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Usury, 0% Interest Rates, and Worthless Currencies
A regular reader recently raised a subject (on our Forum) which should be a frequent topic of discussion in our ultra-corrupt societies, but isn’t: usury. Everyone knows the meaning of the word: lending money at “excessive” or “exorbitant” rates of interest. Yet few of us ever contemplate its significance.
How do we define “usury”, in a world where our Big Banks (and the billionaires who own them) receive $trillions upon $trillions – every year – and all at “0% interest” (i.e. literally free money)? The way we quantify differentials in proportionate terms is through the function of multiplication. What does multiplication tell us about 0% interest and usury?
For the Big Banks who get all their own money at 0% interest; charging even 1% interest on the money they lend isn’t merely a much higher rate of interest (in multiplicative terms), it is an infinitely higher rate of interest. This reflects the simple fact of arithmetic that multiplying anything by zero equals zero, thus the (multiplicative) differential between 0% interest and 1% interest is infinity.
Critics will argue that mathematical analysis of this nature (somehow) “distorts” this conclusion about the absurd differential between those who get their money at 0% (i.e. for free), and those who don’t. But such criticism would fail to acknowledge the concept (of logic and morality) which is illustrated by this ultra-extreme mathematical differential.
One tiny, privileged class (the Big Banks, and the billionaires who own them) gets all its money for free. Everyone else does not. For the Privileged Class; obtaining their money (for free) is always a privilege and never a burden. For everyone else; obtaining their money is always a burden, and never a privilege.
This represents not merely an “advantage”, or even a large advantage for the Privileged Class. Rather, it reflects a fundamental act of discrimination, in arguably its most (economically) heinous form. One class is given, for free, something for which everyone else is required to pay (in the form of a real, non-fraudulent, rate of interest).
Revealed by the function of multiplication; there can be only two, possible remedies for this fundamental, systemic, economic discrimination. Either everyone must receive their money for free, or no one can be granted such a privilege. The fairness of this point of logic (and usury) is not merely elementary, it’s tautological.
It is through simply contemplating the implications of these two options that the inherent fraud of (so-called) “0% interest” becomes painfully obvious. What would happen in a world where we woke-up one morning and discovered that everyone could “borrow money” at 0% interest?
Every “Average Joe” and “Average Jane” would immediately march to the nearest available bank, and start borrowing (who would need to show up for work?). Would they “borrow” a million dollars – at 0%? Of course not. Would they borrow a billion dollars? Why stop there?
If Average Joe and Average Jane could “borrow” like the Big Banks (i.e. get as much money as they wanted, for free, whenever they wanted), then that is exactly what they would do. The day after everyone was allowed to “borrow” for free, our money-supply would be a number which would look something like this (we don’t have a word for it):
$1,000,000,000,00,000,000,000,000,000,000,000,000,000,000,000.
…and the day after that, our money-supply would look something like this:
$1,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000
…as everyone began “plans” for construction of their own Castle in the Sky. And by Day 3 (at the very, very latest); no one would accept this funny-money – as by then it would be crystal-clear to everyone that all this paper was totally worthless.
Conceptually, this (extreme) example will come as a shock to many readers, to the point where many will reject the obvious logic here as being contrived. It isn’t. It just illustrates a simple principle of arithmetic: anything available for free, and in infinite supply must be worthless.
Suppose that tomorrow one of our insane/corrupt governments decreed that it would start to use grains of sand as its “money” (instead of coloured scraps of paper). Some enterprising individual would immediately take a back-hoe to the nearest beach and start “harvesting money”, which he/she would then use to buy everything.
Obviously if grains of sand were “money”; it would be worthless money, because no one would accept it for payment, in spite of that government’s “fiat”. But if grains of sand would be an obviously/irredeemably worthless currency; then what about “dollars”? Most are now fabricated electronically, with nothing more than a mouse-click.
If even government decree would not/could not bestow “value” on grains of sand (because it was free, and available in near-infinite quantities), then how can it bestow any value on electronic currency – created for free, and in near-infinite quantities? The obvious answer is that it cannot.
