A World Without Interest Is Not Only Possible but Wildly Preferable
It's time to stop rewarding bankers for looting civilization
“The rich rules over the poor, and the borrower becomes the lender’s slave.”
— Proverbs 22:7
Interest is a sin. In the Old Testament, the Israelites were forbidden from charging interest to fellow Jews. In the New Testament, Jesus affirms the OT commands and raises them: Now, Christians are to loan even to their enemies without interest, and expect nothing in return.
But over the centuries, the Christian church has fallen away and become monetary secularists like everyone else. Today, nearly every Christian you know is profiting from usury through their pension plans and 401ks/RRSPs, which are heavily invested in bonds and banks and real estate. Other Christians play the role of the usurer more directly, either by making loans at interest or by being a for-profit land-lorder.
It’s time for the church of Jesus to return to financial faithfulness.
But most people aren’t creative enough to imagine a world beyond the status quo.
Like fish swimming in water, humans can’t fathom that they swim in a $300 trillion ocean of unsustainable, anti-flourishing, ultimately-suicidal interest-bearing debt.
They simply cannot fathom how ruinous usury is for civilization:
Interest enriches the idle rich.
Interest impoverishes the working poor.
Interest keeps poor countries in poverty.
Interest exponentially increases debt forever.
Interest forces humanity to work harder but keep less.
Interest forces competition instead of cooperation.
Interest rewards extraction and punishes contribution.
And, in the words of Geoffrey Ste. Croix:
“A propertied class is freed from the labor of production through its ability to maintain itself out of a surplus extracted from the primary producers.”
In other words, interest is the ultimate economic inefficiency.
Isn’t it telling that three major world religions, covering nearly half the planet, all agreed that interest is a sin?
And they’re right: A world without interest is wildly preferable.
The major objection
Pretty much everyone except the extractive rich agrees that interest sucks, and that a world with less unsustainable debt is good, but everyone seems to get hung up on one big (and good) question:
Who is going to lend money if there’s no interest?
Before we answer that question, we need to ask a far more important question:
Knowing that capitalism is all about incentives, and knowing how interest harms society via unsustainability, inflationary effects, wealth inequality, economic inefficiency, bankruptcy, and generational poverty, do we really want to encourage and incentivize any interest-based lending?
It’s that fundamental moral question that should be our north star, not the status quo.
I don’t like when Christians need a new HOW before they address the ultimate WHY. For instance, I’m currently in conversation with a rich friend who knows that his retirement fund is invested in all sorts of shady garbage. But he won’t even investigate the stocks in his portfolio until I tell him how, exactly, he can still retire rich without exploiting the poor and the planet. Clearly this is sickening, anti-human behavior, and he should do the right thing regardless of the personal cost. The why matters more than the how.
When someone asks, “Who is going to lend money if there’s no interest?” what they’re actually asking is: “Who is going to help others if they can’t exploit them in the process?”
Let’s assume all of my readers are good and moral people — a big assumption, I know — and that we do, indeed, want to rid our nation of the blight of interest.
Who would possibly be willing to lend money without interest?
As it turns out, there are plenty of people:
Who will lend in a world without interest?
To be sure, lending will not cease in a world without interest.
The creditor-debtor relationship is as old as humanity itself, but one doesn’t need to charge interest to borrow or lend.
One example of this is employment. Most people work every day but only get paid bi-weekly or monthly. In other words, they extend interest-free credit to their employers ~225 days per year.
Whenever you swipe your Mastercard or Visa, the company extends you interest-free credit for the remainder of the month, albeit with the hope that you forget to pay off your bill so they can charge you loanshark levels of usury.
Every tax-paying employee in America loans money to the government interest-free. How? Tax is deducted from every check and deposited with the IRS. If at the end of the year, your tax return said you paid too much, they give you an interest-free refund. Conversely, if you paid too little, they send you an interest-free bill, and even give you a few weeks to pay it before they start charging usury.
My point is that it is entirely possible to borrow and lend without interest, and millions of people have done so for thousands of years.
Now let’s take off our pathetic but-it’s-always-been-this-way mindset and think about who would lend in an interest-free world, and why they would lend.
The first and biggest interest-free lenders will be banks, of course.
You don’t get it.
Why in the world would a bank loan without reaping unearned profits?
You’re not thinking creatively enough, my friends!
