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Subject:Re: [socialcredit] Regarding "interest" and "usury"
Date:Monday, February 4, 2008  21:53:53 (-0500)
From:Joe Thomson <thomsonhiyu @....ca>

Hi Jamie,
 
I think many  loan agreements can be re-negotiated if the business is having a difficult time, yet it still has good long-term prospects.  I suppose the key to that is to keep the Banker informed.  They don't like surprises, like an account that's empty when a loan payment is due with no prior explanation why. 
 
I don't like to seem like I'm defending Bankers, for there are many things to do with modern banking practices that I think should be rectified.  Some that , in my view,  are completely predatory on an often unsuspecting, highly intimatadable public.
 
  Like one of our Canadian bank's practice of charging a "Mortgage Application Fee", for instance.  A $ 100 extraction before they'll even deign to discuss funding your home purchase with you. At their convenience.
 
 To me, that's tantamount to a restaurant charging you a "menu application fee" before they'll let you look at what's to eat!  The restaurant wouldn't be in business long if it tried that.  But that Bank....?  Still going strong.  
 
 But, aside from things like that,  I don't think they are always the 'cold hearted Shylocks' out to put  all of us in business under either.  Many times they've just as much, or maybe even greater, interest in seeing a business succeed as the businessman himself.  But they do like to know what's going on.
 
If I could offer any advice to anyone  who wants to borrow money for business expansion purposes from "the voice of experience", it would be to never short-change yourself on the initial loan.  I think that's what's broke more businesses than anything else when it comes to dealing with the Banks.
 
The 'first loan' is always the easy one.  But woe-betide the poor businessman who subsequently finds it isn't enough to meet his needs, and has to go back for more.  As Douglas said, "Banks operate on almost mechanical principles..."  And one of them seems to be a great reluctance to be in a position where they think they might be "throwing good money after bad." 
 
The Banker is an 'technician' at 'banking'.  He doesn't generally know the 'technics' of the business he's being asked to finance, but he assumes the borrower does.  When that borrower shortly re-appears looking for another loan unexpectedly, he's natuarally suspicious of his competence. 
 
And the second loan, if granted, will be a lot harder to secure than the first.  Your banker will want to see just where the money is going, and you will be under his eye until his confidence in your sincerity and business competence is restored.
 
So borrow plenty the first time.  You can always pay it back quickly if you don't need it.  While there will be more to pay in interest, the cost is small compared to the alternative, and being forced to the wall.
 
Regards,
 
Joe
----- Original Message -----
Sent: Monday, February 04, 2008 10:58 PM
Subject: Re: [socialcredit] Regarding "interest" and "usury"

Thanks Joe,
 
I am also often bemused by the sentiment for the 'struggling businessman'.  Maybe this is because I have not been one.  However, it is not as if anyone points a gun to their head and says "you have to open a shoe shop, or else!".  I am glad, but never cease to be amazed, that people bother trying to set up businesses.  I am not sure of the ststs, but I think I have heard before that about 9 out of 10 business start-ups in New Zealand fail within their first 2 years (of those, it seems some are run to fail on purpose, but are kept going for tax reasons).
 
With regard to your response, I meant to say that as the loan is repaid, the stake of the lender is reduced proportionately, and their agrred share of the gain or loss also reduces correspondingly, so that when the loan is fully repaid, the lender no longer has any stake.  As now, the lender would be prudent to pick more winners than losers to cover themselves and their depositors and investors.  I think of a loan as an agreement, or if people want to get wordy, a contract, so it should be able to be negotiated by the parties involved, and be re-negotiated as circumstances change.  I have worked in the construction industry, and this happens all the time like that, and things get done by the parties.  As I come from a civil engineering background, the thing that blew me away when I found out about the money system was the arbitrariness of it all.  It's like saying "All bridges must be 20 metres long" no matter whether the river is 50 metres wide, or just a ditch.  It's crazy!
 
Well, I could go on, but I probably don't know what I am talking about.
 
All the best,
 
Jamie.
 
