Please, see the black arrow below
Liberty, Unity, Friendship
Traduire cette page
Last week I had occasion to visit the Italian island of Sardinia and spend a few hours meeting with the founders and managers of a commercial trade exchange called Sardex. Here below is an abbreviated report of what I learned. The pdf version of the report can be found here.
Sardex, a brief report
by Thomas H. Greco, Jr. August 15, 2015
I recently spent a few days on the Italian island of Sardinia conferring with the founders and administrators of Sardex ( https://www.sardex.net/?lang=en or http://www.sardex.net/), a commercial credit clearing exchange that has been notable for its success in organizing small businesses and service providers on this island of about 1.6 million people.
I’ve known about Sardex since almost its beginning five years ago and have corresponded over the past few years with Giuseppe Littera, one of its founders, but this was the first opportunity I’ve had to get an inside look at their operation. I came away with a pretty good understanding of how they operate and the impression that the Sardex structures, procedures, and protocols come closer to optimal than any other trade exchange I’ve seen. It appears to be a developing model that is both scalable and replicable.
I will not attempt to provide here a comprehensive report or detailed analysis, rather I will highlight a few major points and provide some sources of additional information for those who are interested in doing their own research.
Current membership: ~3,000
Current transaction turnover: ~1.5 million euro equivalent per month
Expected turnover for 2015: 50 million
Velocity of credit circulation: 12 times per year
Employees included as sub-accounts: 1,000
When I asked about the key factors that account for their success, here is some of what I was told:
1. Founders are dedicated to the mission to relocalize and rehumanize the economy and to reconnect people by enabling the creation of interest-free local liquidity based on the production capacity of local businesses.
2. Social solidarity and cultural cohesion, while very important and part of the mission, were NOT a pre-existing factor that would account for their early success. In fact, they have had to work hard to develop social solidarity and cooperation amongst their members, but this is now changing. One account broker told me, “I can see how behavior of many of our members has changed. When the financial crisis first began, they were starting to lay off employees or cut their wages, and they were reluctant to spend their euros. This made matters worse as the circulation of money slowed down. But as they began to participate in the process of earning and spending trade credits, they began to increase pay to their workers and to invest in their education. In one case, when a member’s shop was burglarized, other members stepped up to help by donating some of their trade credits to help their fellow member recover from the loss.”
That anecdote demonstrates the differences in behavior that results when people experience scarcity compared to when they experience abundance. In this case, the scarcity of euros caused behavior to change in the direction of reduced willingness to spend and the contraction of overall economic activity. But their experience with trade credit was much different. Realizing the greater availability of trade credits, and finding it easier to earn them, leads people to experience abundance and to be more generous and spend more liberally.
3. I was surprised to learn that the Sardex revenue model relies mainly upon initiation fees and annual membership fees (collected in euros); and that they had decided early-on to stop charging fees on transactions. For me, that approach is counter intuitive in that I have long held the view that recruitment would be most successful if membership were made easy, low cost, and risk free, and that it seems reasonable to apply the principle that users pay in proportion to the amount of services they receive. In this case, that principal would mean that those that receive more credit clearing services should pay more. Well, this may be a case where successful practice trumps rational theory. Marketing specialists should look closely at the dimensions of this phenomenon.
There is however some logic in this approach in that, since the cost of participation is relatively fixed, members should seek to maximize the benefits of their membership by trading more within the network. Initiation fees are set according to the size of the business and range from 150 to 1,000 euros. Annual membership fees are likewise based mainly on turnover and range from 350 to 2,500 euros.
4. Strong member support by an effective staff of brokers who help to arrange trades, especially for those that have high earning capacity to avoid excessive accumulation and high positive trade credit balances.
5. Recruitment strategy tries to replicate the supply chain, i.e., bring in businesses that are the suppliers of existing members or prospective members.
6. “Solidarity threshold.” Requirement that members offer their goods and services for trade credit at the same prices as their euro prices, and that payment be accepted 100% in trade credit on all transactions of less than 1,000 euros. “Blended trades,” i.e., payment in a combination of trade credits and euros are allowed on larger purchases, according to a sliding scale).
7. (a) Restrict membership to companies that have a registered office in Sardinia. This promotes social solidarity and excludes large multi-national corporations. (b) Avoid “saturation” (accepting too many members that offer the same line of products or services).
[While I am fully supportive of the former of these, and would indeed, permanently exclude multi-national companies, this latter practice of avoiding saturation I consider to be of use only in the initial stage of establishing credit clearing as a credible means of exchange and an effective source of local liquidity. Ultimately, I believe that membership must be open to any community-based small or medium enterprise (SME) that meets the basic qualifications for membership. Of course, not all of them will qualify for lines of credit.]
8. Fully compliant with reporting and tax regulations. Transparency is a matter of fundamental importance.
9. Emphasis on monetizing the unused capacity of members. Connecting unused supplies with unmet needs is a primary benefit of credit clearing services.
The Sardex company has been consulting with other groups to replicate their system in seven other regions around Italy. In the future, Sardex is planning to initiate a rebate program to bring consumers into the trading community, which will enhance the circulation of local trade credits, make Sardex better known, and stimulate more sales for their business members.
Here below is a list of a few of the many reports and sources of information about Sardex. Readers are invited to add others as comments
From an idea to a scalable working model: merging economic benefits with social values in Sardex, by Giuseppe Littera, et al, at the London School of Economic, Inaugural WINIR Conference, 11-14 September 2014, Greenwich, London, UK.
You can get a pretty good picture of the distinctive features of Sardex by viewing Giuseppe Littera’s presentation that was made (in English) at a conference in Volos, Greece, in 2014. It is to be found on YouTube at, https://youtu.be/rvaL2A8juz0
Report (in Italian) in the Italian daily newspaper, La Repubblica: Dalla Sardegna al resto d’Italia. Sardex inventa la moneta complementare. “Abbiamo ripensato l’economia.” [English translation needed.]
this is our book written in 1989 with friends about the demographic winter coming fast
La création de l’Institut Suisse de Démographie et de Développement, ISDD, dont … François Geinoz François de Siebenthal Michel Tricot Préface par Philippe …
Table of Contents
1. Welcome Letter
2. Introduction-what is an affiliate program?
3. How to sign up & get started
4. Suggestions on how to get the most out of the affiliate program
Welcome to the Affiliate Program!
Thank you for looking at our Affiliate Program. We have designed the program to benefit
your organization – financially of course, but also by increasing traffic to your website
and by enhancing the message and image of your organization.
Your participation in the program will also serve to spread the word about Demographic
Winter: the decline of the human family. Most people are unaware of much of the
information provided by the scholars in Demographic Winter. Your active participation
in the Affiliate Program will help increase awareness about these important issues.
Please consider the extra benefits of becoming a Partner or Advocate.
Again, thank you for participating and helping to promote this important film!
Introduction to the Affiliate Program
The Affiliate Program is designed to reward YOU for promoting Demographic Winter
How it works:
1. You select which promotion tool(s) (referred to in this document as “Creative’s”)
you would like to use to promote the film
a. Banner Ads
b. Trailer Links
c. Text Links
d. Invisible Codes
Add theses Tools to your website, blog, myspace, facebook, other networking sites, email
blasts, newsletters, or anywhere else you can think of—just get the word out & watch the
money come rolling in!
2. We track your referrals from those tools
3. We pay you a negotiated rate for EVERY sale that results from that referral
a. We will pay you per sale that comes as a result from your referral
For example: let’s say you add the banner ad to your site and we’ve negotiated that we
will pay you 30% for every sale that results from referrals from your site. Then, in one
month 2,000 people click on the banner ad and it leads them to our website; and 100 of
those referrals BUY a DVD, we will then pay you $6 for every one of those sales! That’s
$600, for doing virtually nothing!
SELL THE DVD as a Partner or Advocate
Give traffic to your website a boost:
The subject of demographic winter is building momentum right now, so increase traffic
to your website by doing an article on the subject, an editorial or a message from your
organization’s leader. As PR for the film and the subject increases, so will people
looking for information on the internet. Why not bring them to your site for answers
and links to the film, thus associating your organization with this important topic in their
Sell DVDs on your website:
As a Partner or Advocate you can sell DVDs on your website by:
1. Placing an ad on your website and encouraging sales
2. All sales coming from your website will be tracked
3. Your organization will earn 30% of every sale from your website – that’s $6.00
Buy in bulk and make more per DVD:
Your organization can buy DVDs in bulk and sell direct and:
1. Make a higher percent profit for fewer sales
2. Use for a fundraising dinner. Give a presentation, show the film, sell the film for
the $19.95 price and ask for additional donation
3. Sell them on your website for a higher profit than if we handle it
4. Buying it now will enable you to use it for a fundraiser before it goes out to the
general audience, after which they will no longer be available for fundraising
5. Use it for publicity for your organization in local media
6. Buying in bulk will get you the fundraising and PR package
7. Selling to your membership and encouraging them to buy multiple copies to give
out will help create a “buzz” around this documentary, aiding your PR, aiding the
awareness of the importance of family, aiding in a wider distribution of this
Please email us for bulk order discount pricing information.
The release date for this film will be March 7.
How to Sign Up & Get Started
Now that you have an idea of what the affiliate program is and how it can benefit you
and your organization, you are ready to sign up and start earning that extra cash!
Please follow these easy instructions to get started. If at any time you have questions,
or need help with this process please call us at 1-800-896-9525.
How to get started:
1. If you haven’t done so already, fill out the Affiliate Program Application form.
a. We will review your application, and contact you if you if you have been
2. After you have been approved, you will be provided with an Affiliate login,
Affiliate ID and a password, and the link to the Affiliate Login Page (which can
also be found on the homepage).
3. Once, you have logged into the Affiliate Login Page, please check your Affiliate
Profile information, make any necessary changes. Also, please change your
4. Next, select the creative’s that you would like to use to promote Demographic
a. “Images” are banner ads that you can select and use the link that the
Affiliate Generator gives you (?) to paste onto your website. (Most
b. “Text” creative’s are text that you copy and paste onto your website, or in
a blog, an article or another place where a text link makes sense.
c. “Invisible” links are links that conceal the fact that it is indeed an affiliate
link because some merchants feel that consumers won’t click on obvious
affiliate links. But, do not worry, the invisible links still have your
individual affiliate ID information embedded in their link scripts.