The mere (fraudulent) act by which our corrupt central banks give $trillions and $trillions and $trillions to the Big Banks for free automatically renders these currencies economically/mathematically/logically worthless. Thus we see that the extreme, multiplicative differential with which we began our analysis is “revealing” in yet another respect.
When the Big Banks get all their own money at “0% interest” (for free), while everyone else pays (literally) infinitely higher rates of interest; this is not merely fundamentally unfair, it is fundamentally fraudulent. So-called “0% loans” are prima facie fraudulent transactions, since (as our analysis reveals), “borrowing” money for free is inherently illegitimate, from any and every perspective.
The official “0% interest rate” of the U.S. government (and all the near-zero rates across the fraudulent West) establish two, fundamental principles – in mathematical, economic, and logically irrefutable terms.
1) As long as the Big Banks get their own money at 0%; any rate of interest which they charge (to their victims) is “usury”, in its most extreme/heinous form.
2) Because the Big Banks are getting their money for free; all our Western currencies have been rendered worthless.
Our entire monetary and financial systems are merely frauds and shams, of unparalleled dimensions. The paper currencies issued by our corrupt central banks are irredeemably worthless. Worse still; the ludicrous notion that government “fiat” can give these worthless, paper currencies value has been revealed to be just as ephemeral as grains of sand – in a hurricane.
Five hundred years ago; the Dutch were convinced that tulips (actually tulip bulbs) were an ideal currency, to the point where they based their entire economy on the tulip. “Everyone” believed this to be a sound, rational basis upon which to operate a monetary system (and economy)…until the day when “everyone” realized (simultaneously) that they were wrong.
In hindsight; it was obviously a ridiculous basis for a monetary system, in large part because there was no mechanism to limit supply. But at least it was an honest system.
Five hundred years later; our governments now operate a monetary system every bit as ridiculous as “Tulipmania” in Holland: cranking-out scraps of coloured paper, for free, in near-infinite quantities, and pretending that all this paper is “money”. The difference is that unlike the Dutch tulip-economy; our system of (worthless) paper currencies is both inherently/extremely unfair and fundamentally fraudulent.
For those people just becoming aware, today, that our entire economies are based upon a massive, unsustainable fraud, and that all of our (paper) currencies are already worthless (in fundamental terms); fortunately there is still time to protect yourselves. Take your (unofficially) worthless paper – which will soon be officially worthless – and swap it for honest money: gold and silver.
This is one scenario where the cliché “better late than never” does not apply. Those members of the Dutch population who swapped their tulip bulbs for hard assets the day before the collapse of Tulipmania suffered relatively little economic harm. Those who did not were destroyed.
If you borrow any money today (or have borrowed any money, at any time in the past 6+ years); you are a victim of the rapacious usury of the Big Banks. However, if you continue to hold your (dwindling) wealth in the form of these fraudulent/worthless paper currencies; you will soon be a victim of a much bigger crime – by the same cabal of Big Banks.
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A better example for an analogy of today is the Weimar Republic. For most of the peroid 1919-1923 real interest rates were profoundly negative. Steeply declining foreign exchange rates led to much expanded bond issuance which then led to much currency printing for discounting the bonds which then led to further declines in exchange rates etc. The US and much of the west has real negative interest rates. The decline in exchange rates is masked by 24/7 manipulation of the gold price. The manipulation of the gold price is not new. The price has been manipulated with dedication since 1962. And the reason is obvious since the granting of free money to themselves is a privilige that no one would want to lose.
Keynes has just been pantzed that even the sheeple may now see it.
Nice piece Jeff.
I know the U.S. fiat dollar is inherently worthless and I think it is brilliant( in a criminal way) how we got the rest of the world to take so many of them...I think the reason we have not collapsed yet is the old "If you owe the bank a million, you have a real problem. If you owe the bank 100 million, the bank has a real problem"
Yeah, one day the dollar will cease to exist and we'll go back to Gold or something else...so lets get scared because China and Russia have so much Gold. I am a part owner in a gold claim where we find about 2/10 of a pennyweight per yard...barely gas money...it is a 10 acre claim you can only work primatively ( for now). There is probably a million dollars of Gold on that claim ( or more).
