photo credit : jo


Lending Interest
by Jo Abbess
11th November 2007

Having had the benefit of an Evangelical Christian upbringing, with plenty of Bible teaching at Sunday School, I have always been aware that the Jewish Scriptures contain an injunction against lending money for profit.

To be obedient to God, you should not charge your brother or countryman interest when you make him a loan - that would be indecent and oppressive. Neither should you charge the poor for loans - and you should return their cloaks at sundown if they used them as security for a debt.

In Islam, it is forbidden to lend or borrow money at interest, haram under Sharia Law. Those Muslims wanting a halal mortgage from a Western bank often have to pay an agreed but fixed charge for the loan.

Imagine what the world would be like without percentage rates on loan repayments.

Economic models assume that the way that Capital works most effectively is to incentivise labour and production through debt, with interest added on to the repayments.

You borrow and pay back more, in the case of house loans, roughly three times what you borrowed.

And this interest, charged on every single lend, whilst it could be considered to be a valid financial charge, implies that the money supply has to continue to increase, as all trade and industry rely on debt.

Whether the new money is minted, printed or exists only as electronic signals, it has to emerge to keep the whole system of debt creation working.

And as the money pool increases, the supply of products expands to soak up that pool of money.

Increased provision of goods and services imply increased consumption of natural resources and increased use of energy and fuel.

So in effect, charging interest on loans is causing Climate Change.

There are checks and balances on economic growth - one of the levers is to reduce interest rates when there is inflationary pressure on prices.

Interest charged should tend to zero if there were to be a continued stress on natural resources and energy supplies.

And that is very well what we may see : with Peak Oil upon us, and Peak Energy not far behind.

With the exponential rates of increase in commodities and minerals prices due to a combination of Peak Oil and Climate Change damages, there is every chance that prices of all goods and services will rise wildly.

An environmental price for Carbon, and Carbon Energy prices continuing to be subject to high demand and decreasing supply, will inevitably have a knock-on effect on the rest of the Economy.

As costs spiral, interest will need to be reduced for the Economy to survive.

It seems like this could be the end of the line for Usury.

When this idol topples, what else will it drag down with it ?


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