* If you are in a country where English isn’t the primary language and you would like to
be a part of the affiliate program please contact us and we will work with you
individually in setting up special Creative’s for you.
5. After you have selected the creative’s-you should copy and paste the codes into
another document (see the Affiliate excel spread sheet that you can download on
the Affiliate Program webpage)
6. Give your creative affiliate codes to your webmaster and have them put the links
on your website, or wherever you desire the codes to be.
7. Next, check your Affiliate account periodically to see if it has been effective, and
that there aren’t any discrepancies.
The Payment Process
You will be paid the First Friday of every month for the previous month’s sales.
Before each payment date we will reconcile all transactions and contact you if there are
any discrepancies. Please check your account every week to stay current on your activity
Please see the following section to see our suggestions on how to make the affiliate
program even more effective.
How to be more effective
Below are a few suggestions that we have found to make any affiliate program more
1. Affiliate programs work the best when the product you’re promoting is relevant to
your website. If your site is not relevant, we may still approve you to be an
affiliate, however you may not see significant benefit.
2. Banner ads (Image Creative’s) work great! However, if you have too many
banner ads on your website already, then it just becomes “noise.” We highly
suggest you limit the number of banner ads you have on your website.
3. Also, try different placements of your banner ads. If you keep the banners in the
same spot for a long time (depending upon how frequently each visitor visits your
site) they can become stagnant, reducing their effectiveness.
4. Try using multiple referral methods. Use a banner ad, and use a Text Creative to
point to www.DemographicWinter.com.
On appelle crash démographique, ou « hiver démographique », l’hypothèse, vérifiée en Europe (en particulier en Allemagne et en Italie) et dans plusieurs …
21 sept. 2010 – Mais tout va bien, au pays de la Logique et de la Raison Pure. Le livre: ” Europe: l’hiver démographique” en parlait déjà en 1989. ( Édition l’age …
10 juin 2009 – Le livre: ” Europe: l’hiver démographique” en parlait déjà en 1989. ( Edition l’age … nos excuses. Posted by François de Siebenthal at 08:26:00 …
Dr Erwin Willa : Témoignage (p. 223-226). Prof. Jean de Siebenthal : Synthèse du Congrès (p. 227-229). Congrès 1989 Europe : l’hiver démographique.
Aeules Europe : l’hiver démographique 141 28.1.89 3. Akademiker u. Sur les droits de l’enfant 215 28.5.96 5. Algoud François-Marie Vers Dieu ou vers la Bête ?
François,What is this? Someone’s book?Bill Still
Bill Stillwebsite: www.billstill.comSkype: billstill3On Mon, Oct 14, 2013 at 3:45 AM, François de Siebenthal <firstname.lastname@example.org> wrote:nihil obstat & imprimatur and Elim…
The LORDS BANKBishop Benjamin J. Bargain of Daet and Mr. Grace Economics Willy Pearl Elim Communities of Quezon City.Executive Directors: Three deacons, if possible married with many children.Auditors: Check and balance, the elders, 2 or 3, men and women.Central Monetary Authority – The Parish PriestUnder the Supervision of the Diocesan BishopGuided by God’s Laws, the Canon Law,the Govemment LawsAnd the Diocesan Decrees and Statutes
Source Admin Basic Spiritual Material ofFunds Needs Needs Needs Tithes Parish Infra-GHQ Training and Lending Tithes or As Priest Lot and Formation Wo inierest The Tenth Manager Building of members Nor penaky Gift Board of Village Periodic Supplies Donations Elders Center Retreats For Offices w / in & and with and Movable w / out Consultants Leaders Recollection Assets Vow Staff Area Catechesis Fixed or and Centers & Evangelizadon Immovable Pledges Personnel Leaders Missionaries Assets Sacrifice MSK MSK Sacrements Scholarship Offerings Leaders Centers Sacramentels tirants From For For Guidance For Admin, Honoraria Acquisition Counseling Periodic Staff and Construction Consultation Grace Personnel Allowances Supplies Referrals Sharing of and of Maintenance Bonding Goods _MSK Management and wl members and Members and Staff Mass Media & Other LBS Services Immediate beneficiaries Ail Contributors to the Tithing Program Targeted immediate beneficiaries w Ail parishioners Targeted beneficiaries coverage = Ail people of the Lord God Consolidation of charge for Concepts on Banking, Cooperativism, Social Credit, Pondo ng Pinoy, Filipinos PondoAnd coined as Grace Economics Contour by MQP as Experience
- Changes from the old methods… the success of banking.To help the needy et non-members can supply the desired items on … and dreams in life.
…GUIDEFor the establishment of the “Lord’s Bank”Offerings:I am offering this booklet to:
- In the patron of the Municipality of Nabua, Camannes Sur, where I was born, The Beloved Cross and the Virgin Katipanan, basic basic safety signs;
- In my late parents: Candido et Teodora Guadalupe Parcero Binondo Gavina. They gave me life and naghubog, together with my brothers and relatives …
- In my Hon. Bishop Benjamin J. Almoneda and clergy of the Diocese of Daet, province ‘of Camarines Norte;.
- In my …Rural Bank of Paracale, Mr. Clan Julio and Dra. Merle Ramores, Mr. Clan Vicente and Mrs. Sanchez, Jr.., The Children’s Atty. Joseph and Mrs. Pajarillo and wonderful families in the Parish. Flyover Land, Paracale, Jose Panganiban, Vinons and Contour, Paracale;
- In Other magnanimous I became partners in ministry to the Lord’s Vineyard.
Msgr. Quirino CI Parcero, HP
The current management of the Holy …Including the Catholic Church’s experience of chronic poverty in the world, and many miscellaneous factors, neglect, addictions, excessive politics and more and especially abandonment and in compliance with the Commission and holy God. If so, this booklet is a desire to return to the Divine Plan of God for the glory of God and the salvation of man. Important care and should just go back and live about … the Lord, which is the main topic to establish a BANK OF LORDS.The thoughts that were involved here is the result of gold mental wanted to create a new community: The Code of the Holy Catholic Church, the Central Bank and Security and Exchange Commission of the Philippines, the Social Credit of Canada, the Fund Cardinal Gaudencio Rosales’s Pinoy Manila, the Filipinos Fund Bishop Benjamin J. of Daet and Mr. Grace Economics Willy Pearl Elim Communities of Quezon City.The Author – MQP
1. The Bank.
- Definitions. …funds, limited only, from the investor / investor and the investor deposits 1) to extract and use them if they need the money. 2) to be loaned with profit / interest and coating the non payment of promised time frame and 3) to be used to exchange different types of currency (currencies), and other human needs.Bank of the Lord, and funds the gift of God’s grace is not limited Being the eternal God and owns all the lives and livelihoods of people – money or…and whatever they are, wherever and never / forever.
- Importance .. Kahn how, there are resources to meet each person eventually …a delight for Food (food ), Clothing (clothing), Housing (sheftr) Moulding (education) and its Lifestyle Olfestyle).Bank of the Lord, God answers all human needs. He is the Creator and Father eventually cared nature He created. He is the Son
Redeemer that sacrificing and Mercy are endless for the devil. He is the Holy Ghost Lover that raises and gives life.k). Properties. Need unity, cooperation and loyalty of … / the debtor, who sealed the Act and the rules …/ Institution to be assured and continuing its operations in accordance with the Law / Commandment Church suggestive of Government / Holy lèlesya and Government-Town 1 State.Bank of the Lord, surely the unity, cooperation and honesty because there is only one God in the Trinity Community, Father, Son and Holy Spirit – which sealed the love.2. Kapitaia) Investment. The aggregate turnover of …and deposits may sink, or recover stolen. No security …Bank. Operation may be stopped, unless renewed, again …capital. You should really protect the Bank of superintendent (management) at all times.Bank of the Lord, not suffer loss, no recovered. Being, the people doing the supervision, possible theft. …
devotion to the Lord just 2) sils serve not only as servants, but servants may actually lbig, so 3) always ana the Lord for all the work and things, to think only in the glory of God and the salvation of man , and not the pers, honor or pleasure purposes.
- …. And if it has planned to build. the shelter of the guard in the field? … and estimate the inheritance … Luke 14:28. You should only estimate the Halage of Finance destined for the need … in time, in different ways and play. Should not neglect the need of the people involved in the exercise.
- Financial auditing. Required … approved and the Auditor Evaluation of record entered (income) and … (expenses) on a daily, monthly and annual. … audit for running and employees; inventory of all its transactions and equipment / instruments.3. lkapu.The Tithing is one-tenth (1/10) of any grace and gift of God to every man for the Lord. Leviticus 27:30-33. Patient love and kindness. 1 Corinthians 13:4.
Provided the Levites Meeting Tent. Numbers 18:21-29. …. Deuteronomlo 12 à 0.8 to 9, in priest Aaron. Numbers 18:28 best. 18:29 ET Numbers Hebrew priest Melkisedek 7:11-8.Malachi 3:7-12 promised identified Jews Nehemias 13:5,12.Give as you ibihlgay him. Sirat 35:9. So give … according to him, not unhappy …; love of God nagbiblgay welcome. God is able to enrich you in all things so you do not want to even mention and multiply as your charity. 2 Corinthians 9:7-8. Give, and you will receive an abundance measure, packed together, shaken and overflowing pour into your bosom. Sépagkot sutukatin you scale you use. Luke 6:38. …giving more blessed than receiving. Acts 20:35.The sows little will reap little, and sowed much to g’s a plenty. 2 Corinthians 9:8.Terms Deuteronomy 14:22-29. Loyalty …26:13 -15. The Lord is a neutral judge Sirat 36:12. Tobias kept 1:6-9 condemned the legality of the Pharisees Luke 18:9-14.a) Life. … All life and all human life from God. Tithing is only asking for the Lord.
- In the presence of God you lay your collected; …was there with insecticide or no rust destroy and thieves. You may already know where your treasure is, there will your heart. Matthew 6:20-21.
