Friday, May 27, 2016

Q&A - 27/5

Question

Pork is banned in some religions. Is it good or bad?

Not healthy 

I don't mean to sour anyone's bacon and egg experience, but according to the Blood Type Diet, there are only a few food items that are unhealthy for all blood types, and pork is one of them.

The others are black pepper, carbonated water (soda), blue cheese, corn oil, american cheese.

Twitter User

[Referring to recent protests] The French workers are heroically defending their way of life.

Their way of life is suffocating businesses

Instead of asking for more regulation on business, they can ask for money.

Question

If we abolish centralized, fiat money, there will be no interest payments for any kind of debt. 

Unlikely

Interest collected on debt reflects risk perception on that loan. A risky business / person will get a higher rate, lower one a lower rate. Market forces will / need to do their thing, so there would be interest on debt even if we were using a cybercurrency like Bitcoin.

We see this risk pricing at country level all the time; sometimes entire countries can fall out of favor with creditors, then can become favorites again depending on the policy changes. For example Argentina was ruled badly for a long time (by a nationalist / populist / nativist ideology, take your pick), it fell out of favor with creditors. There was a change of power recently, now they are back in the bond market. They have been out for a long time, they need money, so they need to offer better (higher) rates to creditors. On the other side because of the current easy money / QE environment, investors are hungry for yield, so I bet they jumped on those Argentinian bonds the moment they became available. It's beautiful how it all works. 


This [bad] treatment of moneylenders is unjust but not new. For millennia they have been the primary scapegoats for practically every economic problem. They have been derided by philosophers and condemned to hell by religious authorities; their property has been confiscated to compensate their “victims”; they have been humiliated, framed, jailed, and butchered. From Jewish pogroms where the main purpose was to destroy the records of debt, to the vilification of the House of Rothschild, to the jailing of American financiers—moneylenders have been targets of philosophers, theologians, journalists, economists, playwrights, legislators, and the masses [..]

Today, anti-globalization demonstrators carry signs that read “abolish usury” or “abolish interest.” Although these protestors are typically leftists—opponents of capitalism and anything associated with it—their contempt for moneylending is shared by others, including radical Christians and Muslims who regard charging interest on loans as a violation of God’s law and thus as immoral.

Moneylending has been and is condemned by practically everyone. But what exactly is being condemned here? What is moneylending or usury? And what are its consequences? [..]

The borrower is able to use money that he would otherwise not be able to use, in exchange for paying the lender an agreed-upon premium in addition to the principal amount of the loan. Not only do both interested parties benefit from such an exchange; countless people who are not involved in the trade often benefit too—by means of access to the goods and services made possible by the exchange.

[Loaning] enables levels of life-serving commerce and industry that otherwise would be impossible. Consider a few historical examples. Moneylenders funded grain shipments in ancient Athens and the first trade between the Christians in Europe and the Saracens of the East. They backed the new merchants of Italy and, later, of Holland and England. They supported Spain’s exploration of the New World, and funded gold and silver mining operations. They made possible the successful colonization of America. They fueled the Industrial Revolution, supplying the necessary capital to the new entrepreneurs in England, the United States, and Europe. And, in the late 20th century, moneylenders provided billions of dollars to finance the computer, telecommunications, and biotechnology industries.

By taking risks and investing their capital in what they thought would make them the most money, moneylenders and other financiers made possible whole industries—such as those of steel, railroads, automobiles, air travel, air conditioning, and medical devices. Without capital, often provided through usury, such life-enhancing industries would not exist—and homeownership would be impossible to all but the wealthiest people.

Moneylending is the lifeblood of industrial-technological society. When the practice and its practitioners are condemned, they are condemned for furthering and enhancing man’s life on earth.

True

It's interesting that we cheer enterpreneurs as individuals who take risks to create a business, but we usually forget about people who loaned them money that made their business possible, who took a risk on them

One of the main differences between Protestants and the Catholic Church revolved around the issue of debt interest - Calvinist made it legal, and my guess is Protestans owe much of their success and world-wide expansion to this new reinterpretation - because without pricing of risk, you have no loan, without loan, no business, no expansion.

Question 

But many religions ban interest charged on loans, including Islam.

Incorrect

Islam bans usury which means "excessive interest", not interest of any kind. There are even seperate words for this in Arabic, interest is fa'eda, usury is reba

Jackass

I am a low-interest kinda guy [I guess he is talking about FED interest rate policies].

???

You cannot be a "low" or "high" interest kinda guy... If the Taylor Rule tells you to raise them, you raise them. If not, you don't. If it says go negative, you go negative. A gov could be mired in an inflationary deficit spending (the original sin) and if central bank does not raise rates, there is hyperinflation.