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Let's say you walk in a desert and you see a man dying of thirst, you happen to have a contractual obligation handy, you fill in blanks, and voila you trade a bottle of water for let's say $100,000 paid over 30 years. Obviously, nobody can prohibit anyone to try something like this, but should repressive apparatus of the state enforce these sorts of agreements?
Lending money to the desperate and destitute is not any different. Money is life blood of mass impersonal societies. You can't hunt buffalo, you can't squat and go "self-sufficient", you don't have a clan or a village to protect you in emergency. You must have money to do all of that, you must have money to survive.
I think lending money at any interest is immoral. Living off interest is absolutely 2000% parasitic. If you think you can turn your $100 in $2000, do it, show us that "opportunity cost" have any basis in reality and it's not just justification of parasitism. Our entire financial system is built upon usury, usurers are our ruling class, compound interest pushes entire biosphere to collapse since it requires constant economic growths to satiate the usurers.
Your philosophical question boils down to:
Should things exist that might get someone into trouble?
I mean, this could apply to anything any adult involves themselves with.
I don't think you can control the whole world because some people are too dumb or lazy to attempt to understand the circumstances around making a decision.
I think lending money at any interest is immoral. .
Well, who the hell is going to take the risk of never seeing that money again and lend it out for free?
What you propose is a society with no lending whatsoever.
Then those poor, betrodden people you speak of would be even more screwed.
You can not legislate stupidity, to make laws against this, well, some one will just find a way around the law, if some enters into a contract with the stated interest rate then it is their choice. Would you call this predatory lending, in my opinion, no, for the person who enters into this contract if full aware of the interest involved.
Your philosophical question boils down to:
Should things exist that might get someone into trouble?
I mean, this could apply to anything any adult involves themselves with.
I don't think you can control the whole world because some people are too dumb or lazy to attempt to understand the circumstances around making a decision.
There is simple solution - state agencies don't enforce predatory agreements and prosecute mob like operations that would attempt enforcement. This way there is no need for new laws and regulations. Interest >30% at inflation rate 3% is predatory deal, no matter how you look at that, if a borrower wishes to honor their obligations, fine. Most of the states scrapped their anti-usury laws though. Different philosophy is in the air.
No we don't, is this a good reason for existence of the predatory operations and a leech investor class living off compound interest? Let's just go 100% law of the jungle then. Besides, reciprocal lending agreements don't require kumbaya environment, that's the way human specie operated for hundreds of thousands years.
Last edited by RememberMee; 12-15-2012 at 12:26 PM..
Usury is defined as any fee, in money, for the use of money - not just "excessive interest".
Usury has been denounced for "only" 3500 years, proscribed by all religions (that I checked) and condemned as an abomination in Ezekiel 18:13 KJV.
Usury is mathematically unsustainable in a finite money token system, due to the exponential equation used for compound interest. It requires an infinite money supply, which is impossible.
And still the masses embrace usury to their bosom, who are most surprised when it sinks its fangs into them, and abuses them most cruelly.
Coincidentally, usury IS a privilege subject to an "income tax" on interest, dividends, and other gains from usury and limited liability artificial persons / corporations.
IMHO - contracts for usury should not be enforceable in any court of law in these united States.
First off, I think payday loans are absolutely horrible things no one should ever take out. Don't think that setting an interest rate cap will suddenly make interest rates for high risk borrowers go down, though; if you limit the rates you'll simply eliminate the number of people getting loans. Maybe that's a better option. I'm not sure.
On one hand I'm hesitant for the government to intervene between two parties making mutual agreements because we think "that person isn't smart enough or self-interested enough to make a responsible decision, so we will take this option away from them." That's essentially what banning payday loans would be. On the other hand, these agreements are pretty uniformly awful, so maybe the above conclusion is the correct one.
What I am pretty sure about is that financial education is essential for all children; the lucky ones get this education at home but it's something everyone needs and should be taught in school.
No we don't, is this a good reason for existence of the predatory operations and a leech investor class living off compound interest? Let's just go 100% law of the jungle then. Besides, reciprocal lending agreements don't require kumbaya environment, that's the way human specie operated for hundreds of thousands years.
Look at payday loan stocks; not a great investment. They make some money off the backs of the poor but not enough to be part of the investor class. The investor classes are investing in industries with higher profit margins.
What I am pretty sure about is that financial education is essential for all children; the lucky ones get this education at home but it's something everyone needs and should be taught in school.
While I agree, unfortunately too many high school grads these days are so bad at math that they can't balance a checkbook. How do you explain compound interest to someone who can barely add and subtract?
OTOH if the government sets a cap on interest rates then the people who are bad credit risks will be unable to obtain a loan from any legitimate lender.
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