- You know the grace of our Lord Jesus Christ: As you nagpakadukha he rich to wealthy enjoy his misery. 2 Corinthians 8:9.
- Large-hearted people may be more wealthier; person may turn stingy especially poverty. This is kind abound: watered the nandidilig. Proverbs 11:24-25.b) Period. The period between the first two eternity forever. May 24 hours a day. How much for the Lord, are not more than two hours? Do Nailalaan Poon patin sa sa parriamagitan of worship, prayer and service to Him and to fellow human beings?
- They wanted to share to help with the saints, for Aboi they can and, I said, more – strictly voluntary and they asked us to share the blessings of the divine service. More PE aminginaasahan they giving themselves to us Pangimon and also because the will of God. 2 Corinthians 8. :3-5.
- Sincerely can trust Yahweh, ..
Do not hang on own thoughts. Remember him in all your ways …. Proverbs 3:5-6.3) To whom I work and depriving myself of pleasure? It may be no significance and bad business.C) Brains. Conform to the ant … he stores food in the summer, gathering live in during the summer … Proverbs 6:6-8. Six things Yahweh hates, seven are an abomination in his will : 1) haughty eyes 2) tongue liar 3) hand …innocent blood 4) rogue scoundrel 5) feet go quickly to evil 6) False witness and 7) who sows discord among brothers. Proverbs 6: 16-19. Yahweh gives wisdom, his mouth come knowledge and understanding. Proverbs 2:6.1) Because it’s your hlnlllng and not long life or wealth for yourself, or death of your enemies, …prompts you to decide to …, I grant you ….My comments:Bad translations from Rome.
Example in the recent papal encyclical Caritas in Veritate…Pawnbroking is not monte di pietà…Can we translate the concept hospital by bordel or brothel or whorehouse?65. … Furthermore, the experience of micro-finance, which has its roots in the thinking and activity of the civil humanists — I am thinking especially of the birth of pawnbroking — should be strengthened and fine-tuned. This is all the more necessary in these days when financial difficulties can become severe for many of the more vulnerable sectors of the population, who should be protected from the risk of usury and from despair. The weakest members of society should be helped to defend themselves against usury, just as poor peoples should be helped to derive real benefit from micro-credit, in order to discourage the exploitation that is possible in these two areas. Since rich countries are also experiencing new forms of poverty, micro-finance can give practical assistance by launching new initiatives and opening up new sectors for the benefit of the weaker elements in society, even at a time of general economic downturn.Real translation and its importance:A mount of piety is an institutional pawnbroker run as a charity in Europe from the later Middle Ages times to the 20th century, more often referred to in English by the relevant local term, such as monte di pietà (Italian), mont de piété (French), or monte de piedad (Spanish).In Switzerland, e.g. the cantons of Bern and Zürich enacted elaborate laws for the regulation of the business. In Zürich the broker must be licensed by the cantonal government, and the permit can be refused only when the applicant is known to be a person underserving of confidence. Regular books have to be kept, which must be at all times open to the inspection of the police, and not more than 1% interest per month may be charged, just to cover the costs and not for profits, as asked by the Church, i.e. permitted by Medici Pope Leo X’s usury-for-a-good-cause: the Monte di pieta, so-called “charity banks” operated in the Renaissance in the name of the poor, with no profits. A loan runs for six months, and unredeemed pledges may be sold by auction a month after the expiration of the fixed period, and then the sale must take place in the parish in which the article was pledged. No more than two persons at a time have ever been licensed under this law, the business being unprofitable owing to the low rate of interest. In the canton of Bern there were once two pawnbrokers. One died and the other put up his shutters. The Zürich cantonal bank, however, conducts a pawnbroking department, which lends nothing under 4s. or over £40 without the special sanction of the bank commission. Loans must not exceed two-thirds of the trade value of the pledge, but 80% may be lent upon the intrinsic value of gold and silver articles. The swiss establishments make practically no profit.Fribourg in Switzerland and Rerum Novarum,http://www.vatican.va/holy_father/leo_xiii/encyclicals/documents/hf_l-xiii_enc_15051891_rerum-novarum_en.html3…The mischief has been increased by rapacious usury, which, although more than once condemned by the Church, is nevertheless, under a different guise, but with like injustice, still practiced by covetous and grasping men….
Hunger in the world, population growth, wars, bad distribution of wealth, and the ever-increasing gap between the rich and the poor, call for a neutral and objective reflexion. We admit that there will always be disparities, but the present situation calls for urgent solutions, and most of the problems are yet to receive any beginning of efficient realization, except for a few rare exceptions.After years spent studying the recent demographic phenomena, and because of their relationship with the present banking crisis, I can affirm that the following facts are of the utmost importance, their seriousness having been anticipated by only a few civilizations in the past. The non-respect of natural laws inscribed in nature will cost a high price, and the more we wait, the higher the bill will be for us, our children, and our grandchildren.The main factsThe present demographic crisis in Europe is the most serious in history. One of the worst situations is that of Italy, with an average fertility rate of 1.2 children per woman, even 0.8 in Northern Italy. Soon Spain will beat Italy in this demographic pit. In the near future, Europe will have to consecrate more than half of its Gross National Product to the elderly. The European States will be ruined because of the lack of young people. The European economy is already declining. In an absurd reaction against this, some voices are raised in the mass media to promote the active euthanasia of the elderly and disabled. (Laws along this line have already been voted in in Zurich and the Netherlands.)Most of the Western Nations can no longer manage to pay the interest on their debts nor control them, to the detriment of primary tasks. For example, Italy is socially bankrupt because of its taxes. There is widespread corruption, a decline of the GNP, the failure of the school system, young people on drugs, and the ever-increasing cost of health care (more than 50 billion Swiss francs in Switzerland alone): all of these facts carry a heavier burden on society. National pensions plans are going bankrupt.The productivity due to robots and computers could save us, but it will have to be redistributed in a just way.The role of credit and its demographic consequencesToday’s economy is based on loans. The public does not know that banks take huge liberties with the loans they make. If, for example, there are 100 dollars in deposits, the U.S. banking system lends a hundred times this 100 dollars, which makes $10,000, or a creation of $9,900 out of nothing. This creation of money is possible thanks to the trust in the banks and the law of large numbers, which says that it is never all of the depositors who will withdraw their savings at the same time. The globalization of the world economy aggravates this situation of the “miraculous” creation of money by the banks, which creates skyrocketting debts.Since human nature has its limits, many people have begun to realize the limit of this system of the creation of money out of thin air, and its human cost, especially regarding unborn babies. There is a shortage of babies in every western nation, and the present crisis is due to this shortage. If all the depositors in the world wanted to withdraw their savings all at once, there would be a huge financial crisis. This is going to happen in developed nations because of the ageing of the population. We should be smart enough to prevent this fall, and prepare alternative solutions, by favoring families.The role of interest ratesThrough sudden raises of the interest rates and money creation, banks become gradually the owners of the real wealth of the nations, since all the fictitious money they lend has to return to them, plus the interest.Families or small businesses borrow when the interest rates are low, and most often, are forced to pay back these loans when the rates are high. The consequence is the absence of children and the collapse of the economy.In some nations, the real rate of interest is 7% per month, which amounts to 125% per year (shylocking), whereas the inflation rate is 9%. These rates are usurious, and are the plain representation of greed. And there are even worse systems.The interest plays an even more pernicious role, when money is lent to developing nations. In this case, these loans are granted with advantageous rates, provided the creditor nations apply birth control policies (like China’s one child policy, which brings about forced abortions and the massacres of girls). This is the beginning of a vicious circle, with debts causing the sacrifice of human persons to the modern Moloch. Human rights and freedoms are crushed by the economic system.Taxes and the social budgetNations have borrowed from private banks huge sums of money which, for the most part, is scriptural money created out of nothing. This money is based on the wealth of the whole nation. This creation of money out of thin air is legalized, but immoral, just like abortion which, even legalized, remains a crime in the sight of God. These huge sums of borrowed money bring about ever-increasing debt payments, which take an increasing part of government budgets, leaving less money for health, education and other services, creating unemployment, cuts, stress, quarrels, divorces, downsizing, restructuration plans, etc.The solution is obvious: the State must create its own money, interest free. Savage capitalism eats up its own children, but so slowly that some people actually get used to it.Interest and usury condemnedCardinal Ratzinger recently said that there are over 40 million (declared) abortions per year in the world. This means that if one counts the abortions through coils and abortive pills (undeclared), for the last ten years, there have been one billion human beings killed, not to mention those who were not conceived because of the prevailing contraception mentality. This slaughter is the worst of history. What are the causes?In the Old Testament, God and the Church have always condemned any interest on the loan of money as usury, and not just high rates of interest, especially through the teachings of St. Thomas Aquinas. (See also Josue 3:15 and 4:18, Chronicles 12:15, Isaias 8:7 and 24:2, Daniel 8:16, Exodus 22;25, Nehemias 5:5, Leviticus 25:36, Psalms 15:5, Jeremias 15:10, Ezechiel 18:8, Proverbs, and in the New Testament, Matthew 25:27 and Luke 19:23.) In the Lord’s Prayer (the “Our Father”), which Christians recite every day, the Latin version uses the words “debita nostra” (reported in Matthew 6:12: “forgive us our debts”), which has also to be understood in the literal sense, as taught by the Catechism of the Catholic Church.There is no difference between interest and usury, for it is the very principle of charging interest on time that is pernicious. Besides, it is obvious that the higher the interest, the more harmful it is. The condemnations of greed by Pope Pius II are very harsh: “heretical theories that are appaling and abominable.”The penalty for this type of crime is the same as for all those who take part in an abortion: excommunication. Popes Paul II, Sixtus IV, Innocent VIII, Alexander VI, Julius II, and Leo XIII in Rerum Novarum also strongly condemned interest. ( an other form of voracious usury…)The encyclical Vix PervenitOn November 1, 1745, Pope Benedict XIV issued the encyclical letter Vix Pervenit, addressed to the Bishops of Italy, about contracts, and in which usury, or money-lending at interest, is clearly condemned. On July 29, 1836, Pope Gregory XVI extended this encyclical to the whole Church. It says:“The kind of sin called usury, which lies in the loan, consists in the fact that someone, using as an excuse the loan itself — which by nature requires one to give back only as much as one has received — demands to receive more than is due to him, and consequently maintains that, besides the capital, a profit is due to him, because of the loan itself. It is for this reason that any profit of this kind that exceeds the capital is illicit and usurious.