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 «The Principle and Gross Injustice of Usury» by Brian McCall 
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New post «The Principle and Gross Injustice of Usury» by Brian McCall
The Principle and Gross Injustice of Usury by Brian McCall, JD, author of The Church and the Usurers, Unprofitable Lending for the Modern Economy (Sapienta Press, May 2013), gave a very interesting talk at the Fatima: Path to Peace conference on usury and defends the Church's ancient teaching regarding it:


I never knew the Church condemns usury, not (fair) interest; there's a difference. Usury is selling a product to someone and then charging them to use it. He gives an example (from St. Thomas): If I sell you a bottle of wine, and then charge you to drink it and even demand you give the bottle back, this is usury because I am charging you to use the product I sold you. However, if I want to borrow a brick of gold from you, but it is stored 100 mi away, justice demands you may charge interest to cover the costs of traveling 200 mi to get the gold brick; this is (just) interest. But to lend someone money and charge them more just to use the money is usury.

What's interesting is that the Church teaching on usury condemns "Digital Rights Management" (DRM), which controls how consumers use their digital products! If a record company sells me a CD, I now have ownership of it. That means I should be able to lend it to others, copy it for personal use, etc.

St. Thomas explains all these things well (Summa II-II q. 78 a. 1 c.):
St. Thomas Aquinas wrote:
To take usury for money lent is unjust in itself, because this is to sell what does not exist, and this evidently leads to inequality which is contrary to justice. In order to make this evident, we must observe that there are certain things the use of which consists in their consumption: thus we consume wine when we use it for drink and we consume wheat when we use it for food. Wherefore in such like things the use of the thing must not be reckoned apart from the thing itself, and whoever is granted the use of the thing, is granted the thing itself and for this reason, to lend things of this kin is to transfer the ownership. Accordingly if a man wanted to sell wine separately from the use of the wine, he would be selling the same thing twice, or he would be selling what does not exist, wherefore he would evidently commit a sin of injustice. In like manner he commits an injustice who lends wine or wheat, and asks for double payment, viz. one, the return of the thing in equal measure, the other, the price of the use, which is called usury.

On the other hand, there are things the use of which does not consist in their consumption: thus to use a house is to dwell in it, not to destroy it. Wherefore in such things both may be granted: for instance, one man may hand over to another the ownership of his house while reserving to himself the use of it for a time, or vice versa, he may grant the use of the house, while retaining the ownership. For this reason a man may lawfully make a charge for the use of his house, and, besides this, revendicate the house from the person to whom he has granted its use, as happens in renting and letting a house.

Now money, according to the Philosopher (Ethic. v, 5; Polit. i, 3) was invented chiefly for the purpose of exchange: and consequently the proper and principal use of money is its consumption or alienation whereby it is sunk in exchange. Hence it is by its very nature unlawful to take payment for the use of money lent, which payment is known as usury: and just as a man is bound to restore other ill-gotten goods, so is he bound to restore the money which he has taken in usury.
Cf. also "Is Usury Still a Sin?"

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Tue Sep 24, 2013 6:46 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
One thing we must be very careful about when discussing these matters is the understanding of the word "interest": at the time of St. Thomas and others, and for several centuries afterwards, that term did NOT mean what it means to us today.

At the time of St. Thomas, "interest" meant, "What it is going to cost ME to allow you the use of whatever it is that I loan you" In other words my "interest" in the entire process.

It is only just that anyone who has the charity to loan something to someone in need should be "made whole" at the completion of the process, unless he chooses not to be out of further charity.

Today, that word is simply another word for a use-fee, which is clearly against Catholic teaching on the subject. The "loaner" or creditor is asking to be paid twice for the loan. This is unjust.

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Tue Sep 24, 2013 8:57 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
And, yes, usury is still a sin. The entire economy of the world is built on usury. It is disgusting.

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Tue Sep 24, 2013 8:59 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Ken Gordon wrote:
One thing we must be very careful about when discussing these matters is the understanding of the word "interest": at the time of St. Thomas and others, and for several centuries afterwards, that term did NOT mean what it means to us today.
Yes, today's interest is almost entirely usurious.

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Tue Sep 24, 2013 9:54 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Alan Aversa wrote:
Yes, today's interest is almost entirely usurious.


Leave out the word "almost" and you would be correct...

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Tue Sep 24, 2013 10:44 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Ken Gordon wrote:
Alan Aversa wrote:
Leave out the word "almost" and you would be correct...
Brian McCall would agree. It all comes down to: you can't sell nothing for something.

