“What is especially frustrating is that supporters of 0% interest rates have a stark example of the policy’s failure staring them in the face: Japan. Following the bursting of its credit bubble in 1990, Japan eventually brought its equivalent of the Fed rate down to a then-unprecedented 0.25%. The nation proceeded to suffer a “Lost Decade” of economic stagnation that has never really ended. ” — Michaelson, WSJ

Many people are beginning to think that what is needed is a completely new way of looking at the basic concepts of wealth, commodity, production, and currency. We are so stuck in this current model that we’ve forgotten that “debt” is an abstract number written on a piece of paper. We’ve been convinced of its legitimacy, so we don’t question it. Some benefit from this arrangement, but the majority do not.

Just as in law, where what is perfectly legal one day can be made illegal the next, nothing is written in stone in the economic world. If an extortionist convinces you that you need to pay him, you will, but in a just world, he would be thrown in jail immediately. If you were conditioned to accept the extortionist’s claim as legitimate, the laws would change in his favor, and you would get used to it.

Gambling was a crime for many centuries, and then a few decades ago it became a legitimate form of leisure. The way we think about the creation of wealth reflects this change in attitude. The word “industry” has become confused with the idea of making money from bets; when throughout history it has meant the production of goods and/or the processing of materials for the production of goods.

We no longer think of usury as a crime, in fact it is almost considered standard business practice. Usury is not only about creating debt through the charging of interest, but as Ezra Pound defined it: “Usury is a charge made for the use of money regardless of production and often regardless of the possibility of production.”

The High Costs of Very Low Interest Rates by John Michaelson

The prevailing view among economists, policy makers and Federal Reserve Board governors is that a zero or near-zero short-term interest rate stimulates the economy—the lower the rate, the better. It is time to re-examine this conventional wisdom. In fact, lowering interest rates too much may not stimulate recovery, but actually slow it. Yes, there are benefits from zero rates, but not nearly enough to outweigh their pernicious consequences.

In the first place, the Fed’s policy of zero or near-zero interest rates means negligible returns on savings. Consumers thus have less to spend and those nearing retirement need to save more. The owners or managers of pension plans, foundations, trusts and the like must also make higher contributions to make up for lower investment earnings in order to meet their obligations. In the case of public pension plans, these higher contributions contribute to local and state fiscal crises.

Meanwhile, banks are able to make adequate returns by borrowing at near-zero rates and investing almost risk free and without effort in longer-term government debt, federal government-guaranteed debt, or in relatively riskless investment-grade debt—all at 3% to 4%. They have little incentive to go out and make loans to job-creating businesses that might have a higher yield but entail significant risk and effort.

In human terms, the Fed’s policy means emergency room nurses in Texas work longer hours to make up for low yields on CDs, dairy farmers in Iowa forgo equipment purchases to save more for retirement, charities for the homeless in Manhattan reduce services as foundations cut grants, and local governments from Albany to Sacramento close libraries to fund pension plan deficits.

The Fed and the U.S. Treasury are unable for many reasons to directly inject sufficient capital into the banking system to restore it to health. Thus the primary goal of the Fed’s policy is to provide nearly free capital to banks as a backdoor way of recapitalizing them. Secondarily, the low interest rate policy is intended to stimulate consumption, increase lending and spur investments to create jobs. Read the rest

What does the bible say about interest and usury?

Zekiel speaks plainly against usury: “Oppresses the poor and needy, commits robbery, does not restore the pledge, lifts up his eyes to the idols, commits abomination, lends at interest, and takes increase; shall he then live? He shall not live. He has done all these abominable things; he shall surely die; his blood shall be upon himself “(Ezekiel 18:12-13). ” Also, the Law of Moses says much:

“If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury “(Exodus 22:25).

“Thou shalt not give him thy money upon usury, nor lend him thy victuals for increase” (Lev. 25:37).

“Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury “(Deut. 23:19).

“He that putteth not out his money to usury, nor taketh reward against the innocent. He that doeth these things shall never be moved” (PS. 15:5).