Consider: If a currency slightly deflated in value each year, one needn’t charge interest to grow the value of one’s bank.
Banks don’t make interest-free loans because if they loaned $1.00 USD and the true inflation rate was 10%, even a full repayment means they lost 10%.
But… if $1.00 USD is worth $1.02 USD next year thanks to slight deflation, you can loan today’s dollar at zero interest and still gain 2% more purchasing power.
Re-read those last three sentences again.
In other words: It is absolutely possible for banks to be profitable without charging interest. (People just don’t think hard or smart enough for like two seconds.)
But forget profit.
Banks should return to their original purpose: To be not-for-profit utilities to facilitate the storage and exchange of money, not predatory extraction machines for milking unearned wealth from the contributor class.
Most people will never be able to wrap their heads around the idea of banks serving a public purpose instead of being a profit center for private shareholders, but that’s inevitably where banks will end up in enduring societies.
A not-for-profit banking system
Right now, for-profit private banks are incentivized to indebt people for ever-increasing amounts of interest-bearing money.
Not-for-profit public banking radically changes the incentive. The new incentive isn’t to gain interest, but to make sound loans that increase widest-spread well-being.
But what about defaults?
Well, first off, no matter what banking system we use, all loans should be fully and legitimately collateralized. Unsecured interest-bearing credit is one of the most dangerous ideas in history. There’s a reason why loan sharks like Visa and Moneymart cripple the poor and why banksters like Goldman Sachs crashed the markets in 2008 with impunity. Credit should be made available in response to real wealth, not the other way around.
But if we were feeling extra cautious and wanted to ensure our new banking system is totally rock-solid, all interest-free loans would not only be fully-collateralized, but the government could potentially charge the borrowers a small upfront fee, called, say, Federal Default Insurance. I don’t love this idea, but it would certainly protect banks.
So if not-for-profit banks aren’t going to lose money because all their interest-free loans are fully-collateralized and potentially insured, the only question is: Where are they going to get the money to lend?
There are three major options here:
They can do what big banks sometimes do and borrow it from the Federal Reserve. Except now, of course, the Fed would loan it to them interest-free.
They can do what big banks do and print credit out of thin air (subject to ever-falling reserve requirements). Except now, created-credit would be loaned interest-free. (I don’t love this option, as it can still cause inflation, which we’re actively trying to avoid.)
They can do what big banks do and loan out depositor money. Currently, banks accept deposits from customers and immediately loan them out to borrowers at interest. Under the new system, not-for-profit banks would loan out deposit money interest-free. Naturally, the depositor cash could still be protected by the Federal Deposit Insurance Corporation (FDIC).
Highly accountable, mega-safe, democratic, not-for-profit, for-the-people, interest-free banks should be the only banks that get approved and chartered by the government. The banking system should serve the contributor class, not enrich the extractive shareholder class.
In other words: We need more Christians to become not-for-profit usury-free bankers for Jesus.
2. A democratic government
A second party that could easily loan money interest-free is a democratic government itself.
In fact, for all income-producing projects (hydro dams, eco-trains, old folks' homes, etc) governments at all levels could help facilitate the creation of tens of trillions of dollars in local wealth by loaning interest-free money to not-for-profits so they could create wellbeing-enhancing projects using the revolutionary (Christian-invented) Daman Model.
So where would governments get all their money to lend-interest free?
Unlike our corrupt current governments who create money by buying interest-bearing bonds, a sensible democracy could simply create money free of any debt or interest whatsoever. It could then lend that money to not-for-profit banks to lend to people, and when people repay the bank and the bank repays the government, the government could destroy the money to avoid inflation.
The second way that a democracy could find funds to loan interest-free is to tax the rich, ideally through some sort of Georgist land/asset value tax and a tax on wealth hoarding.
The reality is that billionaires quite literally don’t need anything (except a psychiatrist and some real friends), whereas there are tens of millions of Americans who could be raised from abject poverty with an interest-free loan.
The third way that a democracy could find funds to loan interest-free is through the profits from commons investments made using the Daman Model. The government already runs all sorts of profitable businesses — the FDIC netted $8.5 billion in 2017 — but imagine how much more profitable they’d be if they invested in new profit-producing projects without corruption and the need to pay interest.