It is usurious when banks give out loans for money they don't even have. I would say the vast majority of transactions in today's economy are based on this sort of non-backed money.

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Last edited by Alan Aversa on Wed Sep 25, 2013 5:23 pm, edited 1 time in total.

Tue Sep 24, 2013 10:53 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Ken Gordon wrote:
Alan Aversa wrote:
Yes, today's interest is almost entirely usurious.


Leave out the word "almost" and you would be correct...


I disagree, gentlemen, but our disagreement is in the question of fact - that is, the nature of today's financial system.

There were many lawful financial contracts in the Middle Ages which to the layman would have looked like loans at interest (i.e. usury). The nature of modern money means that today there are many more such lawful contracts.

One point alone should illustrate that this must be so: money is by classical definition a stable store of value, but modern money is not a stable store, but rather it depreciates in value constantly (i.e. "inflation"). This universal fact, the cause of which is debated passionately by economists (they are not permitted to notice the real reasons, and especially not to propose real solutions), means that if I lend you $100 today, and you give me back $100 in one year's time, I am making a real loss despite the numerical identity of the amounts. For this reason an interest charge equal to the rate of inflation is manifestly not unjust, and it is certainly not charging for the use of money. It is merely demanding back exactly what has been lent.

Now, at present, and this has been so for some years in most Western countries, the rate of interest on bank loans for housing at least, has been at or below the real rate of inflation (what economists refer to as "negative real interest rates"). Therefore those loans have not been usurious.

The problem with this particular moral question (i.e. usury) is that virtually every concrete case under modern conditions presents technical questions which even well educated persons generally cannot manage.

I think however we would probably agree very warmly on a related and important question - the modern world loves usury, so that whether a given contract is lawful or not is usually entirely an accident!

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Tue Sep 24, 2013 11:18 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Yes, and method of money creation (the new form of usury referred to by Pope Leo XIII) is what causes the consistent inflation. I agree with John's accessment, and inflation is a fact and makes money an unstable measure of things salable instead of the "common measure of things salable" it is meant to be.


Wed Sep 25, 2013 2:01 am
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
The 14th century French theologian, physicist, mathematician, and economist, Bishop Nicole Oresme, argued that inflation is worse than usury. See this excellent article: "Nicholas Oresme and the First Monetary Treatise." (Download his De Moneta.)

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Wed Sep 25, 2013 5:49 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Here are two bits of information which you find of interest (no pun intended).

1) If one investigates the history of the value of the U.S. dollar from the time of its first inception and acceptance in the late 1700s to today, one finds that except for some few short periods of ups and downs, its value remained substantially constant until 1913, when it began its very steep decline in value which continues to this day. The so-called Federal Reserve was instituted in that year, along with the Income Tax, which is a Marxist concept.

2) As an example, one could walk into a car dealership in 1930, plunk down 20 ea $20 gold pieces ($400) and buy a decent automobile. Today, one can still walk into any car dealership, plunk down 20 ea $20 gold pieces (if the car-dealer will or can accept them) and drive out with a car "worth" $26,668.00.

Also, John, please don't conflate in your mind "interest" as it was meant in the time of St. Thomas, among others, with what it means today. The two are poles apart.

I insist that today's economy is based completely on usury.

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Wed Sep 25, 2013 8:04 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Ken Gordon wrote:
2) As an example, one could walk into a car dealership in 1930, plunk down 20 ea $20 gold pieces ($400) and buy a decent automobile. Today, one can still walk into any car dealership, plunk down 20 ea $20 gold pieces (if the car-dealer will or can accept them) and drive out with a car "worth" $26,668.00.

Ken, can you explain your math here?


Wed Sep 25, 2013 9:17 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
John,

Quote:
Now, at present, and this has been so for some years in most Western countries, the rate of interest on bank loans for housing at least, has been at or below the real rate of inflation (what economists refer to as "negative real interest rates"). Therefore those loans have not been usurious.


I'm interested to learn more about this; banks are not exactly notorious for being loss-making enterprises. How do they make a profit? And if they don't make a profit through mortgages, why do they offer them?

James


Wed Sep 25, 2013 11:12 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Ken,

Quote:
The entire economy of the world is built on usury.


Yes, and also- it seems to me- the systematic defrauding of the labourer.

James


Wed Sep 25, 2013 11:22 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
James Francis wrote:
John,

Quote:
Now, at present, and this has been so for some years in most Western countries, the rate of interest on bank loans for housing at least, has been at or below the real rate of inflation (what economists refer to as "negative real interest rates"). Therefore those loans have not been usurious.


