The Church teaching on usury was discussed here long ago. Most Catholics know the Church condemns usury, but there is no general agreement, even among theologians, on what precisely falls under the rubric of usury. And the complexity of the modern financial system doesn't make it any easier. I would appreciate your thoughts. Some questions and considerations for us to ponder, based on what was discussed last time.
How exactly do we understand the Church's condemnations of usury today? Is all interest taken on a loan usurious? Is only interest on non-productice loans, that is to say, on capital that remains idle, on money that would have been hoarded instead of usefully spent or invested - is only such interest unlawful and truly usury? Is compound interest always and inherently usurious?
On the other hand, as some argue is today the case, are opportunities for investment so manifold, and a risk-free gain always assured, that interest per se is never usurious, unless it is excessive or immoderate?
What about fractional reserve banking? The practice of lending money that banks simply don't have, and charging interest on this non-existent money, which supposedly spurs growth? Frequently banks underwrite loans to the tune of over 10 times or more than the reserves they have with them from deposits by the public. At any given moment, banks never have enough to meet all their obligations, since these liabilities are not backed by real money. The banks only get away with this because all their creditors do not usually demand their money back at the same time.
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"Bank run", i.e. the incidence of banks defaulting on their loans or turning to the government for a taxpayer funded bailout, is what will always happen when a sufficient number of people realize their money is not safe and demand their money, money that isn't there, and mass defaults and a cascading effect in every sector will be the result.
Such banking panics happened many times before 1934, when the introduction of deposit insurance slowed it down somewhat. Even at that time, economists like Irving Fisher argued in the Chicago Plan that only a total return to full reserve banking can prevent events like the Great Depression from recurring. Very recently, and surprisingly, a group of economists at the IMF reintroduced the idea. It is still an extreme minority, and ignored by those who benefit from the current unjust system, but at least it's a start.
Leo XIII and Pius XI say usury has returned in another form, that a few men who have control of money hold entire populations as if by the throat. "The mischief has been increased by rapacious usury, which, although more than once condemned by the Church, is nevertheless, under a different guise, but with like injustice, still practiced by covetous and grasping men." (Rerum Novarum) What does this point to? Some theologians think it refers to money creation.
In almost every modern country, the central bank purchases government bonds and loans money to the government, so that the government must now repay the bank at interest, and is a debtor by the very fact of money creation. A debt it is practically certain can never be repaid entirely, since sufficent money to repay the debt and interest doesn't yet exist in the system.
Money in general comes into existence as debt, a liability owed by the bank's customer, whether an individual or the government, and correspondingly as an asset on the bank's balance sheet. The bank did not work to acquire it, nor undertake any expense of its own in obtaining it. Rather, it is allowed to do this merely because it has money in its hands, and this therefore seems to meet the strict definition of usury in money lending, see Lateran V below. Money is likewise destroyed when the loan is repaid.
The entire amount of principal and interest owed to the banks can only be repaid, then, beside the hard work and labors of citizens, either by printing new money or by taking new debt. And so the vicious cycle continues, and no country can really enjoy the fruit of its labors until usury is banished from the Earth.
Credit default swaps are a derivative product that played a key role in the recession. A credit default swap allows speculators to make money in the event of default. The bottom line is that the system is inherently insolvent. Only a complete return to full reserve banking and to debt-free money creation can solve the problem.
Fr. Denis Fahey courageously pointed out the true origins of the Money Power, which many others knew but did not dare speak of, and, as expected, was silenced for writing about it.
Our Lord whipped the money changers in the Temple, who made the sacred House of the Lord a perfidious den of swindling Thieves. This act of Justice shows us how serious the sin and crime of money-gouging and usury is, as does the severe ecclesiastical laws promulgated on usur, which commanded restitution of usury taken, and legislated other measures including capital punishment for those who maintained there was no sin in taking usury.
Usury is World Jєωry's revenge on Christian civilization, the ѕуηαgσgυє of Satan's weapon against the Church of Christ. It is Shylock attempting to bleed Bassanio to death, Judas betraying Christ for his 30 pieces of silver.
“For that is the real meaning of usury: when, from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk”
Topic: Usury in the world today (Read 1205 times)