 
On 28/01/2008, Joe Thomson <thomsonhiyu@shaw.ca> wrote:
Hello Jamie,
 
I can't answer your first question, but as to the last part of your second, where you wrote:-
 
 "....why can't lending be treated like an investment, with an agreed and linked share of the use outcome as the return?",
 
I would say that it could be treated that way.  And it seems it sometimes is.  But many 'borrowers' would probably prefer it otherwise. 
 
Many 'Social Crediters' seem to fixate their attention on the 'struggling businessman', who they believe, but for the pernicious nature of the monthly principal and interest payment, would be prosperous and happy in his work.  Even though the product he produces or distributes might not even be wanted, and his efforts completely wasted. 
 
While we often seem to overlook  completely the vast majority of businesses that borrow money to provide something that IS wanted, and at a price sufficient to cover the costs.  The ones who, though they may also be 'struggling', do make their payments, and a reasonable net profit for themselves besides.   And look forward to the day when they'll have the loan paid off and not have to share the take with their 'friendly banker' any longer. 
 
Would such businesses really want an 'investor', who's there in perpetuity?   Or one whose increased assumption of 'risk' while he is there can only be justified by paying out an increased share of the profit to him?  An increased share that then can't be put towards 'buying him out'? 
 
Perhaps they would, and if so, do we not have various venture capital concerns that already provide this type of financing?   Including here in Canada, at least, a 'government' owned Business Developmenmt Bank that will  even take an equity position in a business,  if the financial mangement is sound and the concern actually does show promise.
 
But that last part of my last sentence is the key.  The 'financial management' must indeed be based on sound accounting principles, and the concern must be able to show real promise.  If it isn't, then why should anyone be expected to finance it?
 
"Interest" is simply another cost.  Like rent, or insurance, or telephone, electricity, taxes, etc.  Many of these costs are 'fixed', either in whole or in part, too.  They aren't reduced if the business has a 'slow' month.   And less, or nothing, coming in to pay them from.  As to the 'real' problems with "interest", they're caused by a growing unliquidatable debt in the aggregate, and a consequent continual decline in the purchasing power of your dollar. It's to this we should direct our attention.  Solve those problems, and interest, in many cases, would amount to very little more than the actual cost of providing the financial service.
 
Regards,
Joe
 
----- Original Message -----
Sent: Sunday, January 27, 2008 7:54 AM
Subject: Re: [socialcredit] Regarding "interest" and "usury"

 
Hi all,
 
1.. Does anyone know whether the money that banks use to pay their expenses roughly equates with the money collected as interest?  I suppose there is collated data available from statistics agencies and central banks, has anyone looked at this?  [If no-one has done this, I suppose I can add it to my list of things to do]
 
2.  Is calling Calvin a humanist a bit of tongue-in-cheek?  I think the arbitrariness of expecting interest regardless of the use outcome of the lent money is unjustifiable, why can't lending be treated like an investment, with an agreed and linked share of the use outcome as the return?
 
Cheers,
 
Jamie Walton.

 
On 17/01/2008, John G Rawson <johngrawson@hotmail.com> wrote:
Thanks Myro, for your first point.  I have been trying to get it over also.
However, if you take the Douglas analysis as a scientific model and test it scientifically against fact, it soon becomes obvious that it is by far the best explanantion for perceived economic facts and problems. For example the ledar lack of worldwide prosoerith last century except in times of war, preparation for it or recovery from it.
The answer seems clear.  Banks also reinvest and pass repayments to reserves. There is a deficiency in purchasing power unless very active new borrowing continues. There is a tendency towards a "gap", but it is by no means as big as many social Crediters project.
Regards.  
John R.