I'm interested to learn more about this; banks are not exactly notorious for being loss-making enterprises. How do they make a profit? And if they don't make a profit through mortgages, why do they offer them?

James


James, banks of issue (i.e. all of the large modern banks) create the credit they lend, they do not "re-lend" deposits (which would be impossible for most money anyway, which is not in the form of notes and coins). In performing this service they incur some administrative costs (including rent and salaries). In addition to, and much more important than, these very minor administrative costs, one must note that every (non-Notes-or-Coins) dollar drawn down on any loan immediately becomes a deposit in another account, and banks pay interest on deposits. So taking the banking system as a whole, the gross profit that the banks generate is essentially the difference between the deposits and loans interest rates, multiplied by the total amount of credit in the system. Their net profit is this amount less their "real" costs (i.e. the administrative costs mentioned above) and also less non-performing loans which are written off. (These perform a vital function, incidentally, as they act as a pressure relief for an otherwise mathematically impossible system. A written-off loan leaves its corresponding deposits in existence, thus allowing credit - i.e. money - to exist without any corresponding debt.)

Negative real interest rates affect both deposits and loans, and therefore the net effect on the banks' profitability would seem to be essentially zero. Certainly in this country the low interest regime has coincided with record profits by the banks.

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Thu Sep 26, 2013 12:38 am
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Robert Bastaja wrote:
Ken Gordon wrote:
2) As an example, one could walk into a car dealership in 1930, plunk down 20 ea $20 gold pieces ($400) and buy a decent automobile. Today, one can still walk into any car dealership, plunk down 20 ea $20 gold pieces (if the car-dealer will or can accept them) and drive out with a car "worth" $26,668.00.

Ken, can you explain your math here?


It's a "gold bug" argument. :) It's probably largely true, too. He is saying that gold holds its value against real things, unlike cash. So over the long term if you hold gold, you can save without being affected by inflation. I have never looked in detail at the factual basis of this claim, which is made constantly by those promoting gold and gold-related investments, and that's what you'd have to do to be sure that it's really true. But as already said, I think it's undoubtedly at least partly true. Gold is a commodity, not a type of money, so it's not, by definition, subject to inflation.

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Thu Sep 26, 2013 12:45 am
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
James Francis wrote:
Yes, and also- it seems to me- the systematic defrauding of the labourer.


How's that?

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Thu Sep 26, 2013 12:47 am
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Dear John,

I have in mind sweatshop workers, particularly in Asia, who produce the commodities such as the one I am typing on and can't really be said to be remunerated in anything like the sense Leo had in mind in Rerum Novarum. More broadly and more historically (-and as Chesterton points out) the development of capitalism is contingent on removing the possibilities for people to live outside that particular system. Chesterton points to the process of enclosure (which coincides in England with the Protestant revolution) as the beginnings of the process of forcing labourers either to work for low wages (that is, to become the victims of fraud) or to starve.

Here's Pope Leo on wages:

45. Let the working man and the employer make free agreements, and in particular let them agree freely as to the wages; nevertheless, there underlies a dictate of natural justice more imperious and ancient than any bargain between man and man, namely, that wages ought not to be insufficient to support a frugal and well-behaved wage-earner. If through necessity or fear of a worse evil the workman accept harder conditions because an employer or contractor will afford him no better, he is made the victim of force and injustice.

In the next paragraph the pope goes on to specify that a working man ought to be able to support his family on his wage. Now clearly, there are very few jobs that pay such a wage. I take it that not to pay such a wage is to practice fraud on the labourer.

James


Thu Sep 26, 2013 2:48 am
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Robert Bastaja wrote:
Ken Gordon wrote:
2) As an example, one could walk into a car dealership in 1930, plunk down 20 ea $20 gold pieces ($400) and buy a decent automobile. Today, one can still walk into any car dealership, plunk down 20 ea $20 gold pieces (if the car-dealer will or can accept them) and drive out with a car "worth" $26,668.00.

Ken, can you explain your math here?

Yes. In 1930, a $20 gold piece, which contains one ounce of gold, was worth exactly $20.00. 20 X $20 = $400. A new Ford or Chevy at that time cost $400.

The present spot price of one ounce of gold is $1333.40 (as of yesterday). 20 X $1333.40 = $26,668.00. A "cheap" new car today is around $20,000.00.

Clear? What this shows is not the "increase" in the actual value of gold, but the DECREASE in the actual value of the U.S. dollar.