“And in order not to bring upon oneself this infamous note, it would be useless to say that this profit is not excessive but moderate; that it is not large, but small… For the object of the law of lending is necessarily the equality between what is lent and what is given back… Consequently, if someone receives more than he lent, he is bound in commutative justice to restitution…”The interest in one of the factors that triggers inflation, and not the opposite. Pope John Paul II’s encyclical letter Veritatis Splendor reminds us that there are intrinsic evils and absolute sins. To ignore them may suppress personal sin (according to St. Thomas Aquinas, the borrower commits no sin), but society pays for this misdeed, even at the cost of its own disappearance, and those who favor the ignorance of the sin of usury are responsible for endangering the survival of the population.What comforts us, however, is that this condemnation of usury is repeated in the new Catechism of the Catholic Church, at the end of the comments on the Seventh Commandment.Impossible contracts are nullIt is impossible to pay back interest-bearing loans, either they are compound or not. Take the following example: Croesus borrows a principal of 100 at the birth of Christ. If one applies an interest rate of 10%, the sum to be paid back in the year 2000 is (100 x 1,12000), or six times ten to the power of eighty-four, or a number with 84 zeros, which simply blows the mind… It would represent 10 to the power of 68 houses for every person on earth. It is obvious that it is impossible to respect such a contract.A French mathematician, M. Levy, showed that, after a while, all the wealth in the world will be owned by the banks, through the simple application of mathematical rules.Money is a human creation which, if the interest is admitted, begets more money. This money is not only a sign; it really causes deaths and injuries, in every area. It is more prudent to forbid any new organism that is self-reproducing (like viruses, the development of new species in vitro, etc.), including abstract concepts like money that have consequences in real life. The common good called “money” is in the hands of people without scruples. It is a duty for society to take back control over the issuance of money.It is said that everything has a cost, and so the interest would be the cost of money. However, money is not a thing, a commodity, but a sign, a common good that belongs to all, just like water or air. It is precisely the dream of the greedy to make people pay for the air and water they consume. Money is a universal, and to leave its creation into the hands of the supporters of death is a crime.Today, money is more and more invested in labor-saving technology rather than in creating jobs. The interest causes the repayment of loans to the banks to go before the wages of workers, and to prefer to lay off these workers instead of paying them. This is how human rights work today: money, a sign or abstraction, comes before the human person, a reality. Where is the dignity of the fathers of families, who are not bankers? Besides, bankers do not have large families, for money comes even before their own children.Abortion: a sacrifice to MolochThis swindle of the “creation” of money by the banks, and the widespread use of interest on the loan of money, favor economic crises and abortion when loans have to be paid back. In Switzerland, the first reason given by women who had an abortion is the repayment of loans, contracted by themselves or their families. We know that there are other reasons (hedonism, selfishness, fashions, social pressure, frivolity, ignorance, etc.), but to shut up our eyes and do nothing against one of the causes is neither scientific nor Christian. To let the people who earn money without working (by collecting the interest on their loans) crush the poor who are defenseless, is ridiculous. However, to defend the poor is far from being ridiculous.History of ancient Egypt shows the close link between mortgage rates and the decline, even disappearance, of the population. (See the analysis of Belgian historian Pirenne on the 20% rates that caused the deadly exposition of children to the sun.)The new Catechism of the Catholic Church maintains the condemnation of interest and its harmful role at the end of the comments on the 7th Commandment, which forbids to steal. As lay people, we must make this condemnation understood by all, for it is a liberation for the poor; moreover, an economy based on investment in real developments and improvements (and not simply hoarding money through the gimmick of the interest rates), is much more dynamic, and favors a reduction of prices, while rewarding those who take risks in investing in new developments.Justice is necessary to achieve holiness. It is too easy to wash one’s hands of the matter by saying that one understands nothing in economics. Economics is not so complicated, especially when one takes the trouble to humbly study solutions that are finally more practical than those who manipulate public opinion want to make you believe.For many centuries, the Church has been suffering, because her sons are prisoners of a huge disinformation campaign. Maurice Allais, 1988 Nobel Prize winner in Economics, wrote that the present international financial system is the biggest disinformation system in human history. The sons of darkness control this disinformation and crush the weak, often with the help of the ignorant of good faith. Let us unmask them, to give some fresh air amidst this general atmosphere of corruption.What to do?Why not react now? The human race has survived for centuries without this so-called creation of money at interest by banks, and even with no banks at all. So, why not abandon these inhuman and outrageous interest rates that know no limits and steal time from us as educators of our children? The interest is time stolen from fathers and mothers.Nations spend billions for research in physics. Let us spend a few million to study more carefully the social doctrine of the Church and the practical solutions it entails in favor of a sound economy. Let us create a center of studies and formation for social action.Let us make the promise made to Abraham possible. The earth is huge and generous, as well as the seas. All the serious experts, after long studies (cf. Julius Simon), admit that our planet can feed all the population to come in the future. In fact, those who believe that the earth is overpopulated neither believe in God nor in His promise. Let us learn again to utter this greeting of the sons of Abraham: pax, peace, shalom, salam… This peace, as Blessed Mother Teresa of Calcutta said, will come on earth only if abortions are stopped, and if we accept those who are different, the disabled.A salary for housewivesHousewives, mothers who stay at home, work just as hard as those who are hired in the workforce. They deserve a real salary, which will create more job opportunities, boost consumption and the economy, and allow the Gross National Product to double. It was possible to finance two world wars, so there is no reason why it would not be possible to finance this wage to housewives. In Canada, it is estimated that the work of housewives represents 46% of the GNP. So it is simple justice, as Pope John Paul II said, to reward them with a salary.Is is true that:The less the children in a family, the less vocations to sharing and generosity?The best school to teach the principle of subsidiarity is a large family?The main flaw in world politics is this generosity in the existence of intermediary bodies?The contraception mentality is directly aimed against large families?The system of interest directly attacks the family?The interest is a theft of time and children?The creation of money through interest is a lie and a swindle, a theft to the detriment of future generations (unborn children)?Can any person of good will take part in this slaughter, by action or omission? Can we stand up and stop this mechanism?Is the teaching of St. Thomas Aquinas on usury still valid today? Can the time that belongs to God be stolen? This is a good explanation for stress.Any human invention that has no limits is monstrous; the system of interest rates has no limits. Moreover, a means of exchange, or unit of measurement, cannot multiply by itself. If money breeds more money today, it is at the expense of our own children. This is criminal!It is easy to show that the present crisis is in large part due to this search for zero population growth, based on flawed facts and analysis. What a mistake it is to think that the earth cannot support all of the present population, whereas Europe alone could feed many times the world’s population, not to mention the resources of the oceans that are barely developed.For those who say: “We will have to change the way our deposits are managed in banks,” I reply: “This is true, and you will be rewarded a hundredfold, for a dynamic economy will benefit all, unless your selfishness make you sad to see others happy. How sad it would be it you were in such a situation, especially since you risk eternal damnation.All this work is done with the hope that a few simple economic concepts can be explained for the good of the poor, the unborn, especially in Third-World countries. Don’t believe those who complicate everything to keep their control over the economy, for billions of human beings will never be born because of this control. True love cannot accept interest, but it can accept just profit. Let us entrust the future of mankind to the family, with mothers having for their model, Mary.François de Siebenthal
“The Church has not changed her teaching
on usury and one can make a reasonable
argument for the validity of the intrinsic
injustice of usury itself.”
