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Ethics vs. Profits: Navigating the Usury Debate

What is usury? That is the crux of the problem. In the modern world, Usury is defined as the lending of money at an exorbitant rate. This is very different from the medieval and biblical definition of usury. They would state usury as the lending of money with interest, period. This stems from what money is and how it’s changed over the centuries. Money used to be viewed only as a medium of exchange. There wasn’t really a way to turn money into capital like there is today. St. Thomas Aquinas, a prominent medieval theologian and philosopher, defined usury in his works. According to Aquinas, usury refers to the charging of interest on a loan that exceeds the principal amount lent. Aquinas argued that money, by its nature, does not possess the capability to reproduce or generate more money. Therefore, charging interest on a loan was seen as exploiting the borrower's need for financial assistance and unjustly profiting from their situation.

As the economies of the world changed into capitalism, our understanding of money has changed as well. In the past, typically when money was lent, it was because people fell on hard times and needed it to survive. This is why we have multiple admonishments about lending money at interest in the bible.

Exodus 22:25 (NIV):

"If you lend money to one of my people among you who is needy, do not treat it like a business deal; charge no interest."

The laws around bankruptcy have greatly changed as well. At Least in the United States you can no longer throw someone in jail or force them into slavery to repay a loan. The consequences of those loans defaulting are not as severe as they once were.

From this we can distinguish between two types of loans, Loans of production and loans of consumption. Loans for production, to expand operations and grow, would be a foreign concept to the people of Jesus’s time. Loans of consumption are loans of money or goods that would be consumed by the borrower, and Aquinas believed that charging interest on such loans was always considered usury. From a biblical standpoint, it is never ok to loan at interest for someone who is taking a loan of consumption. This is seen as perverting the almsgiving process and taking advantage of someone in a desperate situation.

Usury is a complex issue. Typically it’s seen as a person’s choice to take out the loans at exorbitant prices. No one forced them to, although a case can be made that someone in a desperate situation doesn’t have full ability to make a free choice. It’s akin to a drug dealer saying, I didn’t force them to buy my drugs.

The more nebulous question is whether you as an investor are complicit in these acts of Usury when you invest in banks and finance companies that offer 20% interest rates on credit cards.

I want to hear from you. Do current banks and credit card companies lend at Usurious rates? Whose fault is it? And as investors, are we complicit?

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