- Luke 6:35 But love your enemies, do good to them, and
lend to them without expecting to get anything back. Then your reward will
- Even in ancient scriptures, there is allusion to the
fault of lending for the purpose of receiving back more than what was lent.
Based upon extensive thought and examination of the evidence and arguments,
I firmly believe that borrowing and lending at usury (and any interest
rate) is bad for society.
- The Bible uses the word "usury". Today, the
politically correct term used for "usury" is "interest rate".
Usury is defined as "interest," or is sometimes defined as an
exorbitant or excessive rate of interest. But which is the real definition,
really? Is it any interest rate, or is it excessive interest?
- It is acknowledged by society that loan sharks who charge
very high interest rates are criminals, because they charge too much interest.
It is widely acknowledged that excessive credit card interest rates are
criminal--commercial banks even teach this! TV commercials show that charging
high interest rates is like robbery, as they picture a raid of Vikings
or Bandits as representing their competitors' interest rates.
- If excessive usury is bad, why isn't a low interest rate
bad, too? Where do you draw the line? Where is the moral absolute? What
makes a 25% annual interest rate criminal, but a 15% annual interest rate
not criminal? Or, is a 15% rate criminal, and a 5% rate ok?
- I think any interest rate is bad, and I'll tell you why.
The borrower is the servant to the lender. And in the United States,
we have outlawed slavery since the end of the Civil War.
- The problem of interest rates is perhaps the most important
topic regarding money. Almost every sort of financial commentary on the
general markets contains a comment on what the interest rates are, or should
- There is nothing more confusing than reading commentary
of various economists. Some will say a lower interest rate is bad for
the economy (because it will lead to too much economic activity and inflation),
while others will say a higher interest rate is bad for the economy (because
it can choke off growth, and cause bankruptcy, or deflation). Some will
say a lower interest rate is good for the economy (because it is the needed
stimulus, and to prevent deflation), others will say a higher interest
rate is good for the economy (because it will slow down economic growth,
and prevent inflation).
- What a mess of contradictions! Supposedly, sometimes
growth is bad, and sometimes good. Supposedly, sometimes inflation is
bad, and sometimes good.
- Occasionally, you will read that the problem is that
the Federal Reserve is setting interest rates, and that the solution should
be that the free market should set interest rates. But is that the real
solution to the problem of interest rates?
- It is far more rare to read of any economist who condemns
all usury in the first place, and I really wonder why. Where have all
the moralists gone?
- Isn't it a false set of options when the discussion is
framed as if the choice is to have either a lower or higher interest rate?
How about the option of no interest rate (and no lending) at all? Why
isn't that option widely discussed?
- Why do people just assume that loans, charged at interest,
are needed for a society to grow and prosper? I believe that is a false
assumption, and I'll try to explain why. I believe that loans, charged
at interest, are like a chain around the neck of society, and cause it
to stagnate and die.
- Loans are generally fraudulent in their nature from the
very beginning, and I will describe several examples.
- First, I have to thank Ted Butler for this first example.
Ted has written that metal leasing (loaning) is by nature fraudulent.
He says that the lender (the central bank) lends out the gold (or silver)
to the borrower (the bullion bank). Then, the borrower (the bullion bank)
loans out the gold again to the mining company. Then, the mining company
sells the gold (to a fourth party) to raise the paper money needed for
expanding production. If this process were repeated for any other asset,
it would be fraud. You cannot sign a lease on a house, make rent payments,
and in the meantime, sell the house on the open market, and pocket the
proceeds to hire someone to build a new house. You cannot rent a car at
the airport, and sell the car at the local used car lot, and take the proceeds
to buy another car.
- But why is lending allowed for money? I believe the
key difference is that gold and silver are fungible, meaning that every
unit is similar enough to another so as to be little different whether
the same exact brick of gold or silver is returned. That's the beauty
of gold and silver as money. It is one key reason why gold and silver
are money, whereas other things like houses, cars, numismatic coins and
diamonds are not money.
