Usury was not allowed until the Church began to tolerate the State, and its penchant for promoting usury. A banker once told me "show me a successful SBA loan recipient and I'll show you a case of bank fraud."
See, it seems that on paper loans at usury are putatively carefully controlled to keep from having the money wasted. This is contrary to the real world where constantly changing circumstances require constantly changing allocation of resources.
If your "partner" is a state agency who has lent you money, this flexibility is not possible. If you manage to survive and repay the loan, necessarily you managed to survive by breaking the rules. Most do not manage to do so.
Usury leads to terrible misallocation of resources, which usually ends up in the hands of abusers.
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See, it seems that on paper loans at usury are putatively carefully controlled to keep from having the money wasted. This is contrary to the real world where constantly changing circumstances require constantly changing allocation of resources.
If your "partner" is a state agency who has lent you money, this flexibility is not possible. If you manage to survive and repay the loan, necessarily you managed to survive by breaking the rules. Most do not manage to do so.
Earlier this year, reports came out that Fisker had violated its loan agreements multiple times before being cut off by the Obama administration in 2011. Bloomberg reported that Fisker’s technical defaults began in 2011 partly due to “lower-than-required earnings before interest, taxesOn the other hand, if your partner is someone who has not loaned you money, but invested in your business, you have the benefit of the advice of someone who knows how to make money., depreciation and amortization, and failing to meet a production milestone of at least 11,000 vehicles sold to dealers for an average of $87,500 by Sept. 30, 2011.”
Usury leads to terrible misallocation of resources, which usually ends up in the hands of abusers.
Please feel free to share this post with three of your friends.
Nicely put. Usury leads to the misallocation of resources. But it is insidious in another way as well. Compound interest means that the debt is constantly growing, thereby necessitating that the money supply grows at a comparable rate. So usury also means that the money in your pocket loses a tiny bit of purchasing power with each passing moment of time. Theft, plain and simple.
ReplyDeleteAnd since the ones who issue the fiat currency necessarily are the ones "doing the stealing," this activity is finely targeted as to the beneficiary and victim. Read Rothbard on "What have they done to our money?"
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