Prohibitions against charging interest on loans seem to be almost as old as the practice of charging interest. The definition of usury has vacillated between prohibitions on any interest and prohibitions on excessive interest. Ancient Israelites were prohibited from charging interest on loans to fellow Israelites but not on loans to foreigners. Traditional Islam prohibits charging interest on any loans, and banks in Islamic countries often still find other ways to structure their investments. During the Middle Ages prevailing Christian culture wanted to label usury a sin, but as a practical matter loans seemed to be necessary to make the economy function. The task of making loans was foisted off onto the outsiders, and the ambivalence towards money-lending became one of the things fueling anti-Semitism. 

The Old Testament or the Koran may contain condemnations of usury, but they do not explain the judgment except by reference to the will of God. One current interpretation of the Islamic prohibition is that loans are an inappropriate form of investment because they involve an obligation to repay the principal without any shared risk. This obviously applies only to business loans and seems irrelevant to personal loans for consumption, be it a large screen TV or an emergency medical procedure. Another more contemporary theory about usury is that there is a point at which higher interest rates become self-defeating because they make it impossible for the debtor ever to repay the debt. Ultimately the argument against usury is the same as the argument against interest-bearing loans. It results in a cumulative redistribution of income and wealth in favor of the wealthy that can eventually tear apart the fabric of society.

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