Economics: PayDay Loans- Bastards or Black Sheep?

[DBTrek]

They only want to hand you money dude.
Why you so mad?


You don’t have to take it. But like grandmas cooking, it’s always there for you if you need it.

[DrYouth]

. But like grandmas cooking, it’s always there for you if you need it.

So your grandma only fed you if you washed her car, mowed the lawn and manicured her toenails?

[Fife]

Damn grandma. Usurious old bitch.

She's horning in on the state's action again.

[DBTrek]

. But like grandmas cooking, it’s always there for you if you need it.

So your grandma only fed you if you washed her car, mowed the lawn and manicured her toenails?

If you eat grandma’s food, you accept grandma’s rules.
Those rules might include doing dishes.
ALL the dishes.
Even the cats.

[Speaker to Animals]

Usury in general is a really bad idea, and I mean usury in the actual sense of the word: all interest. But that's still a separate topic. Payday Loans are not usurious simply because they are high interests. They are high interest because of the risk involved in lending to poor people with really bad credit. All interest has terrible side effects on society, however, not just payday loans, and I would add the kinds of usury inflicting the most damage is charged by BANKS (i.e. student loans, mortgages, etc).

[DrYouth]

Usury in general is a really bad idea, and I mean usury in the actual sense of the word: all interest. But that's still a separate topic. Payday Loans are not usurious simply because they are high interests. They are high interest because of the risk involved in lending to poor people with really bad credit. All interest has terrible side effects on society, however, not just payday loans, and I would add the kinds of usury inflicting the most damage is charged by BANKS (i.e. student loans, mortgages, etc).

There was a time when any form of interest on a loan was considered usury.

Usury (/ˈjuːʒəri/[1][2]) is, as defined today, the practice of making unethical or immoral monetary loans that unfairly enrich the lender. Originally, usury meant interest of any kind.

The entire idea of the west wouldn't exist without people practicing what at the time would have been considered "usury".
That is why it was non-Christians who were usually the lenders.

The Renaissance happened pretty much because of trade and trade depended on interest on loans to allow independent merchants to carry out large scale trade...

Prior to this only the nobility had the resources to trade in large amounts... and they notoriously sucked at it.

How do you envision our modern world without interest rates on loans.

[Speaker to Animals]

Your historical narrative is false and silly, but that aside, I envision a world where we use venture capital to fund new businesses, and instead of interest on loans we use flat fees to pay for actual work and servicing of loans.

What makes our economy so fragile, one of the reasons anyway, is that usurors have no stake in the business they lend towards. Further, because of government coercion and collusion in the banking industry, they exhibit almost no real responsibility over their own capital.

Under a venture capital model, the capitalist provides capital in exchange for a stake in the businesses. If the business fails, he loses his investment. Thus he has good reason only to provide capital to those businesses most likely to succeed.

What we have now is a total mess based upon legal theft in which people with capital possess no realistic incentive to wisely manage their capital. Thus you have all these economic crises and bailouts.

[Speaker to Animals]

What people do not often realize, either, is the coercive effect of the banking industry.

Before they really came on the scene with mortgages, people generally were able to build some kind of home after saving for a few years combined with what family gave them upon marriage. Once banks seriously got into the mortgage business, they flooded the market with capital, which drove up prices of homes. Now it's impossible to get a home for most people without getting a mortgage.

The same thing happened with student loans.

Flooding markets with easy credit quickly drives up prices. When those markets are gateways to a middle class lifestyle, the banks essentially got their claws into a significant percentage of future national production. By engaging in usury at the same time, they essentially economically enslaved the middle class.

You'd all have been better off without the banks as you know them.

[DrYouth]

Your historical narrative is false and silly, but that aside, I envision a world where we use venture capital to fund new businesses, and instead of interest on loans we use flat fees to pay for actual work and servicing of loans.

What makes our economy so fragile, one of the reasons anyway, is that usurors have no stake in the business they lend towards. Further, because of government coercion and collusion in the banking industry, they exhibit almost no real responsibility over their own capital.

Under a venture capital model, the capitalist provides capital in exchange for a stake in the businesses. If the business fails, he loses his investment. Thus he has good reason only to provide capital to those businesses most likely to succeed.

What we have now is a total mess based upon legal theft in which people with capital possess no realistic incentive to wisely manage their capital. Thus you have all these economic crises and bailouts.

Huh...

I realize I'm not qualified enough in economics to really rebut what you're saying...

But I've heard often enough that it was the west that developed the economic tools to master trade... and that is what allowed it to successfully colonize the Americas and the rest of the world that fell under it's dominion and hence rise to world dominance.

To go back and second guess all of that now.... is what strikes me as false and silly...

As to your ideas about alternatives... like I say... I'm not qualified to really critique those.... sounds interesting enough.

No doubt there have been plenty of downsides to the interest on loans model.... but the system you propose would have downsides too... every system does.

[nmoore63]

Usury in general is a really bad idea, and I mean usury in the actual sense of the word: all interest. But that's still a separate topic. Payday Loans are not usurious simply because they are high interests. They are high interest because of the risk involved in lending to poor people with really bad credit. All interest has terrible side effects on society, however, not just payday loans, and I would add the kinds of usury inflicting the most damage is charged by BANKS (i.e. student loans, mortgages, etc).

Usury doesn't mean all interest.

(at least if we are talking Catholic Canon Law)