What if loans weren't a thing? What if it was only legal to…
What if loans weren't a thing?
What if it was only legal to invest for equity, rather than the principle plus interest? What is the advantage (to the economy as a whole) of being able to create money for loans rather than having to risk savings?
Replies
what you are talking about here is a matter of God
This is an interesting question.
If you "give someone credit", you are in essence, assessing their character and reputation.
So to take delivery of an item an expect repayment later is to give them credit. Literally and figuratively.
Quite fascinating - sincerely.
https://www.openbible.info/topics/loans
You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest.
I must give you credit where credit is due @204, you're spot on.
You may charge a foreigner interest, but you may not charge your brother interest, that the Lord your God may bless you in all that you undertake in the land that you are entering to take possession of it.
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People never bartered. They gave each other credit or lodged their wares in credit houses.
Reference:
Debt: The First 5000 Years -- David Graeber
Thanks for the reference - I agree barter is a myth. So giving credit is okay in your mind - mine too. What about demanding interest on that credit?
I guess my point is, wouldn't that mean that it's in your _interest_ for the debtor to never pay you back in full, but rather for you to have many many debtors all paying you interest, and continuing to owe you at least part of the principle?
I think interest leaves a bitter taste and takes away the credit. If you need to charge interest to someone then you're not really giving them any credit because it then becomes risk-adjusted.
Giving credit is in good faith based around reputation.
Marquee Mark for Governor of the Bank of England!
More thoughts on this. If you’re only allowed to invest in people, for equity. Then the rich get richer but only at a percentage of the profit their investee gains from their own work. That would require a 49% limit on equity investment in any venture.