Adam, Steve, Eve, Eva & Usury - DD_111023
Channel: owais sarvasukhsevaka
Date: 2011-10-23

Dear_Diary _20111023 - Adam, Steve, Eve, Eva & Usury

This is my Diary for 23rd Oct 2011.

Our modern monetary system has a currency supply that is based on debt and interest.  In my previous diary entry, I discussed, in brief, what I think of our debt based currency, and gave links for further, detailed viewing.  Today, I discuss the interest bit.

Most religions condemn the practice of taking Interest on money lent, or Usury.  Thus, for many people the taking of Interest is a sin.  Some tend to define Usury as a very high rate of interest.  Others believe that any rate of Interest is usurious.  In this little talk, I talk about my take on the taking of Interest.

In my view, interest probably does have a valid function -- in a world of increasing population, it increases the money supply making it easier to keep the wheels of commerce spinning.  

Further, from the stand-point of the lender as well as the borrower, interest is necessary.  If the lender were to take a risk (of the borrower dying or disappearing or not repaying the loan for any other reason), and to forego an opportunity to enjoy or invest that money, plus incur the operational expenses of managing the loan, why would he give a loan at all?  And, if the lender does not lend, the borrower does not get to borrow. 

Of course, for those who believe in the dictum- Neither a borrower nor a lender be*- this is perfectly fine.  However, what of those who must borrow for reasons that may be valid even from a neutral stand-point?  Neither every society, nor every individual, even in the most generous of societies, can get all the necessary funds without borrowing.  Thus interest, in the absence of any other valid and workable solution, is the only real option.  (Neither Islamic Banking, nor other interest-free financial effort has succeeded in building practical systems that are, in truth, completely interest-free.  However, that may be because of the larger global financial system being debt and interest based).

In view of all this, I conclude that interest is NOT a sin in a debt based currency regime, in a world of increasing population.  Whether we SHOULD have a debt-based currency regime, or we SHOULD have increasing population, I, of course, emphatically believe that we should not, indeed MUST NOT have either of those.
 
Thus, this is all fine and logical in a world of debt-based fiat currency.  Not quite so clear-cut in a world of fixed-supply currency, such as gold coin (presuming that no new gold can be found).  In such a world of fixed money supply, a lender lending at interest can theoretically corner all the money in the system.  

For, such a money lender, lending at, say, 7.2% interest, will double his gold coin in 10 years.  Since the coin supply is not inflatable, he will also double his proportion of the total coin every decade.  If he started at a young enough age, with, say 1% of the coin of the relevant economy, bequeathed to him by his rich grand-father; in less than 7 decades, he could, theoretically, end up owning all the money in that economy (presuming that all the money passed through his lending hand at some or the other time, during this short period).

Practically, of course, such a thing could never happen.  Among other reasons, the most important one is that the populace is likely to invent a lower denomination that is not storable by the money-lender.

Thus, perhaps, it IS a sin to lend money at interest in a fixed money supply economy.  However, since we do not like to keep our population (or other desires) in check, population will always likely increase, so long as the necessary resources are available for the exploding population.  What of the money supply then?  A total number of gold coin, sufficient for a population, cannot be sufficient when it has increased ten or hundred fold.

All this has been discussed with my diary today, as also a SUREFIRE solution for keeping human population in check.  This solution will work without the populace actually suffering miserably, which is what will necessarily happen as we are hurtling towards (or perhaps, past) the outer realms of the Earth's Carrying Capacity.


*
"Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry."
Polonius counselling his son Laertes, in Hamlet (Shakespeare).
[Husbandry here means domestic thrift; careful management or conservation of resources; economy].

owais, vasundhara, owaisvasundhara