Category: Interest

  • Debt Financing

    Consumer credit loans seem benign enough except for cases where people dig themselves into a hole by using credit card debt to finance everyday expenses until things take a turn for the better. Mortgages and refinance loans can also be a problem when people bet on their home’s value increasing dramatically, and student loans often…

  • Mortgage Loans

    The first question the average person is likely to ask in response to talk about eliminating interest-bearing loans is “How am I going to make the big-ticket purchases that are so important to me like a car, a house or a college education?” A car purchase is often financed by a loan with the car…

  • Compound Interest

    Keynes marveled at the way compound interest facilitated the accumulation of capital which made the modern era possible  [see Keynes, “Economic Possibilities for our Grandchildren“ ] What he was really talking about is the growth that is possible when profits from an enterprise are re-invested rather than spent on consumption. [see Growth] Adding unpaid interest to…

  • Usury

    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…

  • Interest

    The most significant characteristic of money in our society that is not contained in the common definition is its ability to generate “interest.” Interest is commonly described as a form of rent charged when money is lent to someone else. Economic theory also talks about interest as the “price of money” or the “price of…