Usury, never heard of it. Perhaps you’ve heard of Riba, or Neshekh? No? They mean roughly the same. The concept is simple, although interpretation and circumstance vary. Usury refers to the charging of excessive interest on loans. Something that used to be considered exploitative and immoral.
Within each of the major Abrahamic religions, Christianity, Islam and Judaism, usury was seen as ethically and morally objectionable. Blaming the money lenders and usurers for exploiting a person’s need to create an unfair power dynamic.
Perhaps there’s a good reason behind based Jesus throwing the money changers from the Temple.
Contextual Lending for the Biblically Minded
Whilst the Bible provides some of the most influential references to usury in Western culture, evidence suggests that it was a debate topic long before biblical times. In Ancient Mesopotamia the Code of Hammurabi (18th Century BCE) established regulations for lenders and borrowers, setting out different interest rates based on social status and loan purpose (The Royal Tariff). The Ancient Greeks and Romans also acknowledged the role of interest and lending as well as its usefulness in the economy. Aristotle considered usury “unnatural” and Plato condemned it; “no one shall lend money upon interest”.
Factoid: While the normal commercial interest rate in Mesopotamia was around 20%, it varied from 12% to 18% in ancient Greece
Usury In Christianity
Several old testament verses condemn charging interest to fellow Israelites in need, emphasising principles of compassion and fairness over profit (Exodus 22:25, Leviticus 25:35-37). Whilst the New Testament doesn’t explicitly ban usury the debate over the ethics of it have ranged for centuries. Some early Christian scholars viewed it as permissible, and others viewing it as exploitative.
The Catholic Church adopted a very strict stance against usury, something that was influenced by both Ancient Roman and early Christian sources. Scholars such as St. Augustine and St. Thomas Aquinas argued that charging interest is a form of ‘double charging’ and thus morally wrong. The Protestant reform brought differing perspectives on Usury. John Calvin maintained reservations whilst others adopted more nuanced views, allowing for interest under certain conditions.
He that by usury and unjust gain increaseth his substance, He shall gather it for him that will pity the poor. He that turneth away his ear from hearing the law, Even his prayer shall be abomination.
Proverbs 28:8-9 KJV
Riba in Islam
In Islamic law, Riba refers to Usury, meaning unjust, exploitative gains made in trade or business. Riba is prohibited in the Quran and Hadith and whilst Muslims would agree it is wrong, there are differing interpretations of what exactly constitutes riba. Some views focus on fixed interest rates as explicitly forbidden, while others consider any excessive gain on loans as riba.
To get around the fact that riba is haram (translates to “forbidden” or “unlawful”), modern Islamic finance has developed alternatives. Financial instruments such as profit-sharing models and mark-up financing attempt comply with riba prohibition. To make money from money is forbidden, wealth can only be generated through legitimate trade and investment in assets. Money must be used in a productive way in order to be Sharia compliant.
Jabir said that Allah’s Messenger (ﷺ) cursed the accepter of interest and its payer, and one who records it, and the two witnesses, and he said: They are all equal.
The Book of Musaqah – Book 22, Hadith 132
Neshekh in Judaism
Neshekh appears in several key Jewish texts, not just the Old Testament. In the Rabbinic Texts (Mishnah and Gemara) we see discussions of neshekh, differentiating it from other forms of interest and outlining specific scenarios where it might be permitted. Informal loans amongst the Jewish community are not seen as a bad thing, with quite strict social obligations on paying them back quickly, but without interest accrued.
However, a Jew is permitted to borrow money from a non-Jew and pay interest to him on the loan, and a Jewish person is also permitted to lend money to a non-Jew who asks for a loan and collect interest from him, just as non-Jews are permitted to lend and borrow money to and from each other with interest.
One workaround against lending with interest between two Jewish parties is a legal agreement called a Heter Iska (literal translation: business permit). It restructures a loan into a partnership agreement whereby both parties share in the profits generated by the ‘business’. This avoids the direct imposition of interest but is effectively the same thing. It is a formalistic workaround and has nuance even within the Jewish community.