Its gonna hurt when the reset comes, but maybe a bunch of folks here on ZH are really into finance and don't realize just how much Gold is locked up in the USA by environmental laws. If and when the reset comes, don't worry so much about the Gold in Fort Knox, its not there, but it is still in the ground in greater quantities. I expect a coming rollback in anti-mining laws when SHTF and a chance for the working man to have a good job again.
The real issues occur AFTER the bank has been paid in full.
A. Someone borrows 100k, has paid 150k back and still owe 50k. They lose their job and cannot pay back anymore.
The bank takes the 50k as a "loss" but its not really a loss of any principal, its a loss of expected profit.
They will sue you in court to collect the 50k, no problem and 99% chance they win.
B. However, if the same person borrowed the same money, and when they had paid 75k back, and instead of continuing to pay for the next 15 years they choose to pay off the loan in full right now, pays the bank another 75k.
The bank has collected 150k total from B.
In both cases, the bank has 150k, or 50k profit on the original money. However, they do not sue borrower B for the "lost profit" (Yes, I do realize there are loans that do not allow early payoff, but most do)
Theoretically, the bank should not be in a position to sue for the lost profit in A if they cannot sue B as well. In both cases the bank "made" the same amount of money. Why is there a "loss" in A but not in B?
We would have a better system that shuts down interest once the original borrowed amount is paid back. If you borrow 100k, once you have paid 100k there is no more interest on the money - whatever is the balance gets paid down to 0 with no interest rate. It does'nt mean money is free - just when the bank has no risk any longer they should not be able to keep charging interest on expected profit.
It would for sure encourage people to pay back loans faster in order to save significant money - it would likely spur the economy too.
Unfortunately its a non starter - banks own politicians and they will NEVER vote or propose anything that would reduce the donations which keep them in office.
There is no way the average Joe can get a 1% loan from a bank - even if the bank can get 0% money to cover it. The banks are too smart to lend any longer term money at low interest rates because they DO NOT WANT those loans on their books -- especially since the future may hold higher interest rates.
With gold you have a store of value.
With fiat, you have a belief of value.
Brilliant summation...
Everyone has a credit limit, even banks. Only the Government can borrow an infinite amount at 0%, but it issues the currency.
If you could borrow at 0% from the government, there would be a credit limit and repayment requirements. You could still go bust.
Negative interest rates are a very interesting beast. Full blown negative rates are only possible in the present era, since it is only in the present era that cash can be totally electronic, and never leave the banking system.
If you take out a mortgage at a negative rate, you can still go bankrupt if the value of the property goes down faster than the loan produces cash.
If a negative rate is high, you have to spend any negative interest you recieve immediately, and never try to save any money, because any money you deposit will be taxed away by even higher rates of negative interest. Money becomes something that must be passed on immediately, with as little residence time as possible. The only way to have savings is in commodities or goods. And if those commodities or goods are subject to a comparable property tax, savings of any kind may be impossible.
Someone needs to go back to Early Econ Studies. What is a Medium of Exchange and what is a Store of Value?
ONLY because we use the same thing (the dollar) for both do the kiddies have their panties twisted.
When some one is destroying your Store of Value that is a crime. When they tweak your Medium of Exchange you can just transfer out of it or find another. This is an age old problem and it is being resolved as we watch.
Buy gold. Use dollars.
...don't get them confused...
The charging of interest in itself is not really "usury", regardless of the rate. A flat rate of 25% would not be usury, IF it was a one-time event...a 'fee' for the use of the money. It is actually the COMPOUNDING of interest that is usurious.
It is the endless compounding, to where the original loan swells to multiples of the original amount, and grows exponentially, that creates the debt 'trap'.
