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Shasta'sAunt
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Quote Shasta'sAunt Replybullet Topic: A Christian perspective on usary
    Posted: 12 August 2008 at 11:17pm
Opinion
Is charging interest sinful?

By Gary Moore Tue Aug 12, 4:00 AM ET

Sarasota, Fla. - "There is one bit of advice given to us by the ancient heathen Greeks, and by the Jews in the Old Testament, and by the great Christian teachers of the Middle Ages, which the modern economic system has completely disobeyed. All these people told us not to lend money at interest: and lending money at interest – what we now call investment – is the basis of our whole system. Now it may not absolutely follow that we are wrong.... This is where we want the Christian economist." – C.S. Lewis, "Mere Christianity"

In an age of subprime mortgages, credit cards, and payday lending, it's hard to imagine that charging any interest was once considered immoral. Yet like many ancient moral leaders, Moses commanded, "If you lend money to any of my people who are poor, do not … require him to pay interest." (Exodus 22:25, Good News Translation).

Interest is what fuels savings and investment. Without interest, borrowing – from home loans to bonds – would virtually disappear. Most of us today don't lend to the poor. Rather, we "lend" to the very rich: When we buy bonds or set up a savings account, we give banks and government our money, expecting a modest rate of return in exchange. Does Moses' injunction apply in such cases? If so, is our modern economy intrinsically sinful?

After 20 years of thought, prayer, and practice in the financial industry, I'm convinced that interest can be an important part of financial and spiritual blessings. But a distinction must be made between lending for charity and lending for investment. When we help a neighbor in need – and the Bible says we are obliged to do so! – we ought not seek financial profit. But when we lend to boost a neighbor's productivity, a return on investment is sound.

This distinction isn't always recognized, which explains the usury laws and prohibitions on "excess" profit that persist today. An extreme example comes from Robert Wuthnow's book, "God and Mammon in America." In 1639, merchant Robert Keayne was censured by his Boston church and convicted in court for earning 6 percent profit, two points above the limit.

That concern over greed is alive today. Many cities are passing laws to cap the interest that payday lenders can charge. Washington wants to lower interest rates for troubled homeowners. Politicians complain about price gouging by Big Oil, and threaten a windfall-profits tax. But the "evils" of interest rates cut both ways: America is suffering the consequences of easy money – where interest rates stayed too low for too long, encouraging speculation in housing.

For most of Christian history, loans were made only to those in need. And charging interest on such loans was forbidden. That ban among Christians in medieval Europe spurred many Jews to become money lenders – a job that attracted persecution and resentment at the time but is imitated today.

After the Protestant Reformation, wealth spread rapidly, making lending for profit more mainstream. Meanwhile, philosophers such as Adam Smith began to liberalize the rules on interest and profit. The idea of investing for profit was a liberal one resulting from a long moral battle. Without that victory, the Industrial Revolution – and the social and political reforms it brought – may never have happened in the West.

By comparison, consider the Muslim world, where interest is forbidden by sharia. Has its illiberal attitude toward interest hindered its economic development? Maybe. But there are signs of accommodation. There are special Muslim mortgages that don't involve interest, but that carry higher costs. And Muslim banks don't pay interest on deposits; they declare a "dividend" for depositors. The dividend typically reflects interest rates, leading to the cynical inference that such creative financing is just a charade.

But we ought not judge such creativity harshly. The bending of strict codes may be appropriate in some cases. Inflation, for example, frustrates biblical morality. Most commerce in ancient times was conducted by barter. The rise of currency – paper money especially – made commerce much easier but also made inflation a greater concern.

In an economy with 5 percent inflation, a borrower who pays 5 percent interest is simply returning the original purchasing power. And that doesn't take taxes into account, which is why interest rates are usually higher than inflation. So when we lend to a needy neighbor, is it OK to charge interest to cover inflation?

C.S. Lewis called for Christian economists to help us sort through these issues. We'd have more of them to consult if the Protestant Reformation, which helped to foster capitalism, hadn't also weakened the notion that religious leaders should mediate between the individual and God. Muslims today still have imams to guide them in such matters, but a relative few priests and pastors weigh in on financial matters, so most Christians must rely on their own conscience.

Here's where the golden rule provides invaluable guidance. My own understanding is this: If I lend to a poor person in temporary need, I shouldn't compound that person's problem by charging interest. Yet if I lend to help someone – or some organization – be more productive, it's moral for me to share in the gain by earning interest. It's the same as accepting a few apples for lending my neighbor my ladder so he can pick more.

But how do we apply the golden rule to today's financial crises? Should lenders and taxpayers forgive the interest that delinquent mortgage-holders owe, as Moses also suggested? Would Moses say adjustable-rate mortgages are speculative? Just what would Jesus do about the Fannie Mae and Freddie Mac mess?

They sound like facetious questions, since capitalism has grown immeasurably complex since the Bible was recorded. But scriptural principles remain just as relevant today. We can't simply put our heads in the sand and pretend lending for interest isn't a moral issue. After all, Jesus reminds us: "If, then, you have not been faithful in handling worldly wealth, how can you be trusted with true wealth?" (Luke 16:11, Good News Translation).

• Gary Moore, the founder of The Financial Seminary, is the author of "Faithful Finances 101." He's served as a lay leader of a Lutheran and an Episcopal church.

“No one can make you feel inferior without your consent.”
Eleanor Roosevelt
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honeto
 
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Quote honeto Replybullet Posted: 18 August 2008 at 2:47pm
Very interesting,
I always  wondered about that too. The Bible teaches against charging interest for making money and terms it as Bad, as Haram, while most Christians and Jews live by it and their societies are built around interest based economy.
It is also interesting that the interest is OK for "non-brothers" in faith according to the Bible, unlike in Islam where it is totally Haram/forbidden.
Hasan
39:64 Proclaim: Is it some one other than God that you order me to worship, O you ignorant ones?"
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semar
 
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Quote semar Replybullet Posted: 18 August 2008 at 3:14pm
RIBA in the Qur'an (Chapters 2, 3, 4, and 30)
  RIBA in Abrahamic Faith 
  RIBA in the Bible
  RIBA in the Torah


Edited by semar - 18 August 2008 at 3:15pm
Salam/Peace,
Semar
The Prophet said: "Do not eat before you are hungry, and stop eating before you are full"
"1/3 of your stomach for food 1/3 for water, 1/3 for air"
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Shasta'sAunt
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Quote Shasta'sAunt Replybullet Posted: 18 August 2008 at 6:58pm

Another practice that went astray and Allah corrected in The Quran.

“No one can make you feel inferior without your consent.”
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Quote believer Replybullet Posted: 20 August 2008 at 2:32pm
LOL!!  there are more then just Christians and Jews in the western banking world.
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16"For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life.
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Quote Shasta'sAunt Replybullet Posted: 21 August 2008 at 8:59am
Originally posted by believer

LOL!!  there are more then just Christians and Jews in the western banking world.
 
I am also curious as to why it is allowed to charge non-Christians interest when interest was forbidden.
I thought that Jesus taught: Matthew 7:12 So in everything, do to others what you would have them do to you, for this sums up the Law and the Prophets
“No one can make you feel inferior without your consent.”
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