In order to know whether usury is still a sin we must first understand
what it is. Although today usury commonly means charging
excessive interest on loans, or perhaps merely on loans intended for
consumptive purposes,1 the classical doctrine of the Church on usury
and the debates among some of her outstanding theologians were
concerned with another question. For usury as it was understood for
centuries meant the charging of any interest on a loan simply by
virtue of the loan contract, that is, without any other justifying cause
except that money is being loaned. The most recent relatively
complete papal discussion of usury occurred in Pope Benedict XIV’sencyclical of 1745, Vix pervenit. The pope stated:448 Thomas StorckThe nature of the sin called usury has its proper place and originin a loan contract . . . [which] demands, by its very nature, thatone return to another only as much as he has received. The sinrests on the fact that sometimes the creditor desires more than hehas given . . . , but any gain which exceeds the amount he gaveis illicit and usurious.One cannot condone the sin of usury by arguing that thegain is not great or excessive, but rather moderate or small;neither can it be condoned by arguing that the borrower is rich;nor even by arguing that the money borrowed is not left idle, butis spent usefully . . . .Although, as we will see, in this same encyclical Benedict expresslyallows for the possibility that there can be legitimate titles to interestwhich do not fall under the head of usury, the central question issimply whether interest is ever justified merely by virtue of a loancontract, and we should keep this point in mind as we proceed.Usury is a question that arises at the intersection of theology,philosophy, economics, and law, and has implications for each.Considering the weight of the Church’s consistent and centurieslongcondemnation of usury, obviously there arises a theologicalquestion of development of dogma, as well as of the validity ofvenerable arguments in scholastic moral theology and moralphilosophy, in canon law, and in the teachings of economic theory.I will treat the subject mainly, however, from the standpoint ofmoral philosophy and theology, which, along with canon law, iswhere historically most of the controversy was conducted.2. Historical background and developmentSince the usury question has an unusually long and richhistory, I think that it is necessary to sketch this background,without which both the importance of the controversy and theweight of the intellectual argumentation on behalf of the Church’straditional position might not be clear. In addition, an historicalapproach will help to show how gradually the essential features ofthe condemnation of usury were worked out.The negative judgment upon usury in the early Churchoccurs against a backdrop of wide condemnation by Greek andRoman writers as well as in the Old Testament. The list of classicalpagan authors who disapproved of it is impressive and includesIs Usury Still a Sin? 4492Laws, bk. V, 742.3Politics, bk. I, 10, 11. Since Aristotle’s opinion on usury was the one most citedof all pagan authors during the Middle Ages, I reproduce it here: “The most hatedsort [of wealth-getting], and with the greatest reason, is usury, which makes a gainout of money itself, and not from the natural object of it. For money was intendedto be used in exchange, but not to increase at interest. And this term interest,which means the birth of money from money, is applied to the breeding of moneybecause the offspring resembles the parent. Wherefore of all modes of gettingwealth this is the most unnatural” (1258b, Oxford translation). Too much stressshould not be put on his statement about “the breeding of money” taken inisolation, for the question of whether money can be fruitful is in large part asemantic question.4Clouds, 1283ff.5De Beneficiis, bk. VII, 10.6William C. Morey, Outlines of Roman Law, 2nd ed.(New York: G. P. Putman’s,1914), 355–56.Plato,2 Aristotle,3 Aristophanes,4 and Seneca.5 In addition to a generalcondemnation of usury by some of the best minds of the classicalworld, Roman law provided the legal concept from which canonlaw would later draw its fundamental analysis of the usury question.This was the Roman law contract of mutuum, and one can hardlyoverestimate its importance for understanding the usury question inthe medieval period and thereafter.The subject-matter of the mutuum must consist of things that canbe measured, weighed, or numbered, such as wine, corn, ormoney; that is, things which being consumed can be restored ingenere . . . . From the nature of this contract the obligation isimposed upon the borrower to restore to the lender, not theidentical thing loaned, but its equivalent—that is, another thingof the same kind, quality, and value . . . .With regard to the responsibility for loss, since from thepeculiar character of the contract the right of consumption passesto the borrower, the latter is looked upon as the practical ownerof the thing loaned, and he therefore holds it entirely at his ownrisk . . . .6The two characteristics of the mutuum contract that were to figureso greatly in subsequent discussions about usury were the fact that insuch a loan the actual good loaned was not returned but consumedin some manner by the borrower, and therefore the borrower wasconsidered as the owner of the borrowed goods for all practical450 Thomas Storck7Exodus 22:25, Leviticus 25:36–37, Deuteronomy 23:19–20, Nehemiah 5:7–10,Psalm 15:5, Proverbs 28:8, Jeremiah 15:10, Ezekiel 18:8, 13, 17, and 22:12.8“The modern Rabbis give an extremely interesting explanation of the Torahpermission. There was, they say, at that time no law amongst the Gentiles whichprohibited the practice of usury; and it was only equitable that the Jews should beentitled to exact usury of a people who might exact it of them. In this way, by asystem of compensation the Jews were secured against impoverishment by thepayment of usury, since what was paid in usury by some, was recovered by othermembers of the race” (Cleary, The Church and Usury, 7).9That an atmosphere of disapproval of usury existed throughout the Jewish andChristian spheres of intellectual influence is clear also from the denunciations ofusury in the Koran. See 2:275–6, 3:130, 4:161, 30:39.10On the pre-scholastic period, see John T. Noonan, The Scholastic Analysis ofUsury (Cambridge: Harvard University, 1957), 12–17, and Cleary, The Church andUsury, 37–62. Noonan’s work is exhaustive in its historical details, but he clearlyholds a bias in favor of the ultimate vacuity of the usury prohibition as such, andthis bias often shows in the manner in which he presents the opinions oftheologians and canonists. Most seriously, he states (57) that St. Thomas limits theusury discussion only to money, whereas in fact in both the Summa theologiae II–II,q. 78 and the De Malo, q. 13, Thomas spends most of his time talking about wheatand wine. Noonan quotes from the latter work, but omits the section on food anddrink.purposes. This is in contrast to the loan or rent of something thatwill be physically returned, such as a house or a car.The Old Testament also contains numerous strictures againstusury.7 Although those in the Pentateuch limit the prohibition onlyto fellow Israelites, the later passages, for example Psalm 15 andEzekiel, are phrased as if they are meant to apply universally. I thinkthat the way to regard both the pagan and Jewish usury prohibitionsis to see them as part of a general framework of disapproval of usury,without stressing too much the reasons given in any particular textor even, as in the Pentateuch, the question of whether usury wasprohibited only to fellow Jews.8 Usury was suspect, it had a badodor, the upright did not exact it. This somewhat vague condemnationof usury was the inheritance of the Church and explains the factthat some of the early canons seem to condemn usury only whentaken by clerics, although there are also decisive prohibitions of it asintrinsically unjust.9The Church first manifests her opposition to usury duringthe patristic period.10 Numerous writers condemn usury, includingApollonius, Clement of Alexandria, Tertullian, Cyprian, Basil,Is Usury Still a Sin? 45111Arthur Vermeersch, “Usury,” The Catholic Encyclopedia (New York: RobertAppleton, 1912), vol. 15, 235. The authenticity of the condemnation by Elvira oflay usury is doubtful.12Cf. Cleary, The Church and Usury, 48–56.13Denzinger, 280–81.14Noonan, The Scholastic Analysis of Usury, 15.Gregory of Nyssa, Ambrose, Augustine, Jerome, and John Chrysostom.In addition, the Apostolic Canons, dating in their final form toaround 380, in their 44th canon prohibit the taking of usury by theclergy, as do the Council of Arles in 314 (12th canon) and the FirstCouncil of Nicaea in 325 (17th canon), while the Council of Elvira,305 or 306, the First Council of Carthage in 345 (12th canon) andthe Council of Aix in 789 (36th canon) prohibit it to the laity also.11Many of the patristic utterances against usury are in the formof denunciations of exploitation of the poor and thus do not statewhether usury is an offense against justice or simply charity, or evenwhether it is simply prohibited by the positive law of the Church.12But among the patristic strictures on usury two deserve specialmention. The first is the letter of Leo the Great, Ut nobis gratulationem,addressed to the bishops of Campania, Picene, and Tuscany inOctober 443.13 This contained a section dealing with usury, knownfrom its opening words, Nec hoc quoque. John Noonan calls it “thesingle most important document of the early Church on usury.”14 Itis important because it proceeds from the supreme ecclesiasticalauthority, because it clearly includes the laity in its prohibition andbecause it singles out usury as intrinsically unjust, not simply one ofa number of uncharitable practices which exploit the poor.The second item is a remarkable statement known as Ejiciens,once attributed to St. John Chrysostom, but now thought to be fromthe fifth century. It was later incorporated by Gratian in theChurch’s canon law and anticipates the classical form of theargument against usury given by St. Thomas, and presents theclearest rationale for the usury prohibition of any of the earlydocuments. It is worth quoting at length.Of all merchants, the most cursed is the usurer, for he sells a goodgiven by God, not acquired as a merchant acquires his goodsfrom men; and after the usury he reseeks his own good, takingboth his own good and the good of the other. A merchant,452 Thomas Storck15As quoted in Noonan, The Scholastic Analysis of Usury, 38–39.16In De Malo, q. 13, ad 4, Thomas rejects the “wear and tear” argument. Butdespite this, it seems to me to fit well with Thomas’ understanding of the question,as we will see.however, does not reseek the good he has sold. One will object:Is not he who rents a field to receive the fruits or a house to getan income similar to him who lends his money at usury?Certainly not. First, because money is only meant to be used inpurchasing. Secondly, because one having a field by farmingreceives fruit from it; one having a house has the use of inhabitingit. Therefore, he who rents a field or house is seen to givewhat is his own use and to receive money, and in a certainmanner it seems as if he exchanged gain for gain. But frommoney which is stored up you take no use. Thirdly, a field or ahouse deteriorates in use. Money, however, when it is lent, isneither diminished nor deteriorated.15Ejiciens makes the crucial distinction between goods which must bereturned to their original owner after being used, and goods such asmoney, which are returned only in amount and kind, the subject ofa contract of mutuum. The first type of good normally deteriorates inuse and the owner can rightly charge something for the use and, ofcourse, expect the original thing back also. But with a good which,as the saying goes, is consumed in its use, it is hard to see how onecan charge for wear and tear.16The reasoning of Ejiciens is not altogether clear in everyrespect, and there are more than hints of some of the populargrounds for opposing usury which were ultimately rejected becausethey did not stand up to examination, such as the idea that timecould not be sold and that money was purely a measure. Nevertheless,we have here a very early and solid grasp of the Thomisticargument, at least in germ.Before we proceed to the scholastic period with its rich andcomplex discussions of usury, we would do well to sum up wherewe stand. Usury is clearly condemned by the Old Testament, severalnotable classical pagan authors, and the early Church. But many ofthese sources seem to condemn usury as a sin against charity, notnecessarily against justice, in the