- But Ted Butler's example goes to show the main problem
of loans, which is that paying them back can be impossible under certain
circumstances. For example, you cannot pay back a house after you have
sold it to someone else! The situation in the metals markets is similar
in that that much of the gold and silver that has been leased into the
market has been crafted into jewelry over time. Thus, that precious metal
is no longer fungible, but is now in a drastically different form, and
cannot be easily repurchased to return to the original lender.
- If Ted's argument is correct, then he is really arguing
that all loans are fraudulent by nature, and I do tend to agree, even though
money is fungible. The reason is that the fungible nature of precious
metal does not overcome the fact that money is not borrowed to be used,
like a car or house is used, money is borrowed to be spent or sold! The
false assumption is that spending money is the only use for money, and
clearly, spending money is not the only use for money. Another use for
money is to save it! And clearly, selling a borrowed thing is not wise.
It is not even wise to borrow for the purpose of making an investment,
because investments are risky. The other false assumption is that lending
money to a borrower is the only way to put the money to productive use,
because the borrower will invest it in a project. But this is also a false
assumption, because the person who would be the usurer could also become
the investor directly. Now, loaning paper dollars should really be criminal,
because the creator of paper dollars (that lender of last resort, the Federal
Reserve) could, by a policy decision, cut back on lending. If this happens,
then it would really be impossible to pay back dollars, and the enslavement
process of servicing the loans at an interest rate would really accelerate.
- The next big reason why loans are generally fraudulent
in nature is that banks generally do not loan gold, they loan paper dollars,
or credit. The borrower never really borrowed anything tangible and real
in the first place. This next example goes back to the time of Andrew Jackson,
who fought the central bank of the United States, and refused to renew
its charter. Jackson noticed a real estate bubble developing because banks
were freely loaning paper dollars for the purpose of land speculation.
But the banks never loaned gold. They would only loan paper money. So
Jackson passed a law saying that all land purchases had to be paid for
in gold coin. Since banks would not loan gold, the real estate bubble
quickly collapsed, and economic reality was re-established. (Let this
serve as a warning to people holding overvalued real estate today.) Calculate
the value of your home in gold or silver coin. Is it really worth that
- The next example is from the time of World War II, and
this is a much more frightening example of the fraud of the bankers. By
1945, the end of World War II, the debt of the United States government
was $259 billion dollars, up from $43 billion in 1940. See http://www.publicdebt.treas.gov/opd/opdhisto3.htm
Now, remember, this was during the time when gold was officially $35/oz.
Let's do the math on that, and see how much "gold equivalent"
we borrowed. $258,682,187,409 / $35/oz. = 7,390,919,640 oz. That's 7.4
billion oz. of gold equivalent. Gold is usually quoted in tonnes, and
to convert, we divide by 32,152 oz./tonne. And so, that comes to 229,874
tonnes. That's the value of the dollar debt of the U.S. government at
the end of WWII.
- A quick look at http://www.gold.org/discover/knowledge/faqs/index.html
shows that all the gold mined in the history of the world up to 2001 is
a mere 145,000 tonnes.
- Therefore, it is impossible for the U.S. government to
have borrowed anywhere near 229,874 tonnes of gold. The loan was a fraud
to begin with, and therefore, does not have to be repaid in any way, shape,
or form! It is extortion upon extortion to require interest to be paid
on a loan that was fraudulent to begin with! Loan sharks are more honest
than the people who loaned the U.S. government the money to win WWII.
After our soldiers came home after fighting for the freedom of Europe,
they should have finished the job, and fought for our economic freedom
right here at home! What good does it do to fight for freedom, only to
be enslaved once again to the debt the moment you are free?
- The way this fraud was perpetuated on the people was
that the debt was sold to the people in the form of "war bonds".
Using marketing and advertising, it became a patriotic thing to loan money
to the government, and thus, the people who held war bonds obviously did
not want that debt to default. That's quite a bit of economic trickery.
But to pay off the bonds, taxes had to be collected from all the people,
once again, so the people did not benefit.
