The Wisdom of Banning Usury

One of my biggest transitions in political thought occurred simultaneous to my transition away from American Evangelicalism, which tends to be libertarian-ish in terms of free markets. My foray into Ludwig Von Mises and the Austrian economists was very beneficial as a thought experiment, but at length I found that the most overriding social force across cultures is tribalism.

For the most part, human beings do not know what is best for them, nor do they act that way – the “rational self-interest” canard that serves as the lazy explanation for so much phenomena. Libertarianism would work well if you could make all human beings exactly like the top 20% in terms of intelligence, openness, and regard for human life. And it is actually a very helpful framework for viewing reality in terms of policy – you start from sort of a pseudo-ideal and work backwards from practical reality. And properly formed, markets are probably the most powerful economic force in the world. But they do break down, they do require maintenance, and they do, themselves, require creative destruction that can be prevented or accelerated by the actions of the state or powerful influencing groups. They can also be hacked by the right individuals for a time, and guided to political ends.

This is the very reason that Libertarianism is always a philosophy used to theorize and speculate, and not an actual political system or a reasonable political belief. It has a jacked up anthropology because the differences in cultures and individuals are too difficult to predict, and eventually market capture occurs by powerful groups, leading to institutional state structures. Libertarianism is incoherent once you leave the abstract philosophical levels and venture downward into the policy level – this is why Libertarians are generally tremendous thinkers and debaters but cannot unite around anything and are politically ineffective.

And while the Libertarian analysis of business cycles is spot-on and more intellectually rigorous than any analysis on the market, they do not have the tools to condemn compound interest since that is a moral judgment based in a Christian, and more specifically Catholic anthropology. Libertarians and anarcho-capitalists would allow interest rates to be set by the market, rather than by banning usury altogether.

But I’ve become convinced through history that compound interest is too powerful to allow to exist, and while Jewish law made exceptions to usury, it complimented that with 7 year and 49 year cycles of remission of debts and loss of family heritage. If all debt was expunged in 7 years, the economic landscape of the world changes. People could not be enslaved to student loans or credit card debts. Borrowing may occur, but banks would only do so with collateral, and the price of money is not based in compound interest but fixed; in other words, borrowing 20,000 dollars would have a fixed price of say, 300 dollars, and you wouldn’t allow it to accrete based on time. Compound interest is acid to a country’s financial health. Massive empires and power families such as the de Medici’s have gone from flush with gold to abjectly bankrupt because of compound interest.

Biblically, the notion of a 7 year cleansing of debt sounds incredible. Americans are overloaded with debt, and the common wisdom about credit cards and credit scores causes the less intelligent or those with less stable social structures to become enslaved to their passions and enslaved to their interest servicing. It inherently stratifies society and is a weapon for the wealthy to retain their positions, because when large institutions fail, they are the first and only to receive government largess to prevent forcing creditors to take haircuts. Debt is a weapon against nations – in the form of imposed austerity on EU nations that entrenches French and German control – and a weapon against individuals, keeping former students in bondage to the cost of a highly inflated educated with a debt they cannot liquidate, in the words of their student loan promissory agreements, unless they die or are legally disabled. Usury in the world today, particularly in America in the form of student loans, is immoral.

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