sense at least that they include it ingeneral denunications of acts that exploit the poor. There is usuallyno clear reason given in these statements for saying that usury iswrong, and most of them tend toward the rhetorical rather thanIs Usury Still a Sin? 45317Noonan, The Scholastic Analysis of Usury, 16.18Ibid., 17.being rational examinations of what usury is and why it is wrong.But no one could read this mass of material and come away withoutunderstanding that usury offends against Christian morals, whateverthe ultimate basis of its depravity might be.Next we turn our attention to the elaborate development oftheories about usury that began tentatively in the early middle agesand lasted till around the middle of the eighteenth century. Thescholastic analysis of usury by no means ended with the end of themedieval period, for the same kind of reasoning and arguments, evenif sometimes with different results, were employed for severalcenturies afterwards. In discussing this period I will proceed asfollows: after some preliminary remarks I will set forth the scholasticusury teachings that have the most force, chiefly official pronouncementsby the Church and the opinions of St. Thomas Aquinas. ThenI will discuss the kinds of contracts that became increasinglycommon as means either to avoid or evade the usury prohibition,noting in particular any official reactions to them. This will bring usto the end of the period in which scholastic reasoning could be saidto be taken for granted in the world of Catholic theology andphilosophy, a period that, for our purposes, conveniently coincidesroughly with Benedict XIV’s encyclical, Vix pervenit. We shouldkeep in mind that throughout this period hardly any Catholicattempted to justify the taking of usury as such; on that there was nocontroversy to speak of. The controversy and the complex argumentsthat characterize this period concern not whether it was licitto take interest simply by virtue of a contract of mutuum, but whythis is so, and especially whether various other contracts do or do notconstitute usury and whether and when extrinsic titles can beinvoked by which one may justly receive interest on a loan.During the Carolingian period both ecclesiastical and civilauthorities had promulgated numerous decrees against usury,including excommunication for laymen guilty of usury.17 Scholasticanalysis proper may be said to begin with St. Anselm of Canterbury,“the first medieval author to suggest the similarity of usury androbbery . . . one of the earliest indications that usury is to beconsidered a sin against justice.”18 In the high middle ages thediscussion of usury became more focused and clear. At the same time454 Thomas Storck19For a somewhat different interpretation of the natural law basis of the usuryprohibition, see Christopher A. Franks, “The Usury Prohibition and Natural Law,a Reappraisal,” The Thomist 72, no. 4 (October 2008): 625–60.20See also the De Malo, q. 13, a. 4.writers sometimes took as the basis for their reprobation of usury aground that was subsequently to be disavowed or at least to fail tofind much support in other authors, for example, the selling of time,which was held to occur in usury; the Aristotelian doctrine thatmoney was not fruitful or that money was purely a measure; and theidea that a loan had to be gratuitous (cf. Lk 6:35) and thus the lendercould not hope for or receive any recompense beyond a return ofthe principal. But the bases that were to provide the best means ofunderstanding the sinfulness of usury were also frequently mentioned,and in the case of St. Thomas, constituted his principalargument against it. These bases are chiefly the consumptible natureof money, and hence the fact that in loaning money the same thingis not returned but something of the same kind and value, and thusownership in a sense passes to the borrower. The important pointabout the development of scholastic doctrine on usury is that almostall writers sought to ground the Church’s prohibition in the naturallaw itself, however variously they explained it.19St. Thomas’ most mature discussion of usury is in the Summatheologiae II-II, q. 78.20 I will quote extensively from the Respondeofrom article 1, which contains his theory in a nutshell.I answer that to receive usury for money loaned [mutuata] is initself unjust, because that is sold which does not exist, by whichclearly an inequality is constituted which is contrary to justice.For the evidence of which it must be known that there arecertain things the use of which is the consumption of thosethings; as we consume wine by using it for drinking or weconsume wheat by using it for food. Whence in such things theuse of a thing ought not to be computed separately from thething itself; but to whomever is granted the use from that factitself is granted [possession of] the thing; and on account of thisin such things through the loan [mutuum] ownership is transferred.If anyone therefore wishes to sell separately the wine, andagain wishes to sell the use of the wine, he would sell the samething twice, or he would sell that which does not exist; whenceclearly he would sin by injustice. And by a similar reason hecommits injustice who loans [mutuat] wine or wheat seeking tobe given two recompenses; one indeed the restitution of an equalIs Usury Still a Sin? 45521Canon 13 forbids Christian burial to usurers (Denzinger, 716).22Denzinger, 906. “The Council of Vienne presents a variety of difficulties. Withthe exception of some fragments, the acts of the Council have perished . . . .Joannes Andreas . . . tells us that Pope Clement V made very considerablemodifications in the constitutions . . . hence it is difficult to decide what decreeswere passed in the Council” (Cleary, The Church and Usury, 74–75).23On the contractus trinus, see Noonan, The Scholastic Analysis of Usury, 202–29,and Cleary, The Church and Usury, 126–32.amount of the thing, the other, on the other hand, the price ofthe use which is called usury.Below I will consider this argument in more detail and attempt toshow how it provides a solid intellectual justification for theproposition that in a loan of mutuum nothing may be asked exceptthe principal, unless some other title to interest is also present.In addition to numerous papal condemnations and those bylocal councils, it is worth mentioning the several condemnations ofusury by ecumenical councils during this period, including LateranII in 1139,21 Lateran III in 1179, Lyons II in 1274, Vienne in1311–12,22 and Lateran V in 1512–17. I will mention this latter againin connection with the question of the montes pietatis.Although as I said, in view of the repeated condemnations ofusury by the Church, it was extremely rare for anyone directly todefend the practice during the scholastic period, the needs ofbusiness, or it may be the greed of men, sought ways to ensure a safeand guaranteed return and yet avoid the sin of usury or at least thesevere canonical penalties to which usurers were subject. One suchmethod was the contractus trinus or triple contract.23Briefly, a contractus trinus was a three-fold contract existingbetween two business partners. The first contract was the simplecontract of partnership by which one partner undertook to providethe funds and the other to do the trading. The second contract wasa contract of insurance by which the active partner insured theprincipal of the inactive partner, and the third contract, similarly acontract of insurance by which the inactive partner was guaranteeda profit, smaller than the enterprise was likely to make, but guaranteed,whereas the profit of the partnership itself was always in somedoubt due to uncertain business conditions, the possibility of loss,etc. The silent partner paid for the two contracts of insurance byforgoing the difference between the profit he might have made as a456 Thomas Storck24On the census, see Noonan, The Scholastic Analysis of Usury, 230–48, and Cleary,The Church and Usury, 121–26.25On implicit contracts, see Noonan, The Scholastic Analysis of Usury, 269–80, andCleary, The Church and Usury, 153–55.full partner and what he would receive as guaranteed profit, say thedifference between an expected 8% and a guaranteed 4%. Thus evenif the enterprise miscarried the active partner would be required torestore the principal plus a guaranteed profit to the inactive partner.Although a bull of Sixtus V in 1586 could be interpreted as condemningthe contractus trinus, it was largely without effect. Theologiansargued that it did not ground its condemnation of the triplecontract in natural law, but was merely positive legislation on thepart of the pope, and in addition that its apparent ambiguity leftdoubt as to exactly what contracts were included in its strictures.During the sixteenth century it became widely used even withoutdefinitive approval by the Church.The other popular contract used to avoid usury was thecensus or rent-charge.24 The census was a curious sort of contract, atleast to modern ears. In its original form someone would buy theright to receive the income, or even the actual produce, from somedefinite thing, such as a farm. Later, with the personal census, this wasextended to be merely the right to a return from the work of acertain person, or a census could be established based upon the taxrevenue of a city or even upon the income from another and priorcensus. In addition, the census contracts had many variations, forexample, some provided that the census could be terminated at thecall of the buyer or of the seller or of either party. Pope Martin V in1425 approved the more conservative types of the census, but themore exotic and speculative kinds never received official approval,although they were defended by some theologians.Both the contractus trinus and the census assumed many formsaccording to the needs or wishes of merchants. Even more remarkable,however, was the growth of the notion of implicit contracts.25Merchants, and even the notaries who drew up contracts, often didnot take the trouble to put them in the form required by theologicalauthority, e.g., to specify clearly and distinctly the three parts of acontractus trinus, so that a contract document that was phrasedambiguously might appear on its face to be a contract of mutuum,Is Usury Still a Sin? 45726Duke William V of Bavaria in 1581 had tried to stop this movement towardeasy acceptance of loosely-worded contracts by drawing up several model contractsfor use by his subjects. See Cleary, The Church and Usury, 154–55.27Noonan, The Scholastic Analysis of Usury, 279.with the guaranteed return simply an instance of usury.26 This toofound its theological defenders who developed the theory, whichbecame generally accepted, that if a contract, no matter how itswording ran, could be analyzed into some acceptable type, then itwas licit, and that merchants needed to have only an implicitintention of entering into some kind of licit contract, even if theycould not state what that was. “Not only were the effects of thetriple contract and census those of a loan, but even their form did notneed to be explicitly different from a loan, if the form could beanalytically reduced to a licit contract.”27Although among Catholics usury as such still found almostno defenders in the sixteenth and seventeenth centuries, theologicalopinion working hand in hand with the inventiveness of merchantsand lawyers had succeeded in furnishing several substitutes thatallowed for both safety of the principal and a guaranteed return. Butbefore discussing the dramatic, if confusing, turn of affairs after 1745,we must look at the titles to legitimate interest on loans that hadbeen developing since the middle ages, and that ultimately becameof more significance than either the contractus trinus or the census,because they could be applied to a loan contract directly and withoutany necessity for using a particular form of words in drawing up thecontract. These were the titles to legitimate interest that wereconsidered extrinsic to the mutuum contract itself, that is, they mightor might not exist depending on extrinsic circumstances, even ifsome of these circumstances were nearly always present. These werechiefly lucrum cessans and damnum emergens.Lucrum cessans and damnun emergens are in a sense two sides ofthe same coin. The first refers to the profit that someone might havemade with his money had he not instead made a loan of mutuum, andthe second is damage or loss that a lender suffered or might sufferbecause he did not have access to his money for the duration of aloan. Admitted in principle, at least in isolated cases, early in thedebate, they become generally accepted later. One point to note,however, is that here the question of one’s intention in making aloan, a point that loomed large