- What good does it do for us to have to pay over 50% in
taxes at the highest levels? Wouldn't it be better to live in a nation
that had lost a war and had to pay only a 30% tribute tax?! It would be
less! Historically, slaves paid 50% of their productive capacity to their
masters. Historically, feudal serfs paid 30%. Today, what is the difference?
Aren't we are a nation that is enslaved economically?
- And the only reason we have the income tax is, in theory,
to pay off the usurious loans of the government, which were fraudulent
to begin with.
- Many belief systems throughout the world condemn usury.
I, being a devout Christian, reference the bible to better understand
the morality of usury. There are four verses (Exodus 22:25, Leviticus
25:36,37, Deuteronomy 23:19 ) that prohibit lending money at interest,
- Usury is defined in one of them.
- Leviticus 25:36, "Take thou no usury of him, or
- Man has a history of redefining and manipulating language
to justify actions of greed. The definition of usury and the addition
of the term "excessive" may be a very good example.
- Laws must be precise. If they are not precise, they
are void for vagueness. The law must define its terms. Usury is defined
as any increase, not just "excessive interest". If a word such
as usury meant "excessive interest," then I believe that God,
who gave mankind language ability in the first place, would have also defined
what "excessive" was. The definition would have included a percentage,
such as 1% or 5%, and also a time frame, such as a year or a month. If
usury meant "excessive interest," then the passage in Leviticus
25:36 would have said "or EXCESSIVE increase" but it did not.
- No, it was man who tried to re-define the word, to justify
his disobedience to it, and to deceive people. But if it is wrong to be
a deceiver, it is also wrong to allow yourself to be deceived by those
who practice usury!
- It is not wrong to invest, own, and then produce more.
It is wrong to lend and take more. I believe that the Bible teaches that
each man should be free to enjoy the productive capacity of his own work.
- Usury was forbidden, unless when lending to a stranger,
(Deuteronomy 23:20) which meant someone who was not an Israelite. The
verse is clear that avoiding usury would lead to economic blessings for
the entire land.
- In a global economy, where all men should be treated
equally under just laws, can there really be any such thing as foreigners?
According to the new standard set by Jesus when he said to "love your
enemies," is there any allowance for lending at usury to a stranger?
- Nehmiah Chapter 5 is a really great story on usury that
I strongly urge you to read. It describes the problems of usury, and it
compares the bondage of usury to the bondage of slavery. The setting was
Jerusalem, after some of the Israelites had returned from a 70-year captivity
in Babylon (because they had not obeyed God's laws, such as the laws on
usury). The more wealthy slaves, however, still had to purchase their
fellow Israelite slaves who did not yet have the wealth to buy their own
freedom. But upon their return to Jerusalem, the wealthy people began
lending to the poor people. The poor people soon realized that they were
in economic bondage, not much different than before. The debtors complained.
A person in Israel was supposed to live free, not in bondage. So Nehemiah
thought about the problem, and he ended up condemning the usury, and the
taking of usury, and said that it made no sense to enslave a people with
debt who you just bought to be free from slavery.
- Nehemiah 5
- 7 I pondered them in my mind and then accused the nobles
and officials. I told them, "You are exacting usury from your own
countrymen!" So I called together a large meeting to deal with them
8 and said: "As far as possible, we have bought back our Jewish brothers
who were sold to the Gentiles. Now you are selling your brothers, only
for them to be sold back to us!" They kept quiet, because they could
find nothing to say.
- 9 So I continued, "What you are doing is not right.
Shouldn't you walk in the fear of our God to avoid the reproach of our
- 10 I and my brothers and my men are also lending the
people money and grain. But let the exacting of usury stop!
- Clearly, debt at usury is like slavery. Clearly, the
borrower is the servant to the lender.
- The clear answer to the problem of how usury enslaves
people is to avoid debt, and avoid using debt currency. The use of gold
and silver as money will bring economic freedom and prosperity. As people
free themselves from the fraudulent system, it will create a boom in gold
stocks, and especially silver stocks, since silver is more undervalued
- I produce a free weekly silver stock report on 90 silver
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