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Thu Sep 26, 2013 4:48 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
James Francis wrote:
Now clearly, there are very few jobs that pay such a wage. I take it that not to pay such a wage is to practice fraud on the labourer.

James

You are absolutely correct, James. Here in the U.S., it is almost impossible for any man to earn a "living wage" by working at one job. Either he must have two (or more) jobs, or his wife must also work.

And I am not talking about working for "luxuries": I am talking about putting sufficient food on the table, clothing for the parents and children, properly educating the children by (so-called) "home schooling" (which brings up another point: the cursed public school system...), leaving enough left over for some small proper means of decent entertainment, and being able to put something by for emergencies.

In the present economic system in the U.S. none of the above is possible, and designedly so by those opposed to the family and true religion.

And as someone else here said, one can trace this right back to the Protestant "reformation". Chesterton was absolutely correct. His solution, distributism, would certainly correct much of the wrong.

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Thu Sep 26, 2013 5:00 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Ken Gordon wrote:
Robert Bastaja wrote:
Ken Gordon wrote:
2) As an example, one could walk into a car dealership in 1930, plunk down 20 ea $20 gold pieces ($400) and buy a decent automobile. Today, one can still walk into any car dealership, plunk down 20 ea $20 gold pieces (if the car-dealer will or can accept them) and drive out with a car "worth" $26,668.00.

Ken, can you explain your math here?

Yes. In 1930, a $20 gold piece, which contains one ounce of gold, was worth exactly $20.00. 20 X $20 = $400. A new Ford or Chevy at that time cost $400.

The present spot price of one ounce of gold is $1333.40 (as of yesterday). 20 X $1333.40 = $26,668.00. A "cheap" new car today is around $20,000.00.

Clear? What this shows is not the "increase" in the actual value of gold, but the DECREASE in the actual value of the U.S. dollar.

I agree that gold as a commodity does not lose value like currency, however, the gold price in 1971 was $40 and in 2001 was $270.

In 1971, 20x40=$800; a car was about $2800

In 2001, 20x270=$5400; a car was about $16,000


Thu Sep 26, 2013 9:43 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Dear James,

James Francis wrote:
I have in mind sweatshop workers, particularly in Asia, who produce the commodities such as the one I am typing on and can't really be said to be remunerated in anything like the sense Leo had in mind in Rerum Novarum.

Well, I don't know anything about that except for what I read in the media, and I don't give that much credence. But let's assume it's true that the adult men who work in those factories are paid at rates that will not support a family: this is contrary to justice.


James Francis wrote:
More broadly and more historically (-and as Chesterton points out) the development of capitalism is contingent on removing the possibilities for people to live outside that particular system. Chesterton points to the process of enclosure (which coincides in England with the Protestant revolution) as the beginnings of the process of forcing labourers either to work for low wages (that is, to become the victims of fraud) or to starve.


Well, that was true, and I agree that enclosure was evil - a generally unrecognised and very great evil of the Protestant Revolt - but the so-called labour movement, inspired to a significant degree by the authority and instruction of the pope, ended starvation wages by legislation and collective bargaining in the late nineteenth century.


James Francis wrote:
In the next paragraph the pope goes on to specify that a working man ought to be able to support his family on his wage. Now clearly, there are very few jobs that pay such a wage.

I disagree. At least, I think it highly controvertible to assert that modern First World wages are not living wages in the Leonine sense. The main problem, I think, is that thrift has become rare.

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Thu Sep 26, 2013 11:07 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Dear John,

Quote:
I disagree. At least, I think it highly controvertible to assert that modern First World wages are not living wages in the Leonine sense. The main problem, I think, is that thrift has become rare.


Up to a point Lord Copper.

I suggest that it is very difficult to know whether or not Australian wages are living wages because of the injustice already present in the system. What I mean is that it might be possible to support oneself, one's wife and one's children even on the Australian minimum wage if one has recourse to cheap imported goods which have (at least arguably) been produced in an unjust fashion. A really useful experiment to conduct would be to live on the minimum wage with say, three or four children to support, and to restrict oneself to buying only Australian products. I would be pleasantly surprised to discover that to be possible without government assistance. So I think to speak of First World wages in isolation from what is a global economy isn't really meaningful.

