Against Usury

On Twitter Hurlock took a swipe at distributism. I’m not going talk too much on distributism. I heavily sympathize with it but do not think it is something that would work out. I also find that many distributists simply use distributism to try to disguise their socialism. I must admit that the romantic side of me really likes the idea of repersonalizing production and property, however impractical that might be.

I came not to talk about distrbutism though, but rather usury. At some point in that discussion Hurlock and SB got onto the topic of interest and usury. Essentially, Hurlock thinks that interest should be a free-for-all and SB wants limits on interest. About two years ago, I would have been heavily in Hurlock’s camp; I remember defending payday loan outfits a number of times. Yet now, not so much. Now I fully support a ban on usury.

The problem with discussions of usury is that, as it seems to be in this particular exchange, the focus is almost always on the interest rates being charged. SB focuses on a 400% rate, while someone else implied usury is interest over 10% and should be banned. It’s not the particular rates that are the problem and rates should not be the focus. (Not to mention a focus on the rates is rather arbitrary: ex: why 10%, not 9.5%?)

Zippy has written a lot on usury over the last half-year or so and usury has nothing to do with particular interest rates. A loan is usurious if it is for profitable interest and is full-recourse. To break it down to a more practical level, any loan is usurious if it is for expenditure on consumptive activities (no matter the interest rate), while it is non-usurious if it being spent on capital and real property and that capital is the only recourse for the loaner should the debtor default.

It is a fact that some people are less intelligent and neoreactionaries very much accept this fact. Compound interest is not something that a significant portion of the population will be able to comprehend and even among those who do comprehend it, a significant portion of them will have too low a future-time orientation to make rational decisions. Compound interest makes sense to people like Hurlock, but I’ve lived among the working classes most of my life, and I’ve seen the hardships usury can bring to the lower classes. Now it is possible to take the position of screw them, debtor slaves are natural slaves, but I don’t think the mass debt slavery is healthy for society.

To illustrate, let’s look to the biggest example of modern usury, one that tend to get the attention of the reactosphere: student loans. Unlike most forms of usury, this one is primarily impacting the right half of the bell curve, so its not just the stupids that are being taken for the ride. Thanks to the ease of obtaining this particular form of usury we have a situation of massive amounts of young people going into debt slavery for near worthless pieces of paper, then squandering their potential in underemployment to get of it.

Do these people deserve their debt slavery? Yes, they did take out a loan, then waste it on worthless degrees, and they did promise to pay it back. They fully deserve their debt slavery.

But this is not the right question to ask. The better question is: is it healthy for society to have a large portion of the most intelligent people of an entire generation permanently in hock for a worthless degree? The obvious answer is no, this is a disaster for society. The entire corrupt edifice of the modern college system is built on and enabled by usury. Remove the usury and the entire corrupt structure falls.

We can now look at the national level. The federal government has taken out massive amounts of usurious loans*, enough that 7% of the US budget is devoted to interest payments. Usurious loans (along with inflation) are what keeps the decaying government going. Usurious loans are what allow the uninterrupted growth of the bureaucracy and they are what allow the corruption of the people by said bureaucracy. The corruption of the USG we so hate depends on usury.

If we look back to what constitutes usury, debt for consumption is usurious, while debt for productive purposes is (usually) non-usurious (as long as it is not full-recourse). If we banned usury, if would not hurt the economy. Productive activities would still be able to get themselves funded, while consumptive ones would not. This would be in the best interests of long-term, natural economic growth. Allowing usury draws potentially useful capital away from production towards consumption.

Keynesian nonsense is based on usury. The endless cycle of consumption to keep those GDP numbers high is funded by usury. Without usury, keyensianism would die. There would be no stimulus because there would be no way to fund stimulus.

Usury drives the degenerative ratchet. Cut away to the heart of any degeneracy and inflation and usury will almost always be funding it.

Every reactionary should oppose usury (in its proper sense).

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* Technically, bonds are sold to ‘investors’ by the government as debt instruments and blablabla. But throw away all the extra garbage, and essentially a bond is a usurious loan to the United States government given by ‘investors’.

26 comments

  1. It’s interesting that usury was never banned in Orthodox countries, despite being viewed as sin by the Church. This is how Sir John Mandeville, a 14th century Englishman saw the Orthodox Christians: Although the Greeks are Christian, nevertheless they vary from our faith. For they say that the Holy Ghost proceeds not from the Son, but only from the Father; and they are not in obedience to the Church of Rome, nor to the Pope. And they say that beyond the Greek Sea their Patriarch has as much power as our Pope has on his side of it. And therefore Pope John XXII sent letters to them showing them that the Christian faith should be unified, and that all Christian men ought to obey a Pope, who is Christ’s Vicar on earth and to whom God gave full power to bind and to loose; and therefore they ought to obey him. And they sent to him many answers; and, among others, they sent one saying, …’We well believe your power is great over your subjects; we cannot support your great pride; we do not purpose to slake your great avarice. God be with you, for God is with us. Farewell.’ And other answer had he none of them. The Greeks also make the sacrament at the altar of leavened bread; for Our Lord made it of leavened bread when he held the Last Supper. And they say that we err in making the sacrament with unleavened bread. And on Maundy Thursday they make that bread as a token of Our Lord’s Institution, and dry it in the sun, and keep it all year and give it to sick men instead of the consecrated Body of Christ. And they anoint only once when they christen children, and dip them but once at the font. They do not anoint sick men; and they say there is no Purgatory, and that souls shall have neither joy nor pain before the Day of Judgement. They say also that fornication is not a deadly sin, but a natural one, and that men and women should only marry once; and, whoever marries more than once, their children are bastards and begotten in sin. Their priests too are married. And they say that usury is no deadly sin…
    Sir John is a bit confused here, since in Orthodox view every sin is deadly, so it’s a misunderstanding, but nevertheless we can conclude that they didn’t make a big fuss out of usury. Problem is that people who want to ban “usury”, usually want to ban any loaning of money whatsoever, even for productive purposes, despite Thomas Aquinas defending practice of that kind of “usury” by calling it “investment”. I’m not so sure that Distributists would agree with you on Keynesianism being usurious, because Central Banks keep artificially low interest rates, sometimes even negative interest rates. Distributists seem to have no trouble at all with fiat money, inflation and all kinds of nonsense, as is seen in Medaille’s book. In my experience Distributists are Materialists masquerading as Christians, they always talk, on and on, about material conditions, and never about Salvation. Maybe they even have the best of intentions, but they’re just enablers, a useful idiots. I keep hearing from them, all the time, leftist nonsense, like “wild and unrestrained Capitalism is what’s wrong with today, we need more regulations” and stuff like that, yeah we already have thousands of regulations, and a few more would fix this phantom menace of “Capitalism”. If they ever got in power and implemented their nonsense economics, they would probably cause massive poverty, exactly of those people they’re trying to “help” and I think that Hurlock understands that, and it’s the reason why he was so angry.