He who takes usury (ne الشيخ) transgresses five negative commandments: ‘Thou shalt not take usury of thy brother, money, victuals, or any thing that is lent upon usury’
Mishnah Baba Metzia 5:5
Non-Consensual Debt Obligation
How does historical context and religious study of usury apply to the world of modern finance? It comes down to our understanding of what money is. In biblical and historical eras the money was mostly based on Gold and Silver. If I lent you money and you paid it back, with or without interest, we were exchanging a bearer asset. A bearer asset is a financial instrument where ownership is evidenced by possession of the asset itself, rather than through any registration or record-keeping system.
Whilst governments and royalty may have issued various currency denominations with specific face values, the underlying asset was generally something physical and scarce. This conferred on the holder sole ownership, transferability, privacy, but also the risk of loss (given no documented proof of ownership). Today, bearer assets exist only in limited form, with most financial transactions being digital, and our currencies no longer have specie convertibility. You can include physical precious metals, or digital assets like Bitcoin, in this bearer asset classification.
“The dollar is continually worth less until it’s finally worthless. That’s how it was designed. It’s not money. It’s a financial weapon.”
Jarod Kintz
The currencies that we use today are inflationary by design. The common argument is that central banks need this flexibility to respond to financial crisis and to steer the economy towards growth. This inflation is a form of usury and is forced upon the citizens of a nation through legal tender laws. As more currency is created (through loans / mortgages / QE) the increase in supply reduces the purchasing power of the money already in circulation. This is a “tax” on your own savings and in effect is the charging of negative interest on your own money.
Most people are entirely unaware of the hidden cost of this inflationary money. In part, because the rate of inflation, and its impact, is not noticeable day to day. It is only during huge dilutions of the monetary supply (WWI / Global Financial Crisis / Pandemic QE) that we see the true effects of inflation. You are unlikely to notice a 2% increase in prices of some items YoY, but certainly going to notice 10%. These are numbers applicable to ‘stable’ Western countries. Travel to any country that has experienced 50-100% inflation YoY for a true appreciation of how destructive it can be.
Fiat money is an enforced debt obligation, you are paying through inflation for the debts of others.
“With a gun a man can rob a bank, with a bank a man can rob the world.”
Carter Glass
Conclusion
That you are party to a debt contract by being forced to use fiat money, might be up for debate. Governments printing excessive money to cover spending can lead to inflation, both on assets and consumer goods. Arguably this is an indirect form of tax on citizens through declining purchasing power. Some of this can be offset by holding interest bearing instruments, or hard assets that appreciate with inflation. Not everyone has access to the same financial tools or the same financial education.
This money creation punishes those on a fixed income (pensions or savings), and when inflation is high they suffer the same loss as those who take on high-interest debt. Those who are able to take on low cost debt benefit most from inflation as the assets they buy appreciate in value, and the underlying debt principle is inflated away. This is how governments benefit and steal from the population. They will issue debt notes against future tax earnings (bonds) and inflation reduces the size of the principle over time.
“Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create deposits, and with a flick of the pen they will create enough deposits to buy it back again.
Josiah Stamp
This is not by accident or happenstance. Fiat money in various forms has been used many times through history, and without exception has ended up disastrously. Debasement of a nations currency has been done many times through history although amongst economists this is a chicken and egg debate. Perhaps the society was in decline before currency debasement becomes rampant, perhaps it was a major contributing factor.
In 1913 the Federal Reserve Act, signed into law by President Woodrow Wilson, gave the 12 US Federal Reserve banks the ability to print money to ensure economic stability. Since then, all nations on Earth have converted from backed currencies to unbacked currencies. Many have collapsed along the way, but without exception, the general population has had no choice or vote in the matter.
Your chance of getting a full refund for the money stolen through inflation, is similar to the true value of fiat currency. Zero.
If you enjoyed this article, feel free to tip me on Bitcoin Lightning. (click the icon)
Further Reading:
History of Usury Prohibition – Wayne A.M. Visser and Alastair McIntosh
The Evolution of Views on Charging Interest – Ali Mammadov
The Creature from Jekyll Island: A Second Look at the Federal Reserve – G. Edward Griffin
Why Gold and Bitcoin are Popular (An Overview of Bearer Assets) – Lyn Alden
A return to the convertibility principle? – Michael D. Bordo and Lars Jonung