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Usury

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cognitivist posted on Sun, Aug 15 2010 2:20 PM

If consumers have no demand for usury, then why does it exist.. better yet, why should it continue to exist?

"If you want to lift yourself up, lift up somebody else." Booker T. Washington
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Sieben replied on Mon, Aug 16 2010 9:45 AM

Why? There are many possible lenders/sellers. Successful merchants may converge around a certain temporary price range, but my chioce to charge 5x their rate is still a market price.

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By "de facto" I mean what's a competitive interest rate. The mainstream interest rate for lenders and sellers. If you did charge 5x, I'd find someone else who charged less. Unless there wasn't, in which case that probably reflects free-market level interest rate, the collusion level everyone agrees on. So you'd have to lower your interest rate to remain competitive with other sellers. Or find something in the capital budget to make more efficient and less expensive.

"If you want to lift yourself up, lift up somebody else." Booker T. Washington
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By "de facto" I mean what's a competitive interest rate. The mainstream interest rate for lenders and sellers. If you did charge 5x, I'd find someone else who charged less. Unless there wasn't, in which case that probably reflects free-market level interest rate, the collusion level everyone agrees on. So you'd have to lower your interest rate to remain competitive with other sellers. Or find something in the capital budget to make more efficient and less expensive.

...unless of course, the interest rate differs for you - and you can either find a better rate, because you are such a good prospect, or you simply can't find a better rate, because you are a bad prospect.

Conditions always differ from case to case.

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I don't actually know if there is a market "price".

Now that mention it, I always thought of "market price" as the most recently traded price.  It means nothig beyond that.

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Suggested by FleetCenturion

Whenever there is a demand for credit, there is a demand for usury.  The lending of money represents an initial net loss of capital and opportunity to the lender, since he has less money of his own to spend and invest.  Therefore, it is both legal and moral to charge interest on a loan to compensate the lender, provided both parties agree to the terms.

And since there are no longer religious issues to deal with, putting up a pound of flesh as collateral should be totally legal.

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yessir replied on Mon, Oct 11 2010 6:57 PM

 

Whenever there is a demand for credit, there is a demand for usury.  The lending of money represents an initial net loss of capital and opportunity to the lender, since he has less money of his own to spend and invest.  Therefore, it is both legal and moral to charge interest on a loan to compensate the lender, provided both parties agree to the terms.

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Can someone explain why this is still not understood. How are there still people against charging interest on loans?
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