> Date: Tue, 15 Jan 2008 09:13:04 -0800
> From: new_economics@yahoo.com
> To: socialcredit@elistas.com
> Subject: [socialcredit] Regarding "interest" and "usury"
>
> Unfortunately, Peter, there are some whoppers from
> both Shakespeare and Yaseen in the first half of the
> program that will turn off educated and open minded
> people to the proposed solutions.
>
> For example, Shakespeare's assertion that "one of the
> problems of creating out of nothing is that it creates
> enough money for the principal of the loan but not
> enough for the interest."
>
> And Yaseen's assertion that "the Quran condemns
> categorically usury, or interest."
>
> First, to address Shakespeare's assertion:
>
> We say that banks create money because they credit
> deposit accounts when they create loans. The ability
> and propensity to transfer deposit balances from
> person to person in transactions is what makes deposit
> accounts effectively money in today's economy. So,
> when loans are granted, money is being created. And,
> when loans are repaid, together with interest, money
> is being canceled.
>
> But there is a reciprocal monetary flow from the banks
> when they make payments for ordinary business
> expenses, salaries and wages to their employees,
> dividends to their stockholders, etc., where they also
> credit deposit account balances, which is additional
> to loans in the creation of money. This puts money
> into circulation not deriving from loans that is
> available to pay interest to the banks in payment for
> financial services rendered.
>
> Now, to Yaseen's assertion:
>
> The ancient scriptures originally written in Semitic
> languages used two words that were erroneously
> translated or interpreted as "usury."
>
> A modern Islamic scholar in the United States writes
> this:
>
> http://www.submission.org/islam/interest-usury.html
>
> "The Quran forbids usury, not interest. Quite a few
> states in USA have laws against usury. Usury is
> defined as excessive interest. A Dictionary defines
> usury as 'an excessive or inordinate premium for the
> use of money borrowed', 'extortionate interest', or
> 'the practice of taking exorbitant or excessive
> interest.' The Arabic language also makes distinction
> between interest (Fa'eda) and usury (Reba). The Quran
> forbids Reba or usury."
>
> Which is perfectly consistent with the modern Jewish
> and Christian perspectives on the matter:
>
> http://eh.net/encyclopedia/article/jones.usury
>
> "John Calvin's letter on usury of 1545 made it clear
> that when Christ said 'lend hoping for nothing in
> return,' He meant that we should help the poor freely.
> Following the rule of equity, we should judge people
> by their circumstances, not by legal definitions.
> Humanist that he was, Calvin knew there were two
> Hebrew words translated as 'usury.' One, neshek, meant
> 'to bite'; the other, tarbit, meant 'to take
> legitimate increase.' Based on these distinctions,
> Calvin argued that only 'biting' loans were forbidden.
> Thus, one could lend at interest to business people
> who would make a profit using the money. To the
> working poor one could lend without interest, but
> expect the loan to be repaid. To the impoverished one
> should give without expecting repayment."
> -
>
> Myro
>
>
> ---------------original message-----------------
>
> Date: Thu, 10 Jan 2008 17:23:12 +0000
> From: "Peter Challen" <peterchallen@googlemail.com>
> To: discussion@globaljusticemovement.net
> Subject: Re: [GJM] An excellent programme
>
> I've reached the half-way stage of the programme
> recommended below and use the 'break' to add my
> recommendation to this sanguine critique of a complex
> situation - a remarkable bit of broadcasting.
>
> Peter
>
> On 10/01/2008, Rodney Shakespeare
> <rodney.shakespeare1@btinternet.com> wrote:
>
> Dear All.
>
> Alright, I know I should not say this (because I am
> one of the speakers with Moeen Yaseen of
> Globalvision2000) but Global Money Crisis: Just Where
> Does the Buck Stop? is an excellent programme. Moeen
> is tremendous!!
>
> At last we have managed to put across on television
> some analysis of what is wrong with the global economy
> and also put across some idea of the GJM solution.
>
> To see the programe:- go to www.Presstv.com then
> (left-hand side) Programs then The Agenda then Global
> Money Crisis: -- the programme on Monday, 9th January,
> 2008
>
> Rodney Shakespeare.
>
>
> ____________________________________________________________________________________
> Be a better friend, newshound, and
> know-it-all with Yahoo! Mobile. Try it now. http://mobile.yahoo.com/;_ylt=Ahu06i62sR8HDtDypao8Wcj9tAcJ
>
> ---------------------------------------------------------------------
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> http://www.geocities.com/socredus/compendium
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