Usury

[The Theosist]

The price of commodities, used cars, energy, salt, tulip bulbs, bitcoin can vary enormously.

You are correct. But what I meant was, the physical item's value is constant relative to itself. One gallon of milk is always going to be worth one gallon of the same quality milk. The only time it'll be worth less is if you let it go bad.

Let's twenty years ago, in 2000, I needed a gallon of milk. And my neighbor happened to have an extra gallon of milk in his refrigerator. So we make an agreement, and I sign an I.O.U., and I take his milk. Now, in 2020, he comes to me with the I.O.U. and he expects me to honour the agreement. So I go into my refrigerator and pull out a gallon of milk, which I recently purchased at the grocery store for $3.00, and I give it to him. We're even. (I know that the scenario seems kind of comical, but that's beside the point.)

The scenario changes drastically once we switch from I.O.U.s to cash. Let's say twenty years ago, in 2000, I needed a gallon of milk. So I borrow $2.00 from my neighbor, go to the grocery store, and buy the milk. (Back in 2000 you could buy a gallon of milk for $2.00.) So I do that, and I don't bother to pay him back for twenty more years. It's now 2020, and he expects me to pay him back. So I reach into my wallet and pay him... $2.00. Are we actually even? Milk now costs $3.00 per gallon. He's out $1.00. (Assuming he wants to use that money to buy milk.)

Obviously the market will affect the milk's value relative to other items. When there's a milk shortage, one gallon of milk has more buying power than when there's a milk surplus. But for my example, I'm not really considering any of that. I'm considering only two very simplified scenarios: the scenario where milk is exchanged directly, and the scenario where money is exchanged as if it were a sort of milk voucher.

I'm willing to accept the Catholic teaching on this, but it seems kind of strange.

Interesting, but there's no such thing as an object's value relative to itself. The "worth" of a gallon of milk is something imputed to it, and that varies not just between two different gallons of milk but for the very same gallon of milk at one particular time!

[Greg]

The supermarket may even sell you the milk at a net loss for the chance to sell you chocolate and fancy pink salt for a large profit.

Loans helped build the world we enjoy today.  Internet, motorways, jet planes, free schooling, gasoline exploration all financed by loans so we don't need to save for 40 years to have things.

[Daniel]

He wouldn't even use a bank at all

This brings up an interesting point which I hadn't considered: Is it ok to use bank accounts? I used to just assume it was ok, since the person using the account isn't collecting any usury. But giving it more thought, I notice that the money I take out of my bank account is not literally the same money I put into my bank account, but is, rather, withdrawn from the bank's money pool which contains not only legitimately-acquired money but also money acquired through usury. Further, by putting money into the bank account I am enabling the bank to commit even more usury, since the bank then has more money to lend out.

He was lucky the van wasn't stolen.  Or caught on fire. I had a BMW 323i parked in Nice (close to the Russian Orthodox Church) which was burned out by Muslims.

I think it was God's providence, not luck. Had the van been broken into, caught fire, or been stolen, this young man ideally would have kept his cool and accepted the misfortune, knowing that God must have had a good reason. (Though realistically, many of us--myself included--would most likely be quite upset to lose our home, our transportation, and our life savings all in one fell swoop. But that's because many of us have weak faith or otherwise don't live in a constant state of recollection. But just look at Job. That's who we should be imitating.)

[Greg]

The central bank creates money out of thin air by selling bonds and the commercial bank can borrow this money to lend.  It can lend more money than it has in deposits.

You have to have a bank account.  How will your employer pay you otherwise.  They are getting rid of cash entirely in certain sectors.

I think it was God's providence, not luck

So God interferes with the free-will of car thieves in Europe?

They pass by the cars of good people because God gives them brain freeze?

How is it then that my Argentinian priest friend had his Citroen C3 broken into in France and his stuff stolen?  I am fixing his window for him tomorrow.

[paul14]

I think it was God's providence, not luck. Had the van been broken into, caught fire, or been stolen, this young man ideally would have kept his cool and accepted the misfortune, knowing that God must have had a good reason. (Though realistically, many of us--myself included--would most likely be quite upset to lose our home, our transportation, and our life savings all in one fell swoop. But that's because many of us have weak faith or otherwise don't live in a constant state of recollection. But just look at Job. That's who we should be imitating.)

It is ironic that you should mention Job.   

[Santantonio]

The supermarket may even sell you the milk at a net loss for the chance to sell you chocolate and fancy pink salt for a large profit.

Loans helped build the world we enjoy today.  Internet, motorways, jet planes, free schooling, gasoline exploration all financed by loans so we don't need to save for 40 years to have things.

Loans did nothing of the sort. All loans do is facilitate the consolidation of capital in the hands of the elite, who are the lenders.
Fractional reserve lending ruined Christendom and put Jews on the top of the food chain.

[The Theosist]

The supermarket may even sell you the milk at a net loss for the chance to sell you chocolate and fancy pink salt for a large profit.

Loans helped build the world we enjoy today.  Internet, motorways, jet planes, free schooling, gasoline exploration all financed by loans so we don't need to save for 40 years to have things.

Loans did nothing of the sort.

Yes, they did.

[Philip G.]

My opinion is that as long as the church doesn't define what "profit" is, which I do not believe the church has done, it cannot declare and "define" an approval of a moderate rate of interest as it did in the bull Inter Multiplices in 1515(regarding the montes peitatis). 

