 |
| A good shepherd does not endanger the rest of the herd to find a single lost lamb |
The Agricultural Origins of Loan Interest
You may wonder how the very notion of interest on a loan ever came to be; well the answer is very simple... I will lend you 10 sheep and I want 11 back in a year's time.
Naturally 10 sheep will give birth to at least 10 lambs, some of which will be consumed for food, but the return of 11 sheep on a loan of 10 sheep for a year seems like a reasonable contract.
A sheep has a defined value; the value of the wool which it grows, the value of the meat which can be consumed and the value of the lambs that it can bear. 10 sheep is probably sustenance and clothing for 1 person for 1 year.
A sheep also has a cost, the cost of feeding, sheltering and protecting it.
By loaning out the sheep the owner is defraying the cost and the risks for a guaranteed return which although less than what might be made does not require any effort on his part.
That is a fair exchange.
The Shepherd
Now the shepherd might collect 1,000 sheep from various people in a community and be expected to return 1,100 a year later
During that time some sheep will be lost to predators, some will die of old age, some will die during lambing, some will be eaten by the shepherd.
During that time some sheep will be lost to predators, some will die of old age, some will die during lambing, some will be eaten by the shepherd.
By combining all the sheep into one herd, the risks associated with owning sheep are shared and so everyone can expect quite reasonably for the terms of the contract to be completed. Especially where there is no particular demand that an individual sheep be returned to a specific individual.
Money does not Breed
But what if it is something "unnatural" which is loaned out? Like say money.
Gold and silver are Money; nothing else is. But there is a fixed amount of Gold and Silver in the world and they can't make any more. Gold has only one function - that it does not change. You can dig Gold out of the ground it is true, but then you cannot look after sheep.
If the number of sheep in the world constantly increases, the amount of gold which is required to be exchanged for a sheep should therefore constantly decrease and indeed looking at the price of goods pre-1913 the price of goods outside of periods of war, such as the American War to enforce the Union on the Confederacy (also known as the American Civil War), the price of goods did constantly fall.
As more and more human beings came into existence, an equitable distribution of gold would naturally mean that each being has less gold and so that reduced amount of gold would, by necessity, be required to cover the subsistence of cost of each being and so prices should fall.
As more and more human beings came into existence, an equitable distribution of gold would naturally mean that each being has less gold and so that reduced amount of gold would, by necessity, be required to cover the subsistence of cost of each being and so prices should fall.
In such a world (i.e. the one we live in), simply having the same amount of gold returned to a lender a year later would mean that the lender had enjoyed the economic benefit of having someone else be responsible for their gold for a year and be better off.
It should be no surprise that charging interest on gold has often been banned and has even carried a death penalty in societies.
It should be no surprise that charging interest on gold has often been banned and has even carried a death penalty in societies.
Fiscal Irresponsibility
But that is not how our world works; on the contrary, whilst the value of gold does constantly increase, so do prices... because no one has gold anymore it has been substituted with the promises of fiscally irresponsible governments.
Governments over the centuries have borrowed heavily to finance wars. Loans which take decades to pay back. Loans which are partially paid back and which are partially de-valued by decreasing the value of government promises.
In 1921 the British government (deeply endebted after World War I) broke their promises and stopped exchanging the promise of "One Pound of Sterling Silver" written on each bank note - the British government went bankrupt. In 1933 the US government confiscated all the gold in the hands of the American people and exchanged one ounce of gold for a $20 promissory note... the very next day they re-priced gold at $35 per ounce. Outright fraud. Yet less than 40 years later, by 1971, the US government had run out of the money they had stolen in 1933 and no longer would a $20 note being exchangeable for an ounce of gold.
What these governments are doing, in effect; is collecting up the sheep and bringing them back the next year but without any fleeces... the sheep are returned but much of the value of them has already been taken.
What these governments are doing, in effect; is collecting up the sheep and bringing them back the next year but without any fleeces... the sheep are returned but much of the value of them has already been taken.
No comments:
Post a Comment