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Most important is the success that the finance industry has had in convincing the populous that prompt debt repayment is next to Godliness. Never before was virtue tied up with debt repayment. But now, people are expected to impoverish themselves, eat twinkies, live in boxes, and sell kidneys to repay debts. A debt that can’t be repaid, historically won’t. And it shouldn’t. Excessive interest is usury, and excessive charges from monopolies that corner people into participating with a one-sided loan, are unjust.

If you default on a loan, perhaps you’re a creep. But perhaps you can’t repay it. And if you can’t repay it, it was a bad loan and a bad business move by the bank.

Aurelius 2y ago

“Cheap borrowing advantages the borrower.”

Not really. The fact that money is cheap means that everybody has already borrowed on the real assets that you desire. Prices are inflated on houses not as a virtue of their productiveness, but because of available money. Paying 6% interest to borrow on a house that was worth 2 years of your income in 1950, has now transitioned into borrowing at 3% on a house that is worth 12 years of income. You’re paying far far more in interest because you’re playing with an asset class that is massively inflated because of those aggressive loans, because of the myth of necessary home ownership, because of the impossibility of bank default due to bailouts, and because of the belief that prices will always rise.

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Discussion

Squirrel Master 🐿️ 🇮🇱 🇵🇸 2y ago

So what would be an acceptable interest rate in your view? That wouldn’t be considered usury

Aurelius 2y ago

I think you start with a return to traditional lending models, and the natural interest rate will reappear.

1. Encourage lending for productive purposes instead of just on real estate

2. No loans that cannot follow you after bankruptcy

3. No debtor prisons

4. Remove the belief that repayment is virtuous

5. Hold banks accountable for loans they make

6. Let banks fail if they make bad loans

7. Hold executive boards responsible for targeted lending

8. Reenact anti-usury laws

9. Don’t have a money system that inflates perpetually

With these things in place, good loans will be repaid, and bad loans will now. Banks who act antisocially will suffer for it. Asset classes that people need (houses) will return to more accessible pricing.