# Comment: Here is my assumption

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### Here is my assumption

* You believe that loaning out some money and receiving the money back at a later date, plus interest is defined as usury

Is this right? If so:

Imagine you work for a week (40 hours), at \$10 per hour. You receive \$400. (Let's ignore tax, cos we already got rid of the state in this mental experiment)
Your costs for living that week come to \$390, like every other week. You could have spent the extra \$10 on some extra food for your family, but you instead decided to delay that gratification, and save the money.
After ten weeks of this, you have \$100 saved. You have planned to go out tomorrow and purchase a new dinghy, so you can take your children fishing, and teach them how to fish.

Suppose now a friend of yours comes to you and asks "Hey, man, I'm super desperate. My house flooded, and if I don't pay for the repairs/drying now, the wood is gonna rot, and it will cause thousands of dollars of damage. I know you had some money saved up, could I please borrow it? I can pay you back in ten weeks time."

You consider this. The man is your friend, and you don't want to let him down. But on the other hand, you don't want to let your family down either.
Why? Because you already delayed your gratification when you saved the money in the first place. If you lend it out without interest, you are further delaying your gratification (the use of your money) and getting nothing in return. You have to wait a further ten weeks before you can use your money, and you have to wait a further ten weeks before you can enjoy the fruits of your labor (your boat) and teach your children how to fish.

The interest you may choose to charge your friend, is actually an earned payment. It is earned because you have to delay your gratification for longer. You have lost ownership of your resources for ten weeks, while somebody else is able to use it.

With your post, are you claiming that it is wrong for a person to ask for a payment to compensate for their loss over that time? (The interest).

Human beings have time preference.

Example:
I would like to give you \$1000.
Would you like \$1000 now, or \$1000 in 1 years time?
You would probably pick the \$1000 now, right?
Well, how about I offer \$2000 in one years time?
No?
Well, how about \$5000 in one years time?
Maybe now you want to wait?

Everybody is different, but the point is that people prefer money now to money later. It's actually defined as a different good altogether.
(In the same way that ice-in-winter is different from ice-in-summer. The price is radically different)

So if someone is using your money for that year, it costs you the use of that money for that period of time, depending on your level of time preference. The interest you charge compensates for your inconvenience, and inability to use the money yourself and enjoy the fruits of your labors.

One more thing: Imagine in my first example that
a) the friend was a stranger
b) that he could not pay back the money until 10 years had passed

Still the same analysis?

Also, are you aware that some people don't pay back the loan? So how would a professional loan business ensure that they can continue operations.

If 'usury' was banned, then money would not be loaned. If it was, then it would not be at anywhere near the levels that demand required.

(Please note that if you gain a sense of gratification from lending to your friend and helping him out, then that can validly be considered interest. But note that this would be voluntary. It also depends on your time preference.)

(Also how can you quote Marx and Ron Paul on the same post? Their philosophies are diametrically opposed. Ron Paul does not support the banning of 'usury' whatsoever. He is objecting to the forcing upon us all of the Federal Reserve Note, by the Fed. We have no choice but to engage in the loan system there, and to top it all off, the Fed never saved that money up in the first place!)

http://mises.org/daily/1977/The-Social-Blessings-of-Usury

"Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take; but as for me, give me liberty or give me death!" - Patrick Henry