The Problem of Interest (Usury)

6 posts

By Mark Smith

• Currently Governments create a currency monopoly with legal tender laws and then hands over this monopoly to a private central banking cartel, destroying us with interest.​

All the world's money in every country ​
is created as an interest bearing debt by private banks. The U.S Government currently pay $700 billion per year in debt service for the National Debt. The UK government pays £100-200 billion to banks as interest per year. Governments could and should create their own money interest free.

• Interest is a wealth transfer from poor to rich. Margrit Kennedy, a German monetarist, has quantified this wealth transfer in Germany. Her conclusions: the 80% poorest Germans pay 1 billion euros per day (365 billion per year) in interest to the richest 10%. The next richest 10% pay about as much interest as they receive.

Also, with in the 10% brackets the same wealth transfer is happening: so the poorest 8% of the richest 10% pay interest to the richest 1%.

The situation is more or less the same in every country.

The poorest 80% Americans pay about 1.5 trillion dollars per year to the richest 10 percent.

The World’s poorest 80% pay between 5 and 10 Trillion per year to the richest 10%.

• Even if you don’t have any debts at all, you will still lose up to 45% of your disposable income through interest. On average 45% of prices we pay for our daily needs are compensation for capital. Producers incur ‘capital costs’. They pass these costs on to their customers. The amount of interest they pay on the loans to finance their production differs per sector. In construction a whopping 75% of prices are related to costs for capital. Meaning that if we buy a new $100,000 home, $75,000 is lost to banks and other financiers.

• When we buy the house with a mortgage, we will not only pay $100,000 for the house, but an additional $150,000 in interest over 30 years. So we pay a total of $250,000 for a house that actually costs no more than $25,000 to build.

Margrit Kennedy's famous ' Why do we need Monetary Innovation ', explaining the wealth transfer from the 80% to the richest 10% and the stunning effect of usury on prices.​

NOTE: This article is originally posted on Mark Smith's wall at Facebook on August 7, 2013.​

This leads to hyperinflation every time

I'm a little skeptical of this. If the prime rate is hovering just above zero, then how can any commodity industry be forced to jack up their prices such that 45% goes for compensation of capital. I would think that even a small house (one with a $100k price tag) is going to cost more than $25k to build.
John Conquest
"Compensation for capital" in relation to the original post in which this phrase was used ( ) clearly includes all capital costs including machinery, the cost of the building, land, and corporate debt and the costs of equity (shares) etc. Yes, sucks having to pay a mortgage, builders, material suppliers, etc. but there's no way around it.

At it's root interest is a cost people charge for delayed gratification. I have some (very slight) investments, and all that stops me cashing them in and living nigger-rich for a few days on them is the slight return they earn me. It's sad that 80% of the population of the world think that it's better to spend more now and pay more later than spend less now and earn a return later, but someone has to invest for the future, and if anything the 80% should be grateful to the 10% for maintaining the worlds capital stock in good order.

Yes, it sucks!

Yeah that doesn't make sense, if you buy a 100k house the amount lost to interest is the amount owed* the interest rate every year for the life of the mortgage. Inflation works two ways here devaluing the cost of the debt.

But regardless it is ridiculous how bankers get to enjoy the massive benefits of fractional reserve banking
Interest is what is the price paid over time for liquidity. Someone gives up liquidity for someone else to have it. If you worked and saved up $50,000, would you loan it out interest free knowing that there is a chance you wouldn't get it all back? According to those against interest, you would be obligated to.

Nevertheless, you pay anywhere from 30% to 100% of the price of a house as interest to the bank over the course of the mortgage. If you crunch the numbers and consider liquidity, it really doesn't make financial sense to own a place in most cases. People just assume that paying for a mortgage is the same as putting money in your bank account. But just remember, you aren't the one getting paid interest. The bank is. On your dime.

You point out that people should be grateful that few control most of the financial power in the world. Right now, bankers are making abuse of this control. Regardless, I'd still rather have this situation where the wealth is largely managed and controlled by them rather having it (almost) equally distributed. Most people can't even draw up a personal budget, never mind actually turning cash into an economically enhancing value-creating venture.

As for the save less now, pay interest later, we can partly blame consumerist culture and low interest rates. Money printing -> lower interest rates -> drive consumption as opposed to investment/saving.