Why is lending a necessity? "Cash on the barrel" is pretty great, in my view; don't spend what you don't have, and that includes other people's money.
The only counter I've thought of is starting a business or factory. Contracts could be negotiated with employees to have their wages be a (small) % of profits instead (or in supplement) of hourly or salary. Harder initial investments like real estate and hardware can be pooled from the funds of cofounders - I'm not convinced that every business must be able to be founded by a single entrepeneur. The difference between this and borrowing money is that the cofounders might actually gain some skin in the game instead of just some rootless cosmopolitan watching numbers in his office. You could try to legislate lenders into becoming cofounders, but it's really not the same because they don't give a shit as long as they get their cut.
The only counter I've thought of is starting a business or factory.
You've fundamentally answered your own question.
You lend money to someone who has the capability of returning on your investment, but does not have the capitol assets to do it themselves. So, you calculate the profits they expect to make, and charge interest on a loan which is your return on your own money. They created wealth by their action, but they would have taken decades to accumulate the capital to even try. So, they give you money for having helped finance them.
It's pretty reasonable.
The difference between this and borrowing money is that the cofounders might actually gain some skin in the game instead of just some rootless cosmopolitan watching numbers in his office.
That's the difference between loaning your money, and loaning other people's money. Our Keynesian system is built to protect the banks from loss and to side against you whenever possible to keep the banks from ever actually suffering consequences. Not only that, they're funding the loans with your money, not theirs. In the end, they never lose anything because the game is intentionally rigged by people who thought that would stimulate economic growth.
Some banks really should go out of business, and really should be forced to gamble their money instead of someone else's.
That's not a problem with lending money & interest. That's a problem with Socialist Economic policies.
That's the difference between loaning your money, and loaning other people's money.
I was overlooking that part of it, for some reason.
I still am not comfortable with charging interest in general, but I'll admit that it can have a beneficial place and so shouldn't be banned altogether. It's just the whole 'making money with no work/risk' thing that bothers me. Perhaps it really would be sufficient to ban the reallocation ("investment") of funds that aren't your own.
It's just the whole 'making money with no work/risk' thing that bothers me.
No risk? Giving you my money and hoping you give it back is incredibly risky. But that's your point:
Perhaps it really would be sufficient to ban the reallocation ("investment") of funds that aren't your own.
Giving you his money isn't really all that risky at all.
Now, I'm not saying we end banking (because what you just suggested kills banking), but it would be more proper to talk about making sure people gave consent to having their money lended out.
Like almost everything it's a matter of degree, the question is where you draw the line. Almost every reasonable person who's grounded in reality can agree on the most egregious examples, things like outright scamming people or blatantly predatory actions like truck systems and high double digit (or triple digit) mafia style "payday" loans.
It's close to the normal side of things you start running into problems. Particularly where you have misleading but not outright fraudulent systems, like multi-layered student loans that to a non-accountant seem like you're paying off but in reality you're just paying interest and never any principal.
A lot of this could be solved by regulating the "informed consent" side of things rather than trying to regulate every new insane financial instrument people come up with. If you require lenders to make the terms clear in plain fucking english with clear examples of all contingencies then you'll see a lot less people getting ripped off or making stupid decisions. One of the founding principles of capitalism is that people are making informed decisions with full information. A system where you need a week with two lawyers and an accountant to understand what the fuck is going on for every freaking transaction isn't a healthy free market, it's one filled with rent seekers and deliberate distortions by bad actors.
It would also kill all lending, and not allowing interest is simply retarded.
Why is lending a necessity? "Cash on the barrel" is pretty great, in my view; don't spend what you don't have, and that includes other people's money.
The only counter I've thought of is starting a business or factory. Contracts could be negotiated with employees to have their wages be a (small) % of profits instead (or in supplement) of hourly or salary. Harder initial investments like real estate and hardware can be pooled from the funds of cofounders - I'm not convinced that every business must be able to be founded by a single entrepeneur. The difference between this and borrowing money is that the cofounders might actually gain some skin in the game instead of just some rootless cosmopolitan watching numbers in his office. You could try to legislate lenders into becoming cofounders, but it's really not the same because they don't give a shit as long as they get their cut.
You've fundamentally answered your own question.
You lend money to someone who has the capability of returning on your investment, but does not have the capitol assets to do it themselves. So, you calculate the profits they expect to make, and charge interest on a loan which is your return on your own money. They created wealth by their action, but they would have taken decades to accumulate the capital to even try. So, they give you money for having helped finance them.
It's pretty reasonable.
That's the difference between loaning your money, and loaning other people's money. Our Keynesian system is built to protect the banks from loss and to side against you whenever possible to keep the banks from ever actually suffering consequences. Not only that, they're funding the loans with your money, not theirs. In the end, they never lose anything because the game is intentionally rigged by people who thought that would stimulate economic growth.
Some banks really should go out of business, and really should be forced to gamble their money instead of someone else's.
That's not a problem with lending money & interest. That's a problem with Socialist Economic policies.
I was overlooking that part of it, for some reason.
I still am not comfortable with charging interest in general, but I'll admit that it can have a beneficial place and so shouldn't be banned altogether. It's just the whole 'making money with no work/risk' thing that bothers me. Perhaps it really would be sufficient to ban the reallocation ("investment") of funds that aren't your own.
No risk? Giving you my money and hoping you give it back is incredibly risky. But that's your point:
Giving you his money isn't really all that risky at all.
Now, I'm not saying we end banking (because what you just suggested kills banking), but it would be more proper to talk about making sure people gave consent to having their money lended out.
Like almost everything it's a matter of degree, the question is where you draw the line. Almost every reasonable person who's grounded in reality can agree on the most egregious examples, things like outright scamming people or blatantly predatory actions like truck systems and high double digit (or triple digit) mafia style "payday" loans.
It's close to the normal side of things you start running into problems. Particularly where you have misleading but not outright fraudulent systems, like multi-layered student loans that to a non-accountant seem like you're paying off but in reality you're just paying interest and never any principal.
A lot of this could be solved by regulating the "informed consent" side of things rather than trying to regulate every new insane financial instrument people come up with. If you require lenders to make the terms clear in plain fucking english with clear examples of all contingencies then you'll see a lot less people getting ripped off or making stupid decisions. One of the founding principles of capitalism is that people are making informed decisions with full information. A system where you need a week with two lawyers and an accountant to understand what the fuck is going on for every freaking transaction isn't a healthy free market, it's one filled with rent seekers and deliberate distortions by bad actors.