Notice that I 'm talking about Australian circumstances: for various historical and economic reasons (which you'll know better than I) in this country wages are relatively acceptable (if they are indeed "just", I'd say that is rather by accident than by design). But look at America. One of the first things that Walmart employees do is take a course which explains how to sign up for social security assistance. The company in other words explicitly admits that its wages are insufficient to live on. Fast food chains are also notorious for defrauding their workers. I mention these examples not to attempt an impressionistic, anecdotal proof of my claim, but to try to suggest that without state intervention in the form of wage laws, the tendency of capitalism is to increase profit at the expense of labour.

I certainly think you are correct when you say that thrift has become rare. This is true- although this fact is often used by people to avoid looking at unjust economic systems. One of the reasons that thrift has become rare I would suggest is the amazing prevalence of advertising: selling stupid people junk that they don't need and can't afford (but will buy on credit- another way for the money interests to laugh themselves all the way to the, er, bank).

I don't like talking about economics because (as my wife will vouch and as you may have noticed) I don't really know anything about them. And I do find that economic discussions reveal a very interesting truth about men- namely, that they believe what they choose to believe. But when I look around, concern for a just wage seems noticeable by its absence. I think Chesterton is absolutely correct to say that both capitalism and communism hate the family and wish to destroy it. In our country, capitalism's success in this seems easily observable.


Fri Sep 27, 2013 2:33 am
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Dear Ken,

Quote:
And I am not talking about working for "luxuries": I am talking about putting sufficient food on the table, clothing for the parents and children, properly educating the children by (so-called) "home schooling" (which brings up another point: the cursed public school system...), leaving enough left over for some small proper means of decent entertainment, and being able to put something by for emergencies.


Yes indeed; not to mention the cost of buying a house; here in Australia the median house price for capital cities (i.e. the places where you can get access to Mass) is a little under $500,000. There has to be something wrong with that. I am by no means on a low wage and I don't think I'm especially frivolous with my income but I can safely say I could never afford such a house.


Fri Sep 27, 2013 3:00 am
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
I've come to the conclusion that usury is the biggest problem facing the world economy. In my view, usury may succinctly be defined as compound interest -- simple interest for all practical purposes no longer exists, at least as far as I know. Government bonds, student loans, mortgages, and so forth, are all based on compound interest.
Alan Aversa wrote:
It is usurious when banks give out loans for money they don't even have. I would say the vast majority of transactions in today's economy are based on this sort of non-backed money.

The blogger-economist "Mish" Shedlock heaps opprobrium on fractional reserve lending, by which a bank holds, say, $100 and lends out $1,000 and keeps a "fractional reserve" of only 10%, under the assumption that only a maximum of 10% will ever be demanded by the bank's depositors. I see Shedlock's point, as this scheme adds fraud on top of usury.

Of course, at the bottom of that would be simple greed. They don't have God, and so they have to serve mammon instead, having nothing else. The Fed and income tax, which started eroding our dollar in 1913, are due to the unrestrained greed of the government and the special interests backing it, who wanted to spend money they didn't have and so cooked up the Fed to filch it from the American people via inflation, plus the income tax.

It should be pointed out that inflation was a perennial problem even during the time of the Roman Empire.
James Francis wrote:
Dear Ken,

Quote:
And I am not talking about working for "luxuries": I am talking about putting sufficient food on the table, clothing for the parents and children, properly educating the children by (so-called) "home schooling" (which brings up another point: the cursed public school system...), leaving enough left over for some small proper means of decent entertainment, and being able to put something by for emergencies.


Yes indeed; not to mention the cost of buying a house; here in Australia the median house price for capital cities (i.e. the places where you can get access to Mass) is a little under $500,000. There has to be something wrong with that. I am by no means on a low wage and I don't think I'm especially frivolous with my income but I can safely say I could never afford such a house.

Aus is still definitely in a housing bubble. Ours popped back in 2007 or so, and even our central bank hasn't been able to get that problem going again. Hardy-har.


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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Brendan wrote:
It should be pointed out that inflation was a perennial problem even during the time of the Roman Empire.
Oh, yes, clipping coins

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Fri Sep 27, 2013 6:14 am
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Robert Bastaja wrote:
I agree that gold as a commodity does not lose value like currency, however, the gold price in 1971 was $40 and in 2001 was $270.

In 1971, 20x40=$800; a car was about $2800

In 2001, 20x270=$5400; a car was about $16,000


So the correct number of gold coins would have been 70 for each of these years.

1971, 70x40=$2800
2001, 70x270=$18,900
2013, 70x1300=$91,000

Seems gold may be overpriced today. A decent car can be had for $25,000 today.


Fri Sep 27, 2013 12:17 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Brendan wrote:
It should be pointed out that inflation was a perennial problem even during the time of the Roman Empire.