The fourth way that a democracy could find funds to loan interest-free is through selling assets. No, I am not talking about the right-wing wet dream of privatizing every inch of American life. Democracy could sell off underperforming assets to not-for-profits/for-benefits who could run them more efficiently, then use the proceeds to loan interest-free money to more not-for-profits who could create more commons-improving assets.
The point here is that democratic governments, if they wanted to, could quite literally come up with an unlimited amount of money to lend interest-free.
Even though banks and governments alone could easily service all borrower needs without usury, there is still a third group that would be willing to loan interest-free:
3. Everyday Christians like you and me
The fact that most people can’t envision anyone making an interest-free loan gives you a rough idea of how horrifically indoctrinated our pathetic society has become.
It also gives you an idea of how intolerably selfish most people are.
My wife and I are by no means wealthy…
We are rent-serfs
We refuse to participate in the economic exploitation of rent-seeking
We refuse to participate in the economic exploitation of stock investing, crypto speculation, land-banking, currency trading, pensions, etc
We refuse to participate in the economic exploitation of land-lording
We refuse to participate in the economic exploitation of employee-robbing
…Yet despite our lack of passive extraction streams of income, even we have been able to make over 300 interest-free loans to developing-world entrepreneurs, ranging in size from $25 to $10,000+.
Because the personal profit motive isn’t anywhere near the biggest driver in human endeavor.
The profit motive
When people push back against the obviously moral rightness of banning interest with the question “but who will lend?” it’s an immediate red flag that they’re still living with the passive profiteer’s status quo extraction mindset.
Because remember, when someone asks, “Who is going to lend money if there’s no interest?” what they’re actually asking is, “Who is going to help others if they can’t exploit them in the process?”
Uncreative capitalists simply cannot fathom a world where the profit motive isn’t God himself.
Yet most of human history hasn’t operated on a monetary profit motive.
Millions of soldiers have given their lives not for a hefty paycheck, but for king and country and honor and glory.
Millions of artists have endured lifelong poverty and disgrace for the sake of art and beauty.
Like billions of parents, I’m not raising my baby son because I expect him to cut me a check someday — I’m doing it out of pure love.
Humans care for the young, the old, the sick, the weak… we humans are wonderfully, crazily, gloriously inefficient, rarely allocating our scant resources on what returns the highest financial profit, but on what creates the most wellbeing for the people that we cherish.
As Christians, isn’t the gospel of Jesus and the kingdom of heaven what’s supposed to drive 100% of our behavior? Why and how did we let the personal profit motive become lord and king of our lives?
Love, not profit, is the ultimate human motivator.
We need to re-design our economy to make it easier to love each other.
Now of course my skin-flintiest readers are currently balking at the idea of giving anyone but their favorite child an interest-free loan, for the sheer fact that every day their capital isn’t out there exploiting someone poorer via real estate or the stock market, it is losing value thanks to corporate-caused inflation.
And they are absolutely right.
Only the most high-minded, morally optimistic, Christ-centered or downright crazy among us would be willing to loan depreciating money without interest.
To that I say two things:
Like all things in life, we all must count the cost.
There are costs and benefits to every decision, and that includes loaning money in a corrupt world that is rife with inflation.
My wife and I recently loaned a major sum to an old classmate in Ghana so she can build a home and a language training school. Sure, we’ll take the inflation hit, but who cares? A member of our global family will now be free from the grip of extractive land-lorders, she will own her home, she will have a thriving business, and she will have a sustainable way to provide for her children by contributing to the world for decades to come. And she didn’t have to enrich a single bankster or further inflate the economy to do it.
We Christians must change our embarrassingly small and selfish mindset and see that we are all family and that all human flourishing is our human flourishing.
We absolutely must destroy inflation.
In fact, I believe that any politician who performs any action that leads to inflation should go straight to jail for robbing the poor.
Our society is desperately in need of sound money. (Save your comments, Bitcoiners — we aren’t interested in your append-only spreadsheet pyramid scheme!)
But seriously, the average person would be far more likely to loan money interest-free to friends and family and colleagues if they knew it wouldn’t cost them a thing.
Why would I care if my savings sits in my interest-free savings account versus my friend Rose’s sourdough bakery?
In fact, our new not-for-profit banking system could facilitate the process without people even knowing it. When we all deposit money in our checking and savings accounts, the bank could lend it interest-free to other customers — fully collateralized, of course, potentially with default insurance for our bank, and certainly with FDIC deposit insurance for the depositors.