This is what the 7-year jubilee puts a stop to. And this is what we need. Not necessarily a full debt write-off, but at the very least, there should be a time-limit on how long you can accrue interest on loaned money. After you reach the limit, no more accrual, and the loan gets 'frozen' and goes into pay-down mode only, until the creditor has been paid, and gotten his 'fee' from the interest accrued. If the borrower hasn't repaid by the time it gets frozen, that could be seen as the 'default event', and used to calculate a borrowers credit-worthiness and FICO score. If you routinely drag out repayment to the point of freezing the loan, they can say you are not a good risk for more loans.
This could actually be a 'happy medium' between straight-out jubilee, and endless debt-slavery. The lender gets a decent return for his loan (and in a decent and KNOWN amount of time..) and the borrower pays back what he owes. No need for bankruptcy for most people, no "moral hazard" to agonize over. The lender knows upfront what the value of the loan is, and when he will be repaid. The borrower knows up front what the actual cost of the loan will be, and can plan accordingly.
Of course, you can't 'sell' a loan like that for an inflated price, because everyone knows up front what the profit will be, and it's on a "timer", and that's no fun.
When I read about people taking out loans for say, 10,000, and 20 years later they now owe many TIMES the original amount, it angers me. The creditors in many cases have ALREADY been repaid, and then some. It is the interest that keeps piling on with no end in sight, and that is an abomination.
Bemused, I like your idea in theory. One flaw that I think needs to be adressed is that it assumes a stable currency. What if the currency that the loan is denominated in devalues in excess of the flat rate of interest. I'm not rejecting your idea, I'm just putting this out there for examination. Cheers!
It probably couldn't work in the absence of sound money...currency stability is important. We've lost that in all the rush to inflate, inflate, inflate...
But we NEED new ideas...the old ones are stale, and aren't working.
Bemused Oberver, ZH needs more comments like that. Most comments, mine included, have become repeats of the same wisdom (or stupidity). Nice to read something that made me think a little even though I hate using my brain these days.
BO
So as long as folks follow your rules for lending they are...what...immoral?
Remind me not to lend to you.
Should I decide to lend I will want a borrower who can abide by a contract, not someone who complains when times get rough that the deal was not a good one.
Would you give the lender the same consideration if they lent at 6% and rates went to 25% soon after the loan was agreed upon?...did not think so...
Lender, an institution, but benefits real people, assholes like you, assigned and allowed to that, creates money on the spot out of thin air and on top of that there is an interest ?
If that does not make working people plain idiots (even if they enjoy what they do) I do not know what does.
Now, if lender is a State (or any Country) owned Bank, and interest charged (and audited min 4 times a year) is used (via competitive and transparent bidding) for real public god or even to get away with taxes, in that case I have no problem.
And, of course, personal lending between individuals and family members is a different story because lending party actually has ALL the money that it lends.
They aren't my 'rules'...they are a suggestion. Loaning money according to the 'contracts' used today hasn't really proved to be a guarantee of repayment, has it?
You agonize over the possibility of losing some points in interest, yet seem oblivious to the fact that, regardless of the rate you charge, if the borrower cannot pay, you are screwed.
My suggestion, (please read it again) does not only protect the borrower. It also protects the lender against the loss of his principle and a reasonable 'fee' for the use of the money.
Our current way requires bankruptcy for over-extended borrowers, and in bankruptcy the debts written off are NOT repaid at ANY rate of interest. Is it better to collect the principle and say, a 20% one-time interest over a shorter, specific time period, or to charge a lower rate and allow it to compound to ridiculous levels and force your borrower to default, and you get nothing and tie your money up for years and years before kissing it goodbye?
It's better not to traffic in counterfeit. Unless the currency reads "we the people", probability says that it was printed by a Chosenite central banker and is used exclusively for wealth transfer, enslavement, impoverishment, extortion and taxation purposes.
I do not know if it is only my household being picked on BUT within the last year credit cards that I have held for 20 years or more, with good payment history/balance pay off; I was given notice that favourable rates (of 5% or prime plus 2% etc.) were being converted to 19.5% interest or more. These are Mastercards not Visa (who have always been a rip-off).
