We all hear that usury is unjust (accepting interest on a the basis of a mere loan). But is it unjust to charge interest on a debt? Basically drowning a person in debt potentially for life?

This is a mare's nest. I wish I could explain it but I can't.

Fair enough. I have anxiety and OCD issues when it comes to moral matters, so I totally get it.

This moral area is irrelevant to you unless you're offering loans to people (and charging interest). To the best of my knowledge it's never been taught by the Church that Christians could not borrow money at usury. The immorality is all on the other side.

Unwise and immoral are two different things.

Is the person saddling their spouse with debt without the spouse's consent/knowledge? THAT would be immoral.

True. But I take it the worry is more about things like: I can't get a car (or home, or whatever legitimate thing) without getting a car loan, but I need a car. So am I sinning if I take out the loan? Yes, you can instead save up for 6 years and buy the car with cash. Or save up for less time and buy a perhaps much less reliable car. Or whatever. But many of us don't need cars two years from now. Many of us need them now. Fortunately, even if the loaner is immoral, the loanee isn't, necessarily.

From the Parable of the Talents, Matthew 24, 24-27



Clearly it is permissible to charge interest on a loan.

In the early Modern Era, Spain was the richest country in the world, due to gold and silver taken from the Indians. But Spain failed to create a system of credit due to laws against "usury." Other nations had less silver and gold, but multiplied the effect of what they had through credit.

That brings up the interesting question of whether gaining money from an investment is the same as usury.

No, it is not -- anymore than charging rent is usury.

Like I said in my first post here, this is complicated stuff, and I'm not well equipped to explain it. But I would note that Vern is giving his opinions here without reference to any Church teaching whatever, which is generally what libertarian American Catholics do when economic issues arise. AFAIK, that's cool in the lyceum. It's a debate forum, and Vern's within his rights to state his views. I just want to encourage anyone looking for a Catholic view to ask for Catholic sources.

Can you find a Catholic source that says charging rent, making investments, lending money for interest and so on is sinful?

Matthew 24,24-27
"24 He also who had received the one talent came forward, saying, ‘Master, I knew you to be a hard man, reaping where you did not sow, and gathering where you scattered no seed, 25 so I was afraid, and I went and hid your talent in the ground. Here, you have what is yours.’ 26 But his master answered him, ‘You wicked and slothful servant! You knew that I reap where I have not sown and gather where I scattered no seed? 27 Then you ought to have invested my money with the bankers, and at my coming I should have received what was my own with interest. "

I'll also point out that Jesus and Joseph were capitalists: They owned their own tools (private ownership of the means of production and distribution), they made their living with their tools (profit) and they were not the only carpenters in Judea (competition.) That's capitalism, by defintion,

First, I think you need to pay a little better attention to that parable.

Second, your claim about capitalism is remarkably oversimplified. JPII made some helpful clarifications in his social encyclicals, to say nothing of Leo XIII and others.

Third, I made no claims about charging rent. As far as making investments and charging interest--it is an irreformable teaching of the Church that usury is gravely sinful. How, exactly, that teaching applies in the contemporary world is open to considerable doubt, which is precisely the reason I myself am not currently interested in trying to make specific claims about it here. But the principle is beyond doubt.

Please expand on that.


Where did I go wrong?

I include rent because there is no difference in paying rent to use someone else's house and paying "rent" to use someone else's money.

It could become a long conversation, but for one introductory thought--are we being exhorted to be like the "hard man"?


It would help you to answer that question for yourself if you read the main documents that lay out modern Catholic social teaching.

Well, one obvious difference is that the Church has unequivocally condemned one of those things, and has never uttered a peep against the other. So...maybe you're missing some stuff.

I'm sorry I don't have the time or interest to engage in a deeper discussion here. Like I said from my very first post in the thread.

1. We are being exhorted to increase what was entrusted to us.
2. Which Church document condemns drawing interest from bank deposits?
3. Which Church document unequivocally condemns the basis of credit and commerce?

The parable isn’t about increasing what we’ve been given. It’s about using what we’ve been given to advance the kingdom. In that case, God will increase what we’ve been given because it’s being used to His glory (e.g., packed down in good measure overflowing).

If it isn't about increasing what we've been given, why are the two servants who doubled the master's money praised, and the one who merely hid the money condemned?

But the point of this post is that Jesus told a parable where he indicated that drawing interest is morally permissible.

Your premise is incorrect.

You are assuming that doubling his money meant he did that via earning interest.

But again, the parable isn’t about making money.

God isn’t going to throw us into purgatory or hell because we make some money, but then didn’t invest it and make more money.

This is not my area of expertise, but I wanted to chime in with some things I remember PED (someone who used to post here often) said about this topic that I remember. My apologies in advance if I misrepresent what he said, but this is what I remember.

There are many modern situations that make the application of usury prohibitions difficult.

1. Modern currency is subject to major manipulation in value. So, loaning money for longer periods of time brings greater risks of loss in value. So, sometimes adding interest is not really "interest" but a hedge against loss to ensure that when the loan is repaid, the same value has been exchanged.

2. Like number 1, most modern economies have actually built in a planned inflation to stabilize growth. Adding "interest" here is, again not really interest, but making sure that the repaid loan is inflated to keep up with planned inflation so that the same value is repaid.

3. Institutions that make loans have costs that need to be recouped to stay in business. Adding "interest" here as long it is a reasonable amount to pay salaries and fees that are incurred by the institution is probably not what is meant by usury.

Bottom line, as I recall, is that loans should occur in a "not-for-profit" model. Any interest or fees attached should only be to ensure that the same value is repaid (given the amount of inflation in modern currencies) and to cover real costs for doing business. Anything above that would get into the "usury" area. This would also go for personal loaning to friends and family. If it is a large amount for more than a year, then expecting a little "interest" should only be to hedge against inflation to maintain value, but not to MAKE money on the loan. And I think this becomes even more sinful when the need for the loan is because of real hardship. This would obviously be taking advantage of people.

That's what I remember...

FJ

I also think the "Zippy" view on mortgages can be helpful - he suggested that interest on a mortgage can be justified by viewing it as rent on the portion of the property you don't yet own. And interestingly, the amortization of a fixed-rate mortgage, at least, lends itself to this interpretation - you pay more interest in the early years when you have less equity than in later years when you have a lot of equity.