5 ms·

Why do you consider bonds usury?

by rocho 2mo ago

michaelt 2mo ago
In many historical societies, religious prohibitions on usury meant the charging of interest of any kind. Jump in a time machine to 1515 and ask Martin Luther, or to 1260 and ask Thomas Aquinas, they'd tell you it's sinful. And in the present age, a fair number of Islamic folk consider interest against their religion's rules. So there's a Halal finance industry where, for example, you can get a "murabahah contract" where the bank buys a house, then sells the house to you at a higher price, while allowing you to pay them in monthly instalments.
- Exoristos 2mo ago
  Older than any of those: "Thou shalt not lend upon interest to thy brother: interest of money, interest of victuals, interest of any thing that is lent upon interest" (Deut 23.20 JPS Tanakh).
- nickpeterson 2mo ago
  the letter but not the spirit, like Amish workers using batteries
  - inigyou 2mo ago
    It's concretely different. If the house becomes worthless, the "borrower" can walk away from the contract, owe nothing, and the bank keeps the house. The bank had better consider the value of the house, not just the ability of the "borrowed" to pay, when issuing this contract.
- LadyCailin 2mo ago
  I love when religions have rule lawyers like this. It readily discredits the religion. As if their all powerful god can be fooled by fancy paperwork or legal loopholes.
  - bacchusracine 2mo ago
    They’re not trying to fool God, they’re trying to fool you into going along with it. They don’t care what God thinks and may not even believe in Him at all, but unless they can convince you of the loophole they’re stuck with the rules themselves.
  - harry8 2mo ago
    Do you love it when people use religion to create rules like this as though people can be fooled into thinking they /know/ the mind of god?
  - marcus_holmes 2mo ago
    The bit that isn't rules-lawyered away is that the risk is shared. For the deal to be compliant with the religious law, the lender must accept the same risk as the borrower, equally. So I guess in this case if the house burns down and the insurance only pays 50% of the agreed value then the lender only receives 50% of their agreed repayment.
    - pastel8739 2mo ago
      Isn’t there still risk for a lender in a typical interest-bearing loan? That the borrower will default?
      - marcus_holmes 2mo ago
        Usually an interest-paying loan is backed by a guarantee, so the lender can pursue the borrower for repayment by claims on other assets.
hualapais 2mo ago
Because bonds involve interest. Per Summa Theologica: > 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. https://www.newadvent.org/summa/3078.htm https://www.newadvent.org/summa/3078.htm …Aquinas expands the analysis but it is relatively straightforward: all interest is usury. Personally, I find it helpful to imagine two hypothetical persons representing the entire economy, one the creditor who is lending and two the borrower who is taking on the loan. In this ultra simple closed model with a fixed quantity of money, the former is in effect asking for more units of money than actually exist in the whole system. When the loan comes due the borrower owes a sum that cannot be paid in full from the circulating medium itself. Settlement then requires either default, the creditor forgiving the excess, or the transfer of real goods and property to make up the difference. Scaled up, that same pressure (the continuous generation of monetary claims that exceed the existing stock of money) is what I suspect drives a good deal of the subtle and overt strain on families and communities that people so often complain of in the West and in modern growth-oriented capital societies. This definition of usury differs from the modern loophole-definition: that interest bearing loans are only usury when the rates cross some nebulous abusive threshold. In the above Thomistic interpretation, all interest is socially problematic and disfavored. Judaism holds to a similar prohibition on interest when loans are made between Jews. Islam likewise prohibit usury even more broadly. Despite the injunction against usury in the Middle Ages Christendom and the enduring prohibitions of usury in other faiths, there are many modern Catholics and Protestants who will favor the modern interpretation over Thomas’ understanding; I’m just not one of them.
- jbs789 2mo ago
  The borrower is buying time. I’m glad I can buy something that I value now, rather than wait. That is useful to me, and I’m happy to pay for it
- maroonblazer 2mo ago
  >in effect asking for more units of money than actually exist in the whole system. Depends on how you define the 'whole system'. If I borrow $100 and make $110, the latter didn't appear out of nowhere. The lender, too, could have turned that $100 into $110. Why shouldn't they be compensated for that opportunity cost?

