A step in the right direction. It should be eliminated entirely.
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11 comments:
To be fair, what reasonable incentive would there be for people to lend money on a large scale? If you lend 10000 with 0% interest and receive it 5 years later, you made negative profit due to (((inflation))). If the interest is low, but only to compensate inflation, you made +-0. So no reason to lend money ever.
Compound interest is vicious due to the nature of its exponential nature. It can get out of control and become crazy high, even double the original amount. But just logically seen it means you lend 10000, and after 1 year it's 11000. But you aren't really lending 11000... you are lending 10000 and 1000 were accrued in "fees." To charge interest on fees is somewhat "unique" to that, and given the nature of it being accrued when a person is already struggling to pay it back is not fair.
There is also something like charging x% interest every year/month on the original amount. That's also reasonable. If you lend 10000 for 2 months vs 5 years is a big difference as to how long that money is locked away from being used by you.
Anyway, it's usury if the interest is too high or compound interest (interest on interest) occurs.
Compound interest is vicious due to the nature of its exponential nature. It can get out of control and become crazy high, even double the original amount. But just logically seen it means you lend 10000, and after 1 year it's 11000. But you aren't really lending 11000... you are lending 10000 and 1000 were accrued in "fees." To charge interest on fees is somewhat "unique" to that, and given the nature of it being accrued when a person is already struggling to pay it back is not fair.
There is also something like charging x% interest every year/month on the original amount. That's also reasonable. If you lend 10000 for 2 months vs 5 years is a big difference as to how long that money is locked away from being used by you.
Anyway, it's usury if the interest is too high or compound interest (interest on interest) occurs.
Loans should be illegal unless you're helping a friend or family member.
Fair enough. I don't think these things should exist on a business-scale anyway.
However I would do it differently: Government doesn't enforce anything related to money lending. So if you lend money and you don't get it back, you just lost that money.
It's a matter of honor to pay back debts. Which is why you should only lend to friends and family. When you lend money, always consider that you may never see it again.
However I would do it differently: Government doesn't enforce anything related to money lending. So if you lend money and you don't get it back, you just lost that money.
It's a matter of honor to pay back debts. Which is why you should only lend to friends and family. When you lend money, always consider that you may never see it again.
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This is why (((digital fiat))) can never be allowed monopoly for monetary transaction. They specifically prey on poor people too.
u/#rub