  2. Some of the people closest to me who I respect also think usury should be banned, however I disagree. Regarding your definition as excluding capital expenses, everything will be classed as such, Islam forbids interest entirely and yet they still figured out loopholes to make loans. Usury is a tool and it is downstream of the root causes of the problems associated with it, dumbing down or making tools illegal for the benefit of the lowest common denominator is the essence of leftism. Student loan debt is a problem because USG backs the loans and because degree mills exist. University isn’t supposed to be for half the population like it’s currently practiced, it’s supposed to be reserved for the top 5% while most men practice trades and go to vocational school (including programming, you don’t need to be an engineer to code). Mortgage debt wouldn’t be as much of an issue if we could practice discrimination since high housing pricing is purely about insulation from undesirables. Payday loans wouldn’t be an issue if we encouraged Malthusian pressure to kill incompetents and their children (you can’t keep the r-selected down without pressure), predation on the stupid (aka r-selected) is a feature not a bug.

    Be careful about connecting this to government debt, the Keynesians would like nothing better than to implement a negative interest rate, which technically wouldn’t be usury.

    I am open to discussion regarding implementing Jubilee or requiring a fixed collateral (potentially including indentured servitude, the military effectively already does this to great success) that can be used to completely cover a debt (instead of outlawing debt slaves pushing it further underground, formalize them instead).

  3. @Aeroguy
    Formalization is probably the right idea. If you think about it, prostitution was formalized in Middle Ages, despite being viewed by the Church as one of the worst evils imaginable. In Middle Ages it was considered that prostitution reduces the amount of rapes, because raping requires much more effort (and also raping was dangerous because of capital punishment, unlike prostitution which was legal) on behalf of the rapist than simply paying the prostitute.

  4. Ban usury, are you nuts?? It’s how we fleece the goyim and squeeze them for every last shekel!

  5. I believe God’s Word says you could not charge usury to those who are of of the faith (and the aliens living among us). Not that it could not be charged at all.

    I think of usury as a you sow what you reap effect. As painful as it is for the poor or the student it does teach you a valuable lesson- and what in life is learned without a little pain when we sin? I think in regards to the poor a more important discussion needs to be had on the jubilee & forgiveness of debt. Or even more important who we borrow from. If we were relying on our faith families and our families would not much of this be moot?

    But the biggest reason I would not want a ban on usury is it caps who far the insanity of government can go? Just how big would the US or any government get if they were allowed to borrow without interest. It is the .01% chance this country has- the imposed reality of usury.

  6. Free northerner, I can tell you’re starting to wake up the gnostic injustices of the modern money control matrix, but do you see how the rest of your “neo reaction” cohorts are feudalistic eugenicist scum bags?

  7. “The better question is: is it healthy for society to have a large portion of the most intelligent people of an entire generation permanently in hock for a worthless degree?”

    The ones finishing school with worthless degrees aren’t generally people who could be classified as part of the “most intelligent people” by any means. They’re people of average intellect who have been suckered by a system that encourages them to get a degree by “following their dreams/bliss, and the work will come”.

    Intelligent people can handle the basic task of comparing the cost of a degree with the expected salary of said degree.

  8. Stop writing on topics you are ignorant about. Please familiarize yourself with Bohm Bawerk’s 3 volume “Capital and Interest” before you write entry-level blog posts.

  9. Please familiarize yourself with Bohm Bawerk’s 3 volume “Capital and Interest” before you write entry-level blog posts.

    Only after you familiarize yoursef with Karl Marx’s 3 volume Capital, and the Select Quotations of Chairman Mao Zedong

  10. Payday loans wouldn’t be an issue if we encouraged Malthusian pressure to kill incompetents and their children (you can’t keep the r-selected down without pressure), predation on the stupid (aka r-selected) is a feature not a bug.

    How about we actively manage their lives instead of passive-aggressively giving them rope with which to hang themselves?

  11. Usury is the destroyer of Empires. It should be eliminated, among with reckless speculation. Get a proper job.

  12. You need a selection mechanism for who to take drastic intervention measures with. Self selection is 100% accurate while bureaucratic selection has known problems.

    Balancing the ecosystem is an art, going after predators that don’t discriminate between strong and weak prey protects the pray as a species, leaving predators alone that only attack the weak also protects the prey as a species. Payday loans only attack the weak, degree mills are far less discriminatory. To be fair though payday loans would be less prevalent if not for welfare.

  13. The Church, and religious people in general throughout most of history, got it right. There’s a lot of attempts to re-invent the wheel, but what ought be is long known. People just don’t want to follow the Truth. That’s the real issue in the end.

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