Why do you consider bonds usury?

by rocho 2mo ago

Why do you consider bonds usury?

In many historical societies, religious prohibitions on usury meant the charging of interest of any kind. Jump in a time machine to 1515 and ask Martin Luther, or to 1260 and ask Thomas Aquinas, they'd tell you it's sinful. And in the present age, a fair number of Islamic folk consider interest against their religion's rules. So there's a Halal finance industry where, for example, you can get a "murabahah contract" where the bank buys a house, then sells the house to you at a higher price, while allowing you to pay them in monthly instalments.

Exoristos 2mo ago
Older than any of those: "Thou shalt not lend upon interest to thy brother: interest of money, interest of victuals, interest of any thing that is lent upon interest" (Deut 23.20 JPS Tanakh).
nickpeterson 2mo ago
the letter but not the spirit, like Amish workers using batteries
- inigyou 2mo ago
  It's concretely different. If the house becomes worthless, the "borrower" can walk away from the contract, owe nothing, and the bank keeps the house. The bank had better consider the value of the house, not just the ability of the "borrowed" to pay, when issuing this contract.
LadyCailin 2mo ago
I love when religions have rule lawyers like this. It readily discredits the religion. As if their all powerful god can be fooled by fancy paperwork or legal loopholes.
- bacchusracine 2mo ago
  They’re not trying to fool God, they’re trying to fool you into going along with it. They don’t care what God thinks and may not even believe in Him at all, but unless they can convince you of the loophole they’re stuck with the rules themselves.
- harry8 2mo ago
  Do you love it when people use religion to create rules like this as though people can be fooled into thinking they /know/ the mind of god?
- marcus_holmes 2mo ago
  The bit that isn't rules-lawyered away is that the risk is shared. For the deal to be compliant with the religious law, the lender must accept the same risk as the borrower, equally. So I guess in this case if the house burns down and the insurance only pays 50% of the agreed value then the lender only receives 50% of their agreed repayment.
  - pastel8739 2mo ago
    Isn’t there still risk for a lender in a typical interest-bearing loan? That the borrower will default?
    - marcus_holmes 2mo ago
      Usually an interest-paying loan is backed by a guarantee, so the lender can pursue the borrower for repayment by claims on other assets.

hualapais 2mo ago

Because bonds involve interest. Per Summa Theologica: > 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. https://www.newadvent.org/summa/3078.htm https://www.newadvent.org/summa/3078.htm …Aquinas expands the analysis but it is relatively straightforward: all interest is usury. Personally, I find it helpful to imagine two hypothetical persons representing the entire economy, one the creditor who is lending and two the borrower who is taking on the loan. In this ultra simple closed model with a fixed quantity of money, the former is in effect asking for more units of money than actually exist in the whole system. When the loan comes due the borrower owes a sum that cannot be paid in full from the circulating medium itself. Settlement then requires either default, the creditor forgiving the excess, or the transfer of real goods and property to make up the difference. Scaled up, that same pressure (the continuous generation of monetary claims that exceed the existing stock of money) is what I suspect drives a good deal of the subtle and overt strain on families and communities that people so often complain of in the West and in modern growth-oriented capital societies. This definition of usury differs from the modern loophole-definition: that interest bearing loans are only usury when the rates cross some nebulous abusive threshold. In the above Thomistic interpretation, all interest is socially problematic and disfavored. Judaism holds to a similar prohibition on interest when loans are made between Jews. Islam likewise prohibit usury even more broadly. Despite the injunction against usury in the Middle Ages Christendom and the enduring prohibitions of usury in other faiths, there are many modern Catholics and Protestants who will favor the modern interpretation over Thomas’ understanding; I’m just not one of them.

jbs789 2mo ago
The borrower is buying time. I’m glad I can buy something that I value now, rather than wait. That is useful to me, and I’m happy to pay for it
maroonblazer 2mo ago
>in effect asking for more units of money than actually exist in the whole system. Depends on how you define the 'whole system'. If I borrow $100 and make $110, the latter didn't appear out of nowhere. The lender, too, could have turned that $100 into $110. Why shouldn't they be compensated for that opportunity cost?