Posted: Feb 09, 2017 12:58 am
by lpetrich
Lending at interest is the practice of the creditor (lender) wanting some additional money back (the interest) and not just the original money (the principal) from the debtor (lendee, one lent to).

There is a problem, however. From their getting back more than they lend, one might expect the lenders to end up with all a society's money, thus causing an economic implosion.

But that clearly does not happen, at least not most of the time. What might keep it from happening? There are several possible mechanisms, most of which are not mutually exclusive.
  • The lenders spend their interest income.
  • The lenders forgive or write off loans.
  • The debtors become unable or unwilling to pay back their debts.
  • A government decrees the cancellation of debts, something done in some societies early in recorded history.
  • A government gives bankruptcy protection.
  • A government restricts how much interest a lender may charge.
  • A government prints lots of money, causing lots of inflation and reducing the effective value of debts.
  • Would-be debtors refuse to take out loans.
I don't know if anyone has ever addressed this issue.

In any case, I think that this hypothesis about lending at interest makes more sense than banker conspiracy theories. Especially theories involving Jewish bankers trying to take over the world.