[Apollia]

Originally Posted by Lauxa

I just want to comment that I do not have problems with money yet...

That's good!

although I am taking some financial risks that could change that.

Good luck with that.

Okay, so let's say we are in a world where you either have a house or you don't... either have a car or you don't... What are we looking at? More rental property and leases on vehicles? Is that so bad?

Maybe it is. Having a landlord is pretty annoying. I doubt having a carlord would be much fun either. Especially since vehicles seem to _inevitably_ break down, and then if you had an obnoxious carlord, they'd probably give you grief about it. Even people who haven't fully paid off their car loans don't have to put up with that, at least.

I'm not sure, but I know that many students come out of college with some BS degree with little earning potential and crippling debt. Many more never graduate, but still have the debt to repay.

At least that's one peril I had the wisdom to avoid.

Maybe banks would cease to exist. Not sure. Also not sure this would be a bad thing.

Same here. However, even though I dislike banks, if there's any way to keep something so disruptive as bank collapses from happening, I'd find that preferable, since a lot of innocent people would probably be hurt by bank collapses.

Originally Posted by SomeRandomGuy

I don't think that a world without lending would necessarily mean you either have a house (or a car) or you don't. I think more likely it would mean a lot of people would be driving a $1,000 or $2,000 car instead of a $20,000 or $30,000 car.

Yes, I also think prices might drop, because otherwise very few cars and houses would be sold. Hopefully a lot of currently overpriced things would drop to price levels which are affordable for people who can't borrow. It would be a disaster if they didn't.

Originally Posted by Brutha

For people who don't have any money to start with some form of credit is important to start a capital intensive business.

I agree they need some form of capital, but I don't think it has to take the form of "credit" (which implies debt).

People who take a mortage to pay for a house that they can't afford are responsible for the result of taking that mortage.

Of course, another way to look at it is:

Callous, uncaring, predatory lenders who have no moral qualms about foreclosing on someone's house and throwing entire families with small children out on the streets are responsible for the results of being so mean.

But perhaps a more fair way to look at it is:

It's not completely the fault of any single person. Predatory lenders shouldn't do what they do, but, on the other hand, no one should trust or make deals with predatory lenders.

Originally Posted by Lauxa

@Brutha: what I am considering is the impact of lending based on profit-sharing instead of lending based on interest. So if you would like to start a business, you must convince someone that you will be able to make a profit on the original investment and will give them a share of the profits. If the business does not make a profit, then the investor doesn't get any profit (the borrower could still pay back the amount of the investment).

Ahh, so that's what you mean by profit-sharing. This is precisely what I meant by investment in businesses - assuming the recipient of the investment isn't forced to pay back the investor, but can do so optionally. (Since being forced to pay back an investment would be little better than a loan).

People who are loaning out their money to finance consumer debt are probably not making the best use of their capital.

I definitely agree with this - someone with a permanent right to share in the profits of a big company like Microsoft or even a much smaller company could probably make a lot more money with much less work than they ever could by loaning to average financially struggling people who have a chance of defaulting eventually even despite doing their very best to pay.

@SomeRandomGuy: yes, I wonder if there would be more economical housing and transportation options if it weren't just culturally expected that everyone should go into debt to finance these purchases.

So do I. Or maybe if everyone simply refused to make deals with the people offering houses at much too high prices, prices would fall.

Originally Posted by Still Growing

Here's what it comes down to:

Society with Loans: Some people use money as leverage to become wealthy. In their case its better to have a system whereby loans exist.

Society without Loans: Some people can't resist themselves and have no control over their spending. These people may do better in a society whereby there are no loans. However overall the rich will stay rich and the poor will stay poor. The same person who used leverage to build a house or expand his business would never make it without loans.

Could be - there might have to be a lot of other changes besides forbidding usury for things to work out much better than they are currently.

If you think the answer is to have those with money simply to invest money into companies this is a horrible idea. Imagine a world where you are forced to take on money partners who meddle in your life. I much prefer borrowing from the bank than having to go to a loan shark who would become my partner by force. Think of what you people are recommending here.

Hmm, I didn't think mere stock owners were capable of being that meddlesome, at least if the primary owners still had 51% of the stock - but, on the other hand, I don't know about investing, so, you could very well be right.

I'm simply going by the fact that a relative of mine had a business, and unless I'm misrecalling, she was careful to have 51% of the company in order to have final authority over various decisions.

But, come to think of it, her partners did indeed turn out to be very meddlesome anyhow despite this. One was just annoying, terrified of failure; but the other violated a contract and tried to sue my relative unfairly, which is the main thing that caused the business to fail.

Perhaps, though, things would be better if there was a firm restriction that investors can't meddle, can't sue, and can only just sit there and wait for the profits to start rolling in.

Or maybe not. Probably not - unscrupulous, immoral, opportunistic, mean people will probably mess things up no matter what the rules are.

Actually, I suppose even the act of banning usury could lead to trouble. The enforcement of it could lead to unfair infringements of freedom - actually, banning it could even itself be an unfair infringement of freedom, since there are probably people who truly feel completely OK with accepting such deals.

Maybe usury being banned would lead to infringements of privacy to see if people are secretly making usurious deals with one another, the possibility of false accusations of usury, etc., and maybe it would also lead to a black market, or cause the existing black market of loan sharks (I assume there is one) to thrive more than it is now. Perhaps the results of banning usury would overall end up being something like the results of prohibition of alcohol, or the War on Drugs.

Maybe what we already have now is a lesser evil.

But as long as we're dreaming, OK then, I wish we lived in a society where we could have houses but no debt, have businesses that require no loans and that money was free with borrow with no interest and available to all.

Me too. I wish charity was more common, that more wealthy people would just give stuff away with no strings attached to people who need it, instead of having the selfish attitude of "what's in it for me?" and only investing, hiring people, or lending.

Best wishes,
Apollia