Some Thoughts About Usury And Fractional Reserve Banking
So, I watched this video today. It explains how charging interest (usury) is immoral because it is mathematically impossible for every person to pay their loan back.
I got to thinking about it and it kind of makes sense. Here's my understanding of what the guy in the video was saying: See, our banking system is what is called a fractional reserve system. What this means is that banks can loan out more money than they actually have. In other words, when you borrow money from the bank, that money is created out of thin air--it is borrowed into existence. Al fiat currency is created this way. Say that one million people were loaned $100. So, $100,000,000 is created out of thin air. All of that money must be paid back plus interest. The problem is, there isn't enough money to pay back all the loans plus interest. Remember, that since all money is created this way, loans + interest is greater than the supply of money.
I think this argument is fine as far as fractional reserve banking is concerned, but most of us aren't bankers. Since there are a lot of people who don't pay off their loans, there is a lot of money out there that just circulates and acts as a medium of exchange. It's also used as a store of value (although a poor one). If I'm saving for retirement and you want to borrow some money from me, I'll be taking a risk if I decide to loan you any. That risk can be mitigated by charging interest. Since you are presumably working and creating value where it didn't exist before, I see nothing wrong with this arrangement.
Heres the video I was talking about:
There are a lot of considerations and variables that go beyond the basic arguments in this regard.
e.g. - The 'value' you create is taxed on a number of different levels, wholesale, retail, income, capital gains, etc. Plus, the 'value' that you are being 'paid' for is also coming from 'borrowed/created' money that someone else has to repay. Also, there is a huge difference between usury on a loan of something real/tangible and something that is imaginary. If I lend you my horse and expect some of the hay you get from using him to plow and plant, that is different from expecting a portion of your crop for 'wishing you well'...
Yeah, I just thought it was an interesting video. I'm not a bible thumper or anything. If people want to charge interest, I think it is perfectly fine, but when banks do it, the interest is charged on money that isn't rightfully theirs to begin with. That's what I don't like.
The real outrage is that the 'select' are allowed to 'invent' money out of thin air based on your ability to 'make good' on it.
The 'full faith and trust of the US Government' is eWe the Sheeple...that's you and me. They are allowed to 'create' money based on our future earnings and then 'lend' it to us and charge us interest on it.
The reason for the Census and birth registrations is that the International Bankers use those figures to decide how much they can lend countries based on the taxation of their citizen's future earnings.
The fact that they can just print money on demand also drives the cost of homes up because people buy based on what they can borrow, not on what they have earned.
Exactly. And when it all comes falling down the people at the top aren't the losers. It's kind of like the used-car dealers who 'finance' the car for you, but the price is twice what you would buy it for with cash. If you bail after paying off a quarter of the loan, they repossess, do the same deal with someone else, and if they bail, they already have what the car was really worth and still have the car.
Predatory lending is where the person making the loan is sad when you make all of the payments because they aren't making as much money when you do that. Helluva system...
Yeah when I learned that banks borrow money at sub 1% and then turn around and lend at +20%, that is just plain frustratingly evil!
Its a confidence game and only works while people believe...
I wrote an article you may enjoy.
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