Chase bought out the credit side of Sears such that all charge accounts went from just usury (19%) to the statuatory limit in Canada ( I think it is over 28%).
Enough said. Jeff Neilson is right,
Have a read of this article... it may shed some light into CC rate hikes.
BTW, if by "good balance history" you mean you've paid off your spends in a timely fashion so as not to accrue much interest, then why use a credit card at all? You're more than likely also paying for the privilege of using the card via an annual fee (it all adds up). Use cash - more bargaining power usually anyway... or if you absolutely, positively need a card, then get a debit card.
Just my 2c worth.
If you are using credit cards as a revolving line of credit you are a fool.
Mine just pay me 1.5% (cash, no upper limit) in 15 years I have never accrued a balance. The rates are screaming "DO NOT USE AS A SOURCE OF CREDIT!!!!"
This blog is a great overview of the debt based monetary system ponzi.
It starts off a bit slow with the goldsmith bankers but lays some good ground work that is used later in the first post. The bitcoin stuff gets a bit out there but still interesting. I hope the blogger continues to post
http://debtcrash.blogspot.com/
On the long enough timeline the interest rate drops to zero...
http://www.gurusblog.com/archives/estamos-con-los-tipos-de-interes-mas-b...
"the Dutch were convinced that tulips (actually tulip bulbs) were an ideal currency, to the point where they based their entire economy on the tulip. “Everyone” believed this to be a sound, rational basis upon which to operate a monetary system (and economy)…until the day when “everyone” realized (simultaneously) that they were wrong."
Err, no, that's urban legend. Even without getting to serious economics paper about tulip mania, even a cursory read of the wikipedia entry would show that, in effect, people involved were a minuscle minority and very little real money really passed around, all the valuation being on paper and futures.
Beat me to it. The "Tulip Mania" was speculation revolving around "rare" tulips. The futures market crashed after the sellers couldn't come up with the product when the buyers wanted delivery.
http://www.businessweek.com/2000/00_17/b3678084.htm
Kinda like rehypothecated paper gold, eh?
In aggregate, mathematically, no amount of interest can be paid on a loan without borrowing even more money at interest. It is therefore never possible to pay off a loan with ANY amount of interest. It's a scam. The author of the article is in error, scientific definition of Usury is ANY amount of interest charged on a loan. I expected better from Zerohedge.
You can pay it off by working for the bank. Or prostituting your daughter to the bank. For a loan imagined into existence.
The banksters need to repay us (stealing it man)
They owe us everything they own. They are parasites and have earned nothing. They deserve only prison in some third world country where you have to blow the guards to get dog food for breakfast.
In aggregate, mathematically, no amount of interest can be paid on a loan without borrowing even more money at interest. It is therefore never possible to pay off a loan with ANY amount of interest. It's a scam. The author of the article is in error, scientific definition of Usury is ANY amount of interest charged on a loan. I expected better from Zerohedge.
Kindly explain usury laws for me. I remember when 18% was the legal limit, and anything beyond that was codified as usury.
Chosenites pretending to be Judges make it a legal law to screw you and me every way imaginable. That is different from what is moral, conscionable, dignified or exhibiting integrity. They made a religion out of being pure evil.
"Everyone knows the meaning of the word Usury". Except, apparently, the author of the article.
Also, It's better not to traffic in counterfeit. Unless the currency reads "we the people", probability says that it was printed by a Chosenite central banker and is used exclusively for wealth transfer, enslavement, impoverishment, extortion and taxation purposes. Send them all back to Israel or put them all in prison.
You make a mistake by falling for the myth that these faux-Hebrew/Babylonian/Khazarian/banksters are Jews. They are people who call themselves Jews, but are not Jews.
Deceiving Christians into believing these descendants of Babylon are God's Chosen People, makes it difficult for Christians to take them to task for the confiscatory Babylonian fraud they have inflicted on humankind for centuries.
The historical pograms against these evil charlatans by the Russian and European peoples were not without cause. The next rejection of these insatiable demoniacs is currently brewing worldwide. Their walled enclaves and island hidaways will fail to protect them.