Tag Archives: Interest

Of money and morals

BOOK REVIEW

You Are Under Arrest For Masterminding the Egyptian Revolution: A Memoir, Authors: Alex Mayyasi and Ahmed Salah.
Debt: The First 5,000 Years
, Author: David Graeber.
Your Money or Your Life: Economy and Religion in the Middle Ages, Author: Jacques Le Goff.
A History of Interest Rates, Authors: Sydney Homer and Richard Sylla.
The Idea of Usury, Author: Benjamin Nelson.
Summa Theologica, Author: Thomas Aquinas.
Politics, Author: Aristotle.

By Alex Myyasi – Hundreds of years ago, when modern finance arose in Europe, moneylenders moderated their behavior in response to debates among the clergy about how to apply the Bible’s teachings to an increasingly complex economy.

Lending money has long been regarded as a moral matter. So just when and how did most bankers stop seeing their work in moral terms?

In the early 1200s, the Church’s position was that extracting a single cent of interest was evil. The roots of this revulsion run deep, and across cultures. Vedic law in Ancient India condemned usury, and rulers routinely capped interest rates from Ancient Mesopotamia to Ancient Greece. In Politics, Aristotle described usury as ‘the birth of money from money’, and claimed it was unnatural because money was sterile and should not ‘breed’.

Judeo-Christian religions cemented the usury taboo.

Throughout early Medieval Europe, the local church or a wealthy family was often the only source of capital, especially outside the major commercial centers. Many peasants bought their land by getting mortgages from a monastery. In a world without credit markets and insurance, then, charging interest felt like extorting a friend or family member.

Meanwhile, the Catholic Church played its own part in sowing the seeds of a change of attitude. In the 13th century, it introduced the concept of Purgatory – a place that had no basis in scripture but did offer some reassurance to anyone committing the sin of usury each day.

Eventually kings, politicians, and business people embraced usury wholesale, and the Church looked the other way. more> https://goo.gl/LztiKA

LIBOR scandal is merely one symptom of bank problems

Editorial – Just how serious is the scale of this fraud? Some say that the amount tied to LIBOR is $360 trillion; some say $500 trillion, while others put it as high as $800 trillion.

“Manipulating the LIBOR is a big deal, because it affects the cost of money for almost everyone,” writes Gretchen Morgenson. As Dylan Matthews put it, “A bank that mucks with the LIBOR rate isn’t just playing around with esoteric derivatives that will only affect other traders. They’re playing with the real economy that most of us participate in every day.”

So outrage is entirely appropriate. more> http://tinyurl.com/btydxqy