Wednesday, October 16, 2002

Yes, I'm Sure

I think the concept of usury is misunderstood, especially in regards to bank interest and the stock market. It seems straightforward enough from one angle: you lend money to someone, and they pay the amount you gave back plus a little more for your inconvenience. However, there are flaws in that logic. Money is a measurement of value. Five dollars now isn't the same as it was in 1800, nor is it likely to be the same as it will be in 2525. Currently, $5 is roughly equal to four gallons of gas.
When people speak of usury, they're condemning two evils. The first is not loving your neighbor, since you're requiring something in return for helping him. The second is taking something that you haven't earned. In modern dictionaries, usury is usually defined not simply as "interest," but as "exorbitant interest," and this seems to be nearer the original intent. It's implied when you make a loan that you want the same amount back. A small interest rate should be enough to keep up with inflation, and though a perfect accounting is impossible to predict, the spirit is right. With stocks, you're buying part of a company. When you bought it, it was worth one amount, and when you sell it, it's worth another, but that's okay, since you didn't make a loan. You're under no obligation to ever sell your shares. With your aid, the company has either increased or decreased in value, and whatever the market value for your shares is when you decide to sell is what they're worth. It would only be wrong if you bought stocks at a certain price and then sold them for higher to someone else by preventing them from using the market value.

Of course, it's late and I've never taken a course in economics, so feel free to tear this to shreds where it deserves it.

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