Every person discounts the future, some more, some less, but everyone does it. If you want to borrow my money for a year, there is an opportunity cost for me to loan it to you, I could use that elsewhere, and loaning it to you for a year means I need to wait that time to get my money back and use it. Further, without interest, how am I supposed to cover the risk of loaning to you? If you lose my money then its simply gone, if I make loans to 10 people with interest and one fails I could still be OK. If your argument is that loans should only be made between friends and family members then OK, I am just skeptical that society will progress very quickly.
Like nostr:npub1qfkcklnmes45z75y7y8dkud5yll8vp5eq5ysk9rmgqdxeasv8unsrfj6kq said, a thing can be immoral yet legal. Or vice versa.
If lender and borrower agree, let them be.
But usury remains immoral, since no well informed person would borrow money from his future more than what he’s getting. You’re getting 10 gold coins, your future self is losing 11 gold coins. No one would make that deal, unless the borrower is uninformed, and the lender is exploiting that, and that’s how it becomes immoral.
If you’re a well informed person, you’d be incredibly high time preference to take such loan. But it doesn’t make sense for a well informed person to be this short sighted.
Finally, we’re not arguing to ban loans. Simply saying usury, aka charging interest, is immoral, and I personally would ban usury if I ever get my own kingdom.
P.S.
Only reason usury looks like a good thing in our time is because fiat has distorted our perception of reality. It never was a good thing, and it never will be.
Discussion
Charging interest does not cover any risk, it may disincentivize taking out loans, but ir doesn't change anything with regards to risk. The borrower might still not pay you back neither loan nor interest.
Under a sound money standard - which is the underlying condition for all my reasoning - like gold in the old days, and bitcoin hopefully soon, as I said before, money appreciates in value. So people will work more for the same amount of gold at year T+1, than they had to at year T.
So when you lend N gold at year T, and the borrower spends it, because that's what you do with loans, and then you get back N gold at year T+1, the borrower must have worked, to earn back N gold at year T+1, more than you did to earn N gold at year T.
To pay interest on this loan with the amount of N gold, the borrower will have to work even more than that to pay this interest, that is also in gold. Why should you recquire this extra extra work, measured in gold ?
When you give out a loan, you're not investing in the borrower. You're simply giving money to someone under the condition to give it back sometime in the future. Now you're going to perform your due diligence to see if the borrower is a trustworthy person and all of that, as is your right. But when you seek to make money off of loans by charging interest, you're laying claim to more money than what you're owed, that's going to require even more work which will not be performed by you.
Because the money supply is fixed, there's no reason to charge interest because you're not risking the devaluation of your money when you postpone your consumption of it by lending it to someone and getting it back at a future time.
The risk is in loaning n money to 10 people (10n) without interest and one of them not paying you back, you only receive 9n back. You would have been better off not loaning it at all under every circumstance. Compare this to loaning 10 people n money and charging x interest, if one bails on you then you receive 9nx back, and lenders set x to ensure 9nx is higher than 10n.
I think I can see your guys point on not making loans for consumer spending or even a home loan, because they don't generate a cash flow, I'm not sure I'd call it evil but something does seem up with it. Loans for equity do make more sense.
That is precisely the point. You’re better off not loaning money, and borrowers are better off not taking loans.
If I need 10 years to earn enough money to pay you back, in 10 years I’ll be exactly where I started. But I don’t take a loan, in 10 years I’ll have more money than I do now.
Investments are different, because they have risk factored in.
Comes down to the time value of money. Under fiat banks seek to add a component of interest to cover the inflation, the rest is the real interest rate that banks charge for the time value and risk of loss.
So banks will work under a Bitcoin system, simply not charging interest to cover inflation, comparably the interest rate would be lower all else equal.
No bank will lend someone who is not willing to repay or does not have the capacity to repay. So a blatant loan to say an unemployed individual for consumption is not going to happen. No one in their right mind would lend us Cb a person their hard earned Bitcoin.