If consumers have no demand for usury, then why does it exist.. better yet, why should it continue to exist?
Demand does not determine what exists.
Preference determines demand, however.
Because consumers do have a demand for usury. And usury is a poor term.
Isn’t this like asking that consumers doesn’t have demand for prices in the sense they would prefer everything for free?
Where in the negotiations did I jump up and down about my credit union charging interest on my car payment?
Not if you consider prices as separate from interest.
They are not. Interest is a value differentiation over time. IE, the cost of time.
filc:
Because consumers do have a demand forusurypresent goods as opposed to future goods. Future goods are offered at a discount price, the discrepancy between the price of present to future goods creates interest.
The use of the term “usury” is a clear representation of not understanding what interest is and where it comes from.
A) It’s a natural phenomena that has nothing to do with money but everything to do with time differentiations.
B) It’s real rate is set on the capital market, not the loan market.
IE Usury, really does not exist in any way. It’s the same concept as price gouging, which is also entirely fictitious. It’s a purely theoretical term that has no logical or empirical merit. It’s something that belongs in early 19th century religous textbooks which are ignorant of economics in general.
But to understand what interest is you first need to learn about capital theory.
Please read some material from Eugen von Böhm-Bawer.
Do you believe you have a positive right to someone else’s monetary capital?
I am familiar with Bohm-Bawer.
Usury, at least I see in a modern economic sense, is the intentional collusion of interest above its free-market collusory level.
I understand interest as a cost of time unit.
I agree with filc, it is a term that belongs in a religious text book.
If I loan you 10 cows for a year and ask for 13 in return to make up for 3 calves I might have had is that usury or am I just wanting what I might have had myself if you hadn’t taken my cows?
Usury, at least I see in a modern economic sense, is the intentional collusion of interest above its free-market collusory level.
I understand interest as a cost of time unit.
I don’t quite understant what the first sentence means, but let me try… people may or may borrow you their money, usually at some rate. Assuming there is some average ‘market rate’, the actual rates in various transactions will vary, according to the risk perceived and other factors. Why would anyone accept a “too high” a.k.a usurious interest rate? Because they can’t get anyone else to borrow them on better terms. There is usually a reason for that.
I think the term usury should stick with Mafia style loans. I’m of the understanding those kinds of interest charges where the mob ignores old contracts to extort more money through force is what the term usury used to refer to.
Forgive me, but is usury widely understood as the definition you provided above? If so I have missed this. When you say collusion are you referring to manipulation from a central bank?
I don’t actually know if there is a market “price”. There are many prices for the same service, and not all of them are marked. You can pay a dollar for a bottle of water at the supermarket, but it would cost you 10 to get one from my fridge. Are they both not market prices?
I highly doubt there isn’t a de facto “price” for a given item on the market’s rate of interest.
Why? There are many possible lenders/sellers. Successful merchants may converge around a certain temporary price range, but my chioce to charge 5x their rate is still a market price.
By “de facto” I mean what’s a competitive interest rate. The mainstream interest rate for lenders and sellers. If you did charge 5x, I’d find someone else who charged less. Unless there wasn’t, in which case that probably reflects free-market level interest rate, the collusion level everyone agrees on. So you’d have to lower your interest rate to remain competitive with other sellers. Or find something in the capital budget to make more efficient and less expensive.
…unless of course, the interest rate differs for you - and you can either find a better rate, because you are such a good prospect, or you simply can’t find a better rate, because you are a bad prospect.
Conditions always differ from case to case.
Now that mention it, I always thought of “market price” as the most recently traded price. It means nothig beyond that.
Whenever there is a demand for credit, there is a demand for usury. The lending of money represents an initial net loss of capital and opportunity to the lender, since he has less money of his own to spend and invest. Therefore, it is both legal and moral to charge interest on a loan to compensate the lender, provided both parties agree to the terms.
And since there are no longer religious issues to deal with, putting up a pound of flesh as collateral should be totally legal.