Well, I'm not sure it was perrenial then, or only occasional (due to coin-clipping, as Alan suggests), but it didn't exist for several hundred years in the Middle Ages. See the work of Professor Thorold Rogers for the evidence.

I'm afraid your comments about fractional reserve banking reveal that you have bought the "cover story" for the issue of new credit by American banks. Bank deposits are actually nothing more than the loans created from nothing by the banks, including the bank that holds the deposit which results from any given loan-creation exercise.

An example: A loan of say $300k is made to Customer A of Bank X. He pays for a house with it, a house that he purchases from Customer B of Bank X. Customer B instructs Customer A to pay the sale price into his bank account by electronic transfer. Bank X has created $300k of credit, and now has an asset on its books in the form of a $300k loan owing to it (by Customer A), and a liability on its books in the form of a $300k deposit upon which it has to pay interest (to Customer B). The notion of "fractional reserve" in such a system is pure smoke and mirrors. It is a concept left over from the days of gold-backed currency, I think, and is virtually meaningless today.

Likewise the notion that for currency to have "real value" it must be backed by gold is anachronistic nonsense, in my view. The real backing for any country's currency is the capacity it has to produce goods and services. That's what an American dollar really means - it is an effective demand upon the American economy to produce goods or services as and when the dollar is presented. So long as the American economy can produce those goods and services at the rate at which dollars are presented, they hold their value. Issuing excessive amounts of dollars - in the form of credit, as usual - will debase each dollar to the extent that the new dollars do not result in an expansion of productive capacity. If there are too few dollars on issue (e.g. in a credit crunch, when loans are not made at the rate they need to be) then deflation occurs, and productive activity is lowered (and eventually, by the shutting of plant, etc., productive capacity is lowered too). If there are too many dollars in existence, each is worth correspondingly less, precisely because the limit on production is real whereas the value of the currency is a purely artificial abstraction.

James, you make some good points. I agree that capitalism is anti-family. At bottom this is because, as Pius XI explained, money is made master instead of servant.

Money has been made into a license to live. We need or want money, so we make stuff, which we then advertise, so that people who don't need or want it will buy it. The same causality drives down the quality of goods and services. Ikea is a microcosm of the modern production system, making goods which are lucky to make it home before they break and must be replaced. The two-dollar shops are another example - the entire notion from the consumer's perspective is that shopping is a pleasurable experience and one can obtain that pleasure with a mere $2. The "goods" are worthless junk which are even luckier than Ikea goods to make it home intact. From the shop-owner's perspective, and that of his suppliers, the notion is that worthless "goods" can serve as a reason for gathering money from "customers". It's like capitalism as a game.

If we were running our production system for its proper, and only proper, purpose, which is to satisfy real consumption, we would tailor what we make to real demand. And we would make goods to last as long as possible (like Roman roads, or Medieval buildings), which would be truly economical with resources and labour. Instead, we are running our production system in service of an artifical abstraction, so we create whatever consumption we can in order to finance further production, and we debase our production quality to ensure future consumption. It's completely inverted.

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Sat Sep 28, 2013 10:27 am
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Thinking further, I wonder if history demonstrates that a capitalist [i]state must necessarily be or become a [i]liberal[i][/i][/i][/i] state? I'm reading quite an interesting book called "The Making of Global Capitalism" which makes the following comment: "...what [capitalist] states can autonomously do, or do in response to societal pressures is ultimately limited by their dependence on the success of capital accumulation. It is above all in this sense that their autonomy is only relative." If you take "capitalism" to mean the whole nexus of injustices (usury, wage-slavery and all the rest) we've remarked upon here, I wonder if we discover the explanation for the continued failure of morality to penetrate the political order? Is there a sense in which, for example, the pro-life cause is doomed to fail in a capitalist state? Can our Lord reign in such a state?


Mon Sep 30, 2013 6:26 am
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
James Francis wrote:
Can our Lord reign in such a state?

Not in my opinion, certainly.

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Mon Sep 30, 2013 3:16 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
Has anyone here visited http://distributistreview.com/mag/? They usually have some pretty interesting articles focussed on Catholic Economics. The writers seem to be very traditional, though I think most of them are still tied to the VII Church.


Wed Oct 02, 2013 5:42 pm
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New post Re: «The Principle and Gross Injustice of Usury» by Brian Mc
How would these principles apply to those who feel morally justified in ceasing burdensome payments on credits cards with maxed balances?


Wed Oct 02, 2013 5:59 pm
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