civil or criminal wrong of charging interest that is beyond the legal limit set by a State. The illegal profit which is required and received by the lender of a sum of money from the borrower for its use. In a more extended and improper sense, it is the receipt of any profit whatever for the use of money: it is only in the first of these senses that usury will be here considered.

To constitute a usurious contract the following are the requisites: 1. A loan express or implied. 2. An agreement that the money lent shall be returned at all events. 3. Not only that the money lent shall be returned, but that for such loan a greater interest than that fixed by law shall be paid.

There must be a loan in contemplation of the parties and if there be a loan, however disguised, the contract will be usurious, if it be so in other respects. Where a loan was made of depreciated bank notes to be repaid in sound funds, to enable the borrower to pay a debt he owed dollar for dollar, it was considered as not being usur-ious. The bona fide sale of a note, bond or other security at a greater discount than would amount to legal interest, is not per se, a loan, although the note may be endorsed by the seller, and he remains responsible. But, if a note, bond; or other security be made with a view to evade the laws of usury, and afterwards sold for a less amount than the interest, the transaction will be considered a loan and a sale of a man's own note, endorsed by himself, will, be considered a loan. lt is a general rule that a contract, which, in its inception, is unaffected by usury, can never be invalidated by any subsequent usurious transaction. On the contrary, when the contract was originally usurious, and there is a substitution by a new contract, the latter will generally be considered usurious.

There must be a contract for the return of the money at all events; for if the return of the principal with interest, or of the principal only, depend upon a contingency, there can be no usury; but if the contingency extend only to interest, and the principal be beyond the reach of hazard, the lender will be guilty of usury, if he received interest beyond the amount allowed by law. As the principal is put to hazard in insurances, annuities and bottomry, the parties may charge and receive greater interest than is allowed by law in common cases, and the transaction will not be usurious.

To constitute usury the borrower must not only be obliged to return the principal at all events, but more than lawful interest: this part of the agreement must be made with full consent and knowledge of the contracting parties. When the contract is made in a foreign country the rate of interest allowed by the laws of that country may be charged, and it will not be usurious, although greater than the amount fixed by law in this.

are you advocating a return to the Gold Standard? You sound like Ron Paul. I am not for or against it myself. Should money have intrinsic value? My friend in Pakistan told me the exact same thing yesterday. He said that money used to worth exactly what it said because it was made of something of value, gold, silver or copper. Now, the value of money is determined by economic factors which you mentioned in your post as being the source of these massive boom and bust cycles. I don't know evough about this to say one way or the other myself.

all you have to do is say that every single time, just like you do, now you have your solution that covers every post and every issue perfectly.... you get to squat and piss on the thread and you don't even have to know what it was about.

usury means interest; it has meant interest for 3000 years. What the Law says about interest is if the usury is breaking the Law. Sure a contract is usurious by definition of a statute or act that was passed to deal with high interest... and your point was?

...to return to money. But your friend is correct, unless money has intrinsic value, it isn't money; it may be legal currency, it just isn't money. But fiat paper currency can store value if it is handled properly. the FED sought to build a currency that stored value, the dollar originally was redeemable for gold or silver, hence it had the ability to store value. Even after the dollar was not redeemable to Americans for precious metals, it was still redeemable to foreign central banks for gold until the early 1970's, hence, it still stored value. But the past 30 years, the dollar has been free floating on the market and really only anchored by the reserve requirements of the petroleum trade. We don't need to return to the gold standard, but we do need to rebuild the currency. Ron Paul is advocating the return to the Constitution because it is the Law of the land. Our money creation is chartered in Article I of the Constitution and it was changed by the Federal Reserve Act which was a bill passed in Congress. What Paul is saying is this; you can't change the Constitution with a simple Act of
Congress; in order for the Federal Reserve to be a legal process, it needs to be created by a Constitutional Amendment... in the absence of which, the nation needs to return to a legal practice of money creation.

I jjust wanted to know what you meant. I have never used that term except as a way of describing interest rates beyond the legal limits. You think all interest is usurious. I just wanted some clarity.

This is one of the most interesting arguments he made during the primaries. I have no idea what this would mean though if implemented. Surely a return to this type of currency would by definition destroy vast sums of wealth overnight. Are you advocating for the Shock Doctrine?

but he's 100% in the right, I just can't see doing that to the currency; economies are not the type of animals that you want to shock and awe. Besides, we are too broke to return to the Constitutional coin. But we do need to do something to taper the abuses to the fiat paper; we are about to suffer some massive deflation and it really is all due to the abuses to the currency.

the practice of lending at interest. Legally, it became defined as the illegal practice of over charging the legal limit of interest. It has two definitions, both are correct.... but the legal came after the standard... my definition of usury goes back to the Law of Moses; so what's that? 3500 years ago?