Advantage 40 – Only interest-free loans have a chance on the market

Excerpt from the book »Gradido – Natural Economy of Life«

»The sin called “usura“ (charging interest), which has its actual origin in the loan contract, consists of demanding back more from the borrower than the amount he received. [... ] Any profit that exceeds the borrowed sum is therefore not permitted and usurious.«

– Pope Benedict XIV

Encyclica of 1 November 1745

Charging interest and compound interest is prohibited both in Christianity and Islam. But how effective is this prohibition?

The Natural Economy of Life manages without a ban on interest as money is plentifully available and subject to planned decay. The number of loans on offer will be very high as people will try to preserve the value of their money. The advantages for the lender are still great even with an interest-free loan: if the money is not lent, half the amount will be gone within a year because of the built-in perishability. After two years only a quarter of the original amount will be left and after three years only an eighth. So in any case it is better to make a loan than to keep the money in an account. That applies to everyone who earns more than they spend.

Interest would have no chance on this market. Loans with negative interest are much more likely: it is still better to have 80% left instead of all your money being gone after ten years.