Daysman Chimes In!
Posted by Daysman in response to Difference Between Lending-At-Interest And Risk-Based-Investing
Your Risk argument becomes crystal clear when you study mortgages. Mortgages have relatively no risk for the Lender because they are backed by the home. Yet, mortgages amortize future compound interest into the earliest payments and that results in 30 year mortgage payments that send over 90% of the payment to "interest"... which is like calling over 50% of our income "taxes".Thanks for your comment, Daysman! It's incredibly insightful and provides a lot of historical perspective.
I do think there is a fair "tax" and a fair "interest" which we owe; but over 50% of our income should not be taken for "taxes" and over 90% of our mortgage payments should not be stolen a la "interest".
The Boston tea party took place because colonists didn't want to pay the tea tax... tax meant 1%. In America today we are splitting our income with the government; it isn't taxes, it's too high to be compared to what the Godfather took from his victims in the old days, so it isn't protection either, it is partnership in crime; the government has drafted us all as partners to commit our lives to killing others and stealing their resources. "Tax" means 1%; these aren't taxes and these aren't dues, these are too big for that.
Of course the cause of the evil that rules the planet is fractional banking. Banks needed cash flow to service their loans and they got it from the slave trade, the opium trade, and from pirating on the open seas. Satan's minions used these to build mega-banks (read corporate) and seized power over whole nations.
They then set up central banks of issue for the nations and indebted the entire nation to the central banks. The central banks are owned by the corporate banks and use their power to change all the laws to let banks write loans that charge "interest" at astronomical levels.
Einstein was asked what the most powerful force in the Universe is and replied, "compound interest". Compound interest sucks the life out of a nation. Banks now own everything and the mechanisms that were put in place to take everything are impossible to turn off. Hence the mosquito will keep sucking blood until he blows up from too much blood.
Your patient is already dead. That's why he won't listen to what's wrong with him. Once the host dies the parasite is in trouble. Hence, all the problems at the FED.
And, thanks for shining light on Interest's evil outgrowth, compound interest, and the abominable practice of fractional reserve banking!
I have to disagree with your position on a small amount of interest being okay. I agree that some money must be paid to maintain a monetary system, but that money should pay for the expense of labor and goods to maintain it. The monetary system should be a public non-profit organization.
And, I hope that you're wrong about the patient being dead. I still hope that we will overcome this monster.
posted by qrswave @ Tuesday, November 15, 2005
6 Comments:
Of course you are right about the patient not being dead, at least not yet. Critical is a fair evaluation, I agree with that.
I can appreciate your apprehension about allowing any interest at all; but consider that we used gold as money in the USA right up until FDR took office (and confiscated all the gold). The banks charged interest and it was no big deal. It was simple interest, and I figure it is the price you pay for obtaining a currency. As long as the currency is gold based and not this fiat paper Federal Reserve crap, interest is contained. Interest creates expansion and that can help spark an economy. What we are facing today is more like a global wild fire out of control that will result in the dollar collapsing. But fiat paper always collapses.
The God awful truth about American history is that we already learned our lesson about currency in the 1700's. The colonists printed up too much paper and England declared it all illegal tender in 1764. Your history book fails to mention that when they talk about the causes of the Revolution War. But the united states printed more paper money during and after the war and it too became quite worthless. So when we drafted the Constitution we provided for hard currency; gold based.
If you allow the banks some interest but restrict fractional banking, the currency will remain in balance. Our banks were always allowed to lend far beyond their reserves; that's what causes money to inflate.
Actually regulate the banks, provide hard currency, and simple interest will help the economy. Comparing a sane banking system, such as this, to what we have today is like comparing a spark to an atom bomb. I disagree with you in one respect; I think America is beyond saving. She could be saved if you overhauled the currency, and started regulating the banks... fat chance of that happening.
Thanks, Daysman. As usual your comment is thoughtful and engaging.
The problem with interest is that it does not exist. It is not issued thus it must always consume principal to be paid. Even if it's limited to very small amounts it sets up a zero-sum economy in which eventually there is conflict.
Of course, giving currency a tangible and heavy form, that costs much more to produce mitigates the consequences, but it also increases the cost of producing the currency.
If there were no interest allowed, you could even implement a digital banking system, which would cost much less to administer than printing. I believe they are attempting such an experiment online in Argentina. Following how that pans out could be worthwhile.
As far as whether we can salvage America's financial system, it is most definitely a long shot. But, I think the most important step is to rewire the central monetary system so that we stop hemorrhaging from our jugular. At the very least, Treasury Bonds must not be issued again and interest on outstanding bonds should be eliminated so that we can begin to recover.