at certain times in the usury debates458 Thomas Storck28On the montes, see Cleary, The Church and Usury, 106–13, Noonan, TheScholastic Analysis of Usury, 294–310, and Umberto Benigni, “Montes Pietatis,” inThe Catholic Encyclopedia, vol. 10, 534–36.29For the text of the decree, see Denzinger, 1442–44.and that we have not looked at, must be mentioned. If a merchantaccustomed to trading used a sum of money for a loan of mutuuminstead of in a business venture, then clearly he could claim lucrumcessans, since he was always engaged in profitable activities with hismoney. But what of someone who simply wanted a safe means ofearning a return? It is true that theoretically he could engage intrade and therefore would qualify for lucrum cessans, but in manycases there was no real likelihood that he would do so, eitherthrough inexperience or fear of loss, for example. I raise this pointhere in connection with the extrinsic titles, and we will look at itagain when we discuss the moral questions of lending in today’seconomy.One last subject that must be mentioned in our historicalreview are the montes pietatis.28 These were institutions, sponsoredusually by municipal governments or the Church, which made loansat low rates of interest to provide an alternative to usurers. They hadsome similarities to pawn shops in that they required that a pledgebe left to cover the possibility of the loan not being repaid. As a rulethey charged interest to cover their expenses, including salaries oftheir employees. Was this interest usury, and therefore despite thegood intentions of their founders were the montes illicit? Previouslyit had been generally held that a loan of mutuum could be made onlyby a merchant who diverted funds to a loan, and probably out ofcharity toward the borrower. To justify the montes seemed to openthe way for justification of lending itself as a business, for if themontes could charge for their employees’ salaries, why could not aprivate pawnbroker do the same? Because of considerations such asthis, they had many opponents, but the popes gave their approbationto numerous individual montes throughout Italy, and definitiveapproval came in 1515 with their acceptance by the Fifth LateranCouncil, despite opposition by the famous Thomistic commentator,Cardinal Cajetan.29 We will see that this approval of interest chargesfor expenses figures in our discussion below of licit and illicitinterest.Is Usury Still a Sin? 45930Noonan, The Scholastic Analysis of Usury, 357.31Denzinger, 2546–50.Questions concerning what was and was not usury continuedto be debated, sometimes bitterly, by theologians throughoutCatholic Europe down to the middle of the eighteenth century. Atthis point (1745) there appeared the papal encyclical, Vix pervenit,already mentioned. Vix pervenit was the most extended discussion ofusury ever to come forth from a pope, and it reaffirmed the essentialsof the traditional teaching, while at the same time giving expressallowance for extrinsic titles. Although originally addressed only tothe bishops of Italy, and thus not a teaching binding on the entireChurch, “it was extended to the universal Church by a decree of theHoly Office of July 28, 1835.”30 Since it is the controlling authorityfor our discussion, I will quote it again and more fully.The nature of the sin called usury has its proper place and originin a loan contract [in contractu mutui]. This financial contractbetween consenting parties demands, by its very nature, that onereturn to another only as much as he has received. The sin restson the fact that sometimes the creditor desires more than he hasgiven. Therefore he contends some gain is owed him beyondthat which he loaned, but any gain which exceeds the amount hegave is illicit and usurious.One cannot condone the sin of usury by arguing that thegain is not great or excessive, but rather moderate or small;neither can it be condoned by arguing that the borrower is rich;nor even by arguing that the money borrowed is not left idle, butis spent usefully, either to increase one’s fortune . . . or to engagein business transactions. The law governing loans consistsnecessarily in the equality of what is given and returned; once theequality has been established, whoever demands more than thatviolates the terms of the loan . . . .By these remarks, however, We do not deny that attimes together with the loan contract certain other titles—whichare not at all intrinsic to the contract—may run parallel with it.From these other titles, entirely just and legitimate reasons ariseto demand something over and above the amount due on thecontract.31Shortly after the appearance of Vix pervenit occurred theseries of events, chiefly responses from various Roman congregations,which seem to some to constitute the Church’s repudiation460 Thomas Storck32On developments in the early nineteenth century, see Noonan, The ScholasticAnalysis of Usury, 377–82, and Cleary, The Church and Usury, 168–77.33Some of these are reproduced in Denzinger, 2743 and 3105–09.34In addition, in a letter to an Irish priest in 1823, Rome specifically reaffirmedthe doctrine of the encyclical. Cleary, The Church and Usury, 169–72.35This is numbered as section 2 of the Paulist transation as published in SevenGreat Encyclicals and elsewhere. The Latin text runs, “Malum auxit usura vorax,quae non semel Ecclesiae judicio damnata, tamen ab hominibus avidis etquaestuosis per aliam speciem exercetur eadem.” The characterization of usury asvorax was traditional and goes back at least to the Roman poet Lucan, Pharsalia, bk.I, 181.of its hitherto constant teaching.32 The decisions emanated fromeither the Holy Office, the Sacred Penitentiary, or the SacredCongregation of Propaganda, beginning in 1822,33 some of themwith explicit approval by the reigning pope. They were addressed toconfessors and their general tenor was the same: persons demandinginterest on loans within the limits allowed by civil law should be leftundisturbed and not denied absolution. Sometimes the proviso wasadded that penitents should be prepared to submit to any futuredecision of the Holy See. At the same time Rome never retractedthe doctrine of Vix pervenit and even reaffirmed and applied it to theentire Church, as we saw above.34After this period of acquiescence in the practice of takinginterest on loans without any clear extrinsic title we come to morerecent times, where the first thing to mention is the condemnationof usury in 1891 by Leo XIII in the encyclical Rerum novarum.Rapacious usury has increased the evil [of unrestrained competition,etc.] which, more than once condemned by the Church, isnevertheless, under a different form but in the same way,practiced by avaricious and grasping men.35Although Leo does not explain what he means by “under a differentform,” I think it is clear that what he terms usury is simply what theChurch always meant by it, especially since he states that it has been“more than once condemned.” Thus we can see this as a simplereaffirmation of the traditional doctrine as stated previously in Vixpervenit.Then the 1917 Code of Canon Law (canon 1543) reads,Is Usury Still a Sin? 46136The footnotes to canon 1543 refer to the decrees of Lateran V, to the encyclicalVix pervenit, and to decisions of Roman congregations on usury in 1821 and 1878.Of course, the 1917 Code, since it has been abrogated by the 1983 Code, is nowsimply a witness to official understanding of doctrine at the time.37Like Pope Leo, Benedict does not say what he means by the term “usury.” Butthere is reason to think that he had in mind the historical rather than the modernnotion. In the same section of the encyclical, the English version when speaking of“the experience of micro-finance,” goes on to make mention of “the birth ofpawnbroking.” This might seem a strange thing to bring up until one looks at theLatin text of the encyclical, as well as the versions in the Romance languages (allavailable on the Vatican website). Instead of “the birth of pawnbroking,” the Latintext has “de Montibus Pietatis constitutis,” while the French has “la création desMonts de Piété,” the Italian, “alla nascita dei Monti di Pietà,” and the Spanish, “elorigin de los Montes de Piedad.” Clearly Pope Benedict was thinking of medievalconditions and institutions in this section.If a fungible thing is given to someone in such a way that itbecomes his and later is to be returned only in the same kind, nogain can be received by reason of the contract itself; but in thepayment of a fungible thing, it is not in itself illicit to contract forthe gain allowed by law, unless it is clear that this is excessive, oreven for a greater gain, if a just and adequate title be present.36Here again we see a restatement of the doctrine of Vix pervenit,followed, it is true, by words that seem to deny much significance tothe doctrine. Finally in the very recent encyclical of Benedict XVI,Caritas in veritate (2009), in section 65, after noting the necessity ofreorienting the financial sector toward the common good, the popetwice mentions protecting and helping to defend “the morevulnerable” or the “weakest members of society” from usury.37 Butlet us now conclude our historical treatment and enter upon adiscussion of whether and how the usury doctrine still bindsconsciences today.3. Was there a change in the Church’s teaching?Without question the vast majority of those who are at allaware of the usury question would say that there was at least somechange or evolution in the Church’s teaching, however they mightwant to explain it. For certainly it appears that usury is no longer asin that Christians need to worry about. But there is somethingcurious about saying the Church’s teaching has changed. When did462 Thomas Storck38“Development in Moral Doctrine,” Theological Studies 54, no. 4 (December1993): 663.this occur? When did usury in the sense which we mean by it herecease to be a sin? If we look in the first half of the nineteenthcentury as the best place to locate such a change, we find nostatement by the Church during that time that says anything aboutrepudiating the teaching of Vix pervenit, but rather the contrary, aswe saw. Then in Rerum novarum we have a matter-of-fact reminderof the evil of usury, in the 1917 Code a bald-faced assertion of themedieval doctrine in its full rigor, followed by qualifications whosemeaning and significance we will look at below, and most recentlyanother denunciation of usury in Caritas in veritate. Even JohnNoonan, in an article written expressly for the purpose of provingthat there had been changes, or developments as he called them, inmoral doctrine, admits: “Formally it can be argued that the old usuryrule, narrowly construed, still stands: namely, that no profit on a loanmay be taken without a just title to that profit.”38 It is true that hecontinues, “in terms of emphasis, of perspective, of practice, the oldusury rule has disappeared.” What this means and what, if anything,can or should be done about this we will take up subsequently. ButI do not think that there is any special difficulty in saying that PopeBenedict XIV’s teaching from 1745 still retains its force today. Onecan certainly find a nearly universal practical neglect of the questionof usury, but one looks in vain to find that the Church everretracted, abrogated, or substantially altered her teaching on usury.Something of course did occur, and that we will try to understandand explain, but no one should have any hesitation about proclaimingthe doctrine of Vix pervenit as the doctrine of the CatholicChurch.We have seen that beginning in the sixteenth century interestbegan to be routinely justified on loans by one or more of theextrinsic titles, and that about the same time the contractus trinus andthe census allowed a lender pretty much the same security that hemight seek in a simple loan at interest. Moreover, by the latesixteenth century these contracts did not even have to be correctlydrawn up in order to avoid the stigma of usury, for an implicit goodintention was widely accepted as sufficient. There is no doubt thattheologians, well before the nineteenth century, while formallyupholding the condemnation of usury, allowed for much that theirIs Usury Still a Sin? 46339Aquinas, for example, had denied lucrum cessans because of the merelyspeculative quality of the lost gain. See Summa theologiae II-II, q. 78, a. 2, ad 1.40Noonan, The Scholastic Analysis of Usury, 317.41John F. Cronin, Catholic Social Principles: the Social Teaching of the Catholic ChurchApplied to American Economic Life (Milwaukee: Bruce, 1950), 44–45. Apparently thiswas nothing new, though, since Domingo de Soto (d. 1560) complained that fewtheologians of his day understood the details of the banking system. Cited inNoonan, The Scholastic Analysis of Usury, 