Then, if we really wanted to incentivize people to loan to their fellow man, we could engineer our new sound currency for slight deflation, which makes it profitable to loan money without charging interest.
A stable or slightly deflating currency has another wonderful side benefit that most people don’t talk about: People will grow longer-term mindsets instead of instant gratification, with positive ripple effects that will utterly transform society.
It might even get people to start thinking about heaven again…
So how does one engineer a currency for zero inflation or slight deflation?
Well, that’s a whole other kettle of fish.
There are all sorts of ways to eliminate the robbery of inflation from a democratic economy:
The knee-jerk answer: Freeze prices.
Sure, locking prices could theoretically keep prices from rising, but price controls are historically a terrible idea. Also, they historically never work.
The standard old-guy answer: Stop printing money and get back on the gold standard.
Gold or some other sort of fixed commodity standard. But the reality is that we don’t necessarily need the all-important scarcity that the cryptoheads worship, but we definitely don’t want too much money either.
If we have far too much deflation, people stop spending and start hoarding cash, prices drop, and people lose their jobs.
If we have too much inflation, people go on insane spending sprees, bubbles inflate, prices soar, and the poor lose their already-meager purchasing power.
We need to ignore the Bitboys and the MMT cultists and avoid the extremes:
We need monetary sufficiency.
The corrupt answer: Raise interest rates
Corporate-corrupted central banks are all too happy to let banksters milk the public in the good times and bad.
When interest rates are low, prices soar and consumer debt levels rise, creating trillions in usury profits for banksters.
When interest rates are high they typically crash the markets, but consumers can’t afford loans due to high interest rates, so banksters take all their usury profits and go shopping for cheap assets, picking through the carnage like the vultures that they are.
The uncomfortable answer: Tax corporations.
If a national economy has, say, $4 trillion in it, and its government prints an extra $16 trillion in a two-year period — exactly what the US did during the pandemic — prices will rise for years to come because corporations will continually raise prices to capture all that new money.
If you print a ton of money, sooner than later you need to tax it back and destroy it, otherwise, you simply destroy the value of your currency.
But because corporatists have shifted the Overton Window on taxing hyper-elites, this altogether fair, democratic, and rational option isn’t even considered feasible in today’s idiot America.
The ultimate answer: Ban interest.
God’s word gives us the answer, my friends. We should get rid of usury as faithful followers of our spiritual family have done throughout history.
The good news is that getting rid of interest means there will be a whole lot less fake credit-money floating around the economy.
At present, there is over $300 trillion in interest-bearing debt on the global books, all metastasizing like cancer. When we get rid of the interest portion, we could see years of lovely deflation, meaning our money would retain and grow in value, rewarding savers.
There are a bunch of other ways to combat price inflation and currency devaluation, but it usually takes a mix of sound money, progressive taxation, and banning interest… things that no corporate-captured government would ever do.
Achieving zero-inflation or slight deflation is absolutely possible — civilizations that have done so in the past were remarkably stable — but it requires people with both good hearts and sharp brains to make it happen.
And as you know, such people don’t normally go into politics.
This is why we need more Jesus-hearted people in economics and leadership and teaching. We need to elevate the world to understand all the blessings that obedience to Scripture creats.
What would happen if we banned interest?
Whereas usury is ruinous for civilization, banning interest has opposite effects:
Banning interest despoils the idle rich.
Banning interest enriches the working poor.
Banning interest allows poor countries to improve.
Banning interest progressively decreases debt.
Banning interest enables humanity to keep more and work less.
Banning interest encourages cooperation instead of competition.
Banning interest punishes extraction and rewards contribution.
Banning interest eliminates a major economic inefficiency.
It makes total sense to ban interest and engineer our economy for zero inflation, so naturally, no one is talking about doing so.
Christians needs to repeat and divest of usury, then stand up and raise their voices.
In this article I have tried to establish that:
Interest is a veritable pox on the contributor class.
A world without interest is entirely possible.
A world without interest is wildly preferable to the wretched status quo.
With a stable, inflation-free currency, a for-the-people banking system, and democratic governments to create and loan interest-free money to interest-free banks, we could bless the poor and the working class by eliminating the parasite of usury from civilization.
But of course, it will never happen.
After all, it wouldn’t further enrich lazy rent-seeking Christian investors with more unearned wealth, and in an age where Mammon is more highly worshipped than God, that would be the ultimate sin.
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