One way or another, we need to survive.
It is a small point to ponder when faced with the dire situation we are in today, but the Constitutional currency as laid out in Article I section 8 is a dollar that Congress regulates. If the central bank currency was dismantled and fractional banking outlawed, if loans were restricted to simple interest and money was made redeemable in gold again... the small amount of interest that banks charged on a loan would require an adjustment to the weight of gold a dollar redeemed for. The constitution made provision for Congressional adjustment to the currency for this reason. This was honest money, but it was constantly under attack from European bankers who were peddling their dishonest money. Both Lincoln and Kennedy were murdered by these bankers, and our whole federal government has become a whore to this paper money.
You can build a currency minus the banks but I think you would lose the primary engine of the economy. If you allow banks you have to closely regulate their activities. If you don't allow the banks any profit (interest provides their profit) the banks will not survive. The constitutional currency can adjust for slight expansion; but the banks have to be regulated by government, not the other way around. Today the banks regulate themselves, obviously they allow themselves every crime under heaven. Bankers do not follow laws, period. That has to change.
I agree that a banking system is essential to a robust economy. But, the only way interest is profitable for bankers is when they have a monopoly of the money supply such that people who need money are forced to resort to borrowing from them at interest.
This ultimately leads to the pernicious results that are at the heart of my argument against it. Although, the constitutional provisions for gold standards and adjustment for interest at redemption would take the steam out of such a process, eventually consolidation of wealth would result.
This is demonstrated in Margrit Kennedy's graph illustrating the exponential growth (curve C) of an interest based monetary system.
If the banks are not allowed a monopoly on the money supply, i.e., if the government maintained a central bank to which entrepeuneurs can always turn for interest free loans, or investment capital, then interest would not offer commercial banks much in the way of profits.
Moneylending, like healthcare, should simply not be for profit. A nonprofit structure is more conducive to helping communities prosper. But again, even if banks were for profit, their fees should be based on their labor and not the value of the money lent. And, no bank should have a monopoly on the money supply such that it can raise its fees to supracompetitive heights and get away with it.
In addition to its exploitative tendencies, because interest is a fictional assessment added to the value of money, once banks are allowed to charge it becomes nearly impossible to regulate without assuming price-fixing role, which would be inefficient and inconsistent with a free market.
That's just my sense. I am not an economist, or a banker. But, the vice of interest is crystal clear to me. I am sure that where there is a will, there is a way to structure a banking system that is far more efficient and wholesome to the economy than one based on interest.
We both envision a banking system that is not allowed to charge interest determined by the market. Your voice is strong for a non-interest, not-for-profit money system; reminiscent of the Teutonic knights money structure. It is very rigid but it does retain value, I would even say that there would be no need for Congress to set the value of a dollar, money would not deviate in value. Wages would be king in such a system but bankruptcies could be brutal; there was no credit in the Teutonic knights' money system, credit came about with the advent of commerce and the industrial age.
We are in complete agreement that imparting a monopoly on the currency was a bad idea. For America to write a bond... in essence America takes out a loan, hence the bank is loaning "bank money" to America... instead of America issuing her own Constitutional money is bizarre and fantastically corrupt. Not only do we owe interest on those bonds, we owe the principal. When America issues her own money the nation is enriched. When America instead borrows money from the Federal Reserve the nation is indebted. The IRS then collects that debt from every American household and deposits it in the Federal Reserve. The Federal Reserve is a banking scam, pure and simple.
I think you tend to roll together fractional banking, currency speculation, bond money, compound interest loans; both corporate and mortgages, and simple interest (yes there still are simple interest loans; auto financing is simple interest) in your mind and label the whole evil beast as "interest". Nothing incorrect in your view, but understand that my view is that we need to stop everything except the simple interest loans. Banks can function as simple savings and loans to the benefit of free society.
Either one of our views would require the hand of God to execute... I personally hold fast to the hope that Jesus will return in the near future and clean the stinking planet up. I can't imagine a grass roots effort acquiring the momentum needed to overthrow the elite ruling class that has held the world in it's grip for centuries. In today's world, those rulers are bankers.
Thanks, Daysman.
I understand your point. Simple interest is far better than all this crap. But, it is nearly impossible to turn the current tide. If we're going to go through all that trouble we must not settle for anything less than equal access FOR ALL to the benefits of our monetary system. That is not possible with interest.
And to your last point, God works through people.
Let's pray and work hard. God will do the rest.
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