"With the approval of the holy council, we declare and define that the aforesaid mountain of piety established by the civil authorities and thus far approved and confirmed by the authority of the apostolic see, in which a moderate rate of interest is received exclusively for the expenses of the officials and for other things pertaining to their keeping, as is set forth, for an indemnity of these as far as this matter is concerned, beyond the capital without a profit for these same mountains, neither offer any species of evil, nor furnish an incentive to sin, nor in any way are condemned, nay rather that such a loan is worthwhile and is to be praised and approved, and least of all to be considered usury.  Moreover, we declare that all religious and ecclesiastics as well as secular persons, who henceforth shall dare to preach or dispute in word or in writing against the form of the present declaration and sanction, incur the penalty of excommunication of a sentence automatically imposed , a privilege of any nature whatsoever notwithstanding."

What is profit?

[Greg]

The Church first said, no interest.  Then later a moderate rate.  And now the Vatican Bank lends at market set rates.

That is like first saying no contraception.  Then later changing it to "contraception is OK when you are married and already have 4 children.  But should not be used excessively".

Leaving excessively undefined.

A complete reversal.  Practically.

[Sempronius]

From Grahams link that he posted:

29) I know that usury was traditionally considered an execrable mortal sin. But didn't the Church change canon law and pastoral practice to remove the penalties and stigma associated with usury?  Haven't most Catholic theologians accepted that the world has moved on from the time when the prohibition of usury made sense?

Well, you asked, so I'll editorialize and give you my personal take.

My answer is yes. The progressive tactic of divorcing doctrine from pastoral and juridical practice is not a new Vatican II innovation targeted specifically at matters of sex and marriage. Earlier progressives were "successful" in leaving the doctrine on usury formally intact, as a kind of decoration that makes no important demands on anyone, despite their attendance of the traditional Latin Mass. Humanae Vitae could easily become the new Vix Pervenit. Contraception apologists have learned from earlier usury apologists and are using the same tactics. Progressives think that money is inherently fecund and that sex isn't inherently fecund.

Acceptance of usury and contraception are both products of denying that things have an objective nature independent of human preferences. Centuries of 'pastoral' acceptance and indoctrination of economic relativism paved the way for other expressions of moral relativism.

You might think of this as the "hermeneutic of continuity of Hell".

It should be said though that getting rid of the ecclesiastical penalties for usury was a pastoral judgement call, and I don't necessarily disagree with it.  For example prior to a declaration by the Holy Office ending the practice on August 31, 1831, it was frequently imposed that a usurer had to make an accounting of all the money he had made through usury and make restitution before he was given sacramental absolution.  This is completely disanalogous to the situation of a divorced and 'remarried' person who is objectively committing adultery on an ongoing basis.  The former may be totally repentant and fully committed to sinning no more without having the practical means to do the accounting and make restitution.  The latter by definition is not committed to sinning no more. Material restitution for past wrongs, in short, is an entirely different pastoral subject from the basic sacramental requirement for a firm purpose of amendment.

The highlighted part is important and shows that it is best for every one to judge themselves. A priest shouldnt study economics in order to properly assess whether the penitent should recieve absolution or not. Every individual can judge himself if he has taken advantage of a needy person. And Thats what the Church fathers have always discussed. They have not talked about institutions and corporations and what not.

And this failure in upholding usury as a sin should be a reminder for trads that they shouldnt strive to build a mighty institution (the Church) on earth.

[Daniel]

For example prior to a declaration by the Holy Office ending the practice on August 31, 1831, it was frequently imposed that a usurer had to make an accounting of all the money he had made through usury and make restitution before he was given sacramental absolution.

I take it that this was done primarily to discourage usury? Or was all restitution done this way?

Every individual can judge himself if he has taken advantage of a needy person.

I don't know... sounds kind of subjective.
For one thing, one's judgement could easily be off.
For another thing, what exactly is the principle? Is it that "interest is inherently wrong", or is it merely that "interest is wrong insofar as it hurts a needy person"?

[james03]

Usury:  charging interest on a non-productive loan.  At that point you are getting paid for the USE of money.  Examples: government debt.  most credit cards.

Interest:  Receiving your just interest from production.  Corporate bonds are typically not usurious.  Government bonds backed by a revenue stream, like toll roads, are not usury.

Structuring an economy that outlaws usury is not only the moral thing to do, it creates a booming economy.

Mortgages and car loans can be done in a non-usurious fashion making them production loans or rent-to-own agreements.  For all intents and purposes a non-recourse mortgage is not usurious.

[Daniel]

I'm not an economist... In layman's terms, what do you mean by "production"? Are you saying that if the borrower uses the borrowed money in order to make a profit, that the lender is then entitled to a share of the profit?

[james03]

Yes.  You structure the contract as a profit-sharing arrangement.  A company borrows money and builds a plant.  The lender gets a share of the profits from the plant.  In this example the interest is from production, and not from the use of money.

Case 2:  You loan money to the government to pay money to welfare queens.  The source of the payment you receive as the lender is what?  This is usury.

Ultimately usury is a sin because it offends the virtue of prudence.  And it is very destructive as we are currently witnessing.

Another example of usury is borrowing money to do stock buy-backs.

[Greg]

That is dumb.

Any company can easily hide profits.

They can re-invest.  They can buy financial instruments.  They can do all sorts of things to hide their profits such as buying all of the directors Tesla cars which then don't need any highly taxed fuel for the next 10 years.  So they just kick their profits into the future.

https://www.accounting-degree.org/accounting-tricks/

You'd never get paid.