336.medieval predecessors would have looked askance at.39 Although insome instances these developments were sanctioned by Rome, by nomeans all of them were. The real change, not in doctrine, but in theapplication of that doctrine to economic life, came during thesecenturies and not in the 1820s or 1830s. Let us try to understandwhat took place.When one reads the subtle analyses of usury by the theologiansof the Baroque era, one cannot help but be impressed by theirpainstaking efforts. Nevertheless, the increasing complexity ofcommercial life made it difficult to say with any assurance what wasand what was not usury. Even in the fifteenth century, Fra Santi(Pandolfo) Rucellai, who had been a banker before entering theDominican order and who, at Savonarola’s request, wrote a treatiseon the morality of exchange banking, was unable to give a definiteopinion on certain points.40 And things did not improve as timewent on and as contracts and commercial practices grew moreexotic. By the beginning of the nineteenth century, or so it appearsto me, the Roman authorities basically threw up their hands anddecided it was better to allow penitents to take moderate rates ofinterest on loans than to continue to analyze contracts and reachdecisions on matters more and more opaque, especially because inmany or most cases probably some kind of just title to interest didexist. In general moralists and moral theology textbooks began toretreat from an engagement with the facts of economic life. Fr. JohnCronin notes this as follows:Our moral theology texts were, in general, hopelessly out of datein applying moral principles to economic life. Apparently fewmoralists knew enough about economic facts to work out arealistic and complete solution. Hence moral teaching generallyconfined itself to obvious justice and injustice and clearly definedmotives.41464 Thomas Storck42Francis X. Funk in the middle of the nineteenth century suggested such anexplanation based on the changed use of money. Cf. Noonan, The ScholasticAnalysis of Usury, 385–87. Heinrich Pesch proposed that the “expansion ofproduction and commerce” and the fact that “everyone who has the necessaryfunds at his disposal could actively participate in commercial life” justified routineinterest taking. Lehrbuch der Nationalökonomie/Teaching Guide to Economics, translatedby Rupert J. Ederer (Lewiston: Edwin Mellen, c. 2003), vol. 5, book 2, 197–99.John A. Ryan stated, “The money in a loan [today] is economically equivalent to,convertible into, concrete capital” (Distributive Justice, 3rd ed. [New York:Macmillan, 1942], 124).In other words, it was easier to say of those involved in transactionsthe usurious nature of which was doubtful, that they ought not to bedisturbed, than either to try to apply the principles of the usurydoctrine to the complex facts of the situation or still less to make thegigantic efforts required to orient the economy away from financialspeculation and emphasis on individual enrichment toward aneconomy based on production for use and a recognition of theclaims of society as a whole.This change in the Church’s approach to usury did not passunnoticed. Various authors explained it in various ways, commonlyarguing, however, that in modern times the nature of economicactivity or the function of money differed essentially from whatobtained in the middle ages.42 In our last section we will try tounderstand what really happened when we try to understand whatthe Church’s teaching on usury should mean for Christians today.4. Argumentation in support of scholastic doctrineBefore proceeding to look at the significance for us today ofthe Church’s prohibition of usury, I want to argue anew for thecorrectness of the teaching of Vix pervenit, based on St. Thomas’argumentation, which looks to the consumptible nature of moneyas the key point. I do this so that we might approach the question ofthe meaning of the usury rule with a positive appraisal of thescholastic doctrine and regard it as something that must be understoodrather than disregarded as a relic of the past.We might remember that as far back as Ejiciens thinkers haddistinguished between something loaned that “deteriorates in use”and something that, “when it is lent, is neither diminished norIs Usury Still a Sin? 46543I noted above that St. Thomas rejected the “wear and tear” argument;however, this argument seems to me the best reason why it is licit to charge for theuse of something such as a house, whose ownership is separable from its use.44Ryan, Distributive Justice, 176.deteriorated.”43 Money is certainly the most common representativeof the latter class, but is not the only one. As we saw, St. Thomasbased his argument on the more general class of consumptible things.And I think that if we look at more humble consumptibles, such asfood or drink, we might be able to look at the question afresh andunderstand the Church’s doctrine better. Let us consider thefollowing analogy.Suppose we have a small businessman who owns a cateringservice, catering food and drink, and let us suppose further that allthe supplies that accompany the food and drink are disposable, suchas plastic forks, paper napkins, etc., so that there is nothing heprovides to his customers that he must reuse. Now what may helicitly charge his customers for? For the replacement cost of the foodand drink and the other disposable supplies, certainly. In addition, hemay charge each customer for a share of the overhead for his shop,including rent, utilities, etc., his delivery van, for wages for anyemployees, for any legitimate interest payments he must make, andfor a “return for his labor of organization and direction, and for therisk that he underwent.”44 But as regards the food and otherconsumptibles that he provides, it is hard to see how he can chargea customer for more than the amount purchased. If he furnishes 100bottles of wine, the caterer may charge what it will cost him toreplace a similar kind and amount of wine. Anything he charges acustomer in addition must come from one of the other titles Imentioned above, such as costs incident to the running of hisbusiness and wages for his employees and for himself.This last is what is generally called profit, a term that is oftenused loosely and inexactly. As we see here, Ryan reduces it to theproprietor’s labor, plus his entrepreneurial abilities and risks. It is notan open-ended invitation to charge as much as the market will bear,but rather there must exist some title of justification such as Ryanenumerates here. Looked at in this way the limiting of the reimbursementfor the consumptibles sold seems obvious. Of course thecaterer cannot charge for 110 bottles of wine if he delivers only 100.His profit, in reality his salary and compensation for risk, etc., comes466 Thomas Storck45“The great majority of businessmen in competitive industries do not receiveincomes in excess of their reasonable needs. Their profits do not notably exceed thesalaries that they could command as hired managers, and generally are not morethan sufficient to reimburse them for the cost of education and business training,and to enable them to live in reasonable conformity with the standard of living towhich they have become accustomed” (Ryan, Distributive Justice, 190).46Pesch, Lehrbuch der Nationalökonomie/Teaching Guide to Economics, vol. 5, bk. 2,200.47Another way of looking at this example that yields the same conclusion is toregard a mutuum of money as a sale. As in the case of the caterer who provides 100otherwise and is not gained at the expense of expecting more inreturn than what he supplied.We can now easily apply this analogy to loans of mutuum.Supposing someone is in the business of making loans, then similarexpenses could justly be taken from customers. The montes pietatisacted in similar fashion. Of course the montes were not profit-makingin the sense that they intended to earn more than their expenses,including salaries. But according to Ryan’s analysis of business, nobusiness is profit-making in the sense that it can justly seek as wideprofits as it can obtain. The owner can seek a fair “return for hislabor of organization and direction, and for the risk that he underwent.”Although one cannot calculate such returns with mathematicalexactness, neither can one maintain that they have no theoreticallimit.45 And even if one were to argue that there should be no limiton such a return for labor, skill and risk, still that is not the same assaying that usury for the lending activity itself may be taken, for wehave seen that here the entrepreneur can require only the sameamount as the consumptible good that he has provided, “the equalityof what is given and returned,” as Benedict XIV taught.Of course in the case of our caterer he receives immediate ornearly immediate payment for his expenditure on food and otherconsumptibles. A loan, however, is generally paid back after a periodof time, or gradually during such a period. Is not the lender entitledto some compensation on account of this delay? No, for “the meretime differential by itself does not cause a difference in value. Theremust be added the possibility of earning a profit in the interveningtime period.”46 In other words, one must have a title such as lucrumcessans or damnum emergens to justify receiving interest, for the merefact of delay by itself does not equate to the right to contract formore than the principal.47Is Usury Still a Sin? 467bottles of wine and receives as part of his total payment the price of the 100 bottles,no more and no less, if we look at money loaned as a sale of money we see that theprice of $100 is obviously $100. Any other just charges come from the same titlesas the caterer had, such as overhead expenses, wages, etc. For the product provided,money, one can charge only what it is worth, which is always its face value.I have argued both that the Church has not changed herteaching on usury and that one can make a reasonable argument forthe validity of the intrinsic injustice of usury itself. On both thesepoints, it seems to me, assent to the scholastic teaching is not wherethe real difficulty is. That lies elsewhere, in the question, what doesit mean? Or better, does it have any meaning except as an empty andantiquated formalism? Assuming that we accept at least some of theextrinsic titles and other practices that grew up during the Renaissance,would adherence to the usury prohibition today make any realdifference in our economic and legal practices?5. Application of usury theory to contemporary economiesIf what I have said is correct—if, based both on argumentsfrom reason as well as on a failure to find that the Church everretracted her papal and conciliar teaching on usury, it is the case thatthe “law governing loans consists necessarily in the equality of whatis given and returned”—then there are two chief questions thatconcern us in this last section. In the first place, returning to my title,Is Usury Still a Sin?, we have to ask what effect the intrinsic evil ofusury should have on the moral conduct of the Christian. Is thereanything that Christians should do or avoid in their financial oreconomic behavior as a result of the sinfulness of usury? Secondly,what meaning does usury have in an economy hopelessly enmeshedin all kinds of interest-bearing transactions as a matter of course andwithout a thought as to any justifying title? Given that for centuriestheologians have found it easy to justify most forms of interest, arewe committing the Church to a ridiculous anachronism, a relic ofthe past? Are we hankering after a silly formalism in order to justifysomething that it is easier and more honest simply to call interest ona loan?In regard to our first question, in light of the various Romandecisions of the nineteenth century and of the 1917 Code, no one468 Thomas Storck48“Even higher rates of interest are not unheard of, as one Indiana payday lenderoffered a loan of $100 with interest of $20 per day—an APR of 7,300%” (JohnSkees, “The Resurrection of Historic Usury Principles for Consumption Loans ina Federal Banking System,” Catholic University Law Review 55, no. 4 [Summer2006]: 1132). As late as the mid-1970s most state usury laws set a limit of 10%, andthe model Uniform Consumer Credit Code proposed a maximum of 18%(Lawrence P. Galie, “Indexing the Principal: the Usury Laws Hang Tough,”University of Pittsburgh Law Review 37, no. 4 [Summer 1976]: 764).49The 1978 Supreme Court decision, Marquette National Bank v. First ofOmaha Service Corp., 439 U.S. 299, made inevitable the eventual demise of statelaws regulating interest rates.can be condemned for taking the legal or customary rate of intereston a loan, provided that it is not excessive. The reason for this, Iargued above, is that the complexity of modern