During the Middle Ages and Renaissance, Christians were not supposed to charge interest. Therefore, the most common moneylenders-to-kings were Jews. They could loan money at a profit, and were thus more likely to lend it.
But whenever the King’s debts got too large to repay, he began to demonise the Jews. And eventually came a pogrom. And hey-ho, the debt went away along with the Jews.
I’m seeing the demonisation of banks. I wonder how long before government throws a pogrom?
The Jews then, and the banks now, will lend you money, but the cinchy bastards not only want it back, they want more back than you borrowed. This is vile and evil behavior, deserving of punishment. The fact that if you punish them you don’t have to pay the money back, let alone the interest, is purely incidental, and has no bearing on the criminal charges, right? It all makes we wish I’d posted a private communication, in which I suggested to Norm Geras that the pogrom was imminent. Soothsayers take great pride in finding others who agree with them.
I’ve noted before that this is a matter of terminology. Most Western and Western-derived religions and all popular sentiment demonize lending at interest — yes, even Judaism, although the Jews handle it by making those passages historical rather than canonical. It ain’t right! An example demonstrates why.
Lots of people don’t have a pickup truck. They’re expensive and big and get lousy gas mileage, and HOAs think they’re ugly and don’t want them parked where they’re visible. Once in a while, though, there’s a couch or a fridge or something else too big to fit in the Prius that needs to be taken elsewhere or brought home, and a pickup would be useful. Lots of people have friends who have pickup trucks. Such a person might go to the friend and ask to borrow it to carry the unexpected load, and an indulgent friend might agree to lend the cargo-hauler.
The friend wants his truck back when the borrower is done with it, and a wise borrower will return it full of fuel and possibly offer a few bucks, or a compensatory favor, in return, but there’s no quid pro quo involved. If the friend wants to charge for the use of the truck, it creates resentment. That isn’t what friends do to one another.
But if the prospective borrower doesn’t have any friends who own pickup trucks, there’s another alternative. He or she can go to an agency, like U-Haul or Enterprise, and rent a truck. The terms here are quite different from borrowing from a friend. The agency specifies exactly how long the renter can use the truck; it wants something to reassure that the truck will be returned in good order, and (most importantly) it wants payment based on usage. The renter may resent the necessity — it would be much cheaper to borrow from a friend if one were in a position to lend — but the agency itself, and the rental terms, don’t cause resentment. It’s just perfectly normal business, and even at the height of the anti-usury campaign the Church itself was happy to serve as a rental agency for capital, luxury, and real property articles, and make a nice profit doing so.
As technology and commerce advanced it was discovered that “borrowing” at interest served the needs of both “lenders” and “borrowers”. Instead of renting a truck, the person can “borrow” the money to buy one. The “lender” specifies the term of the “loan”, wants reassurance that the money will be returned, and charges a fee for the transaction. From the standpoint of the “borrower” there isn’t a whole lot of difference. He or she provides assurance of repayment (a “security deposit” or “collateral”), and pays a periodic fee for use of the truck.
In other words, instead of renting a truck, the person rents the money to buy one. The terms may be different in detail, but are identical in principle to the case of renting the machine, and the advantage to doing it that way is that the “renter” gets to keep the truck — a capital good, which can be used for hauling all kinds of things — at the end, instead of returning it to the agency.
Neither Citibank nor The Shady Corner Finance & Extortion Agency “loans” money. They rent money out, on exactly the same terms U-Haul rents out trucks: the user pays a periodic fee, based on the value of the item rented, for the use of that item. SCFEA is not your friend; Citibank is even less so; using “loan” to describe what they do confuses it with transactions between friends that are in reality totally different, both in what happens and in the underlying philosophy behind them.
We would be better off if “lenders” discarded that terminology and used terms that better reflected what was really happening. Instead of renting a house, you can rent money from the bank to buy one; instead of renting a truck, you can rent the money to buy one from GMAC. The terms and conditions for renting the money are the same as for renting the house or truck: security (assurance that the money or the item will be returned in good order), a periodic payment, and a defined period of rental. Getting the words right would make it clearer just what it means when Obama & Co. want to rent a trillion dollars to bestow largesse upon their friends and dependents. It’s just too bad that the Medicis didn’t think of that when they established the system. It might have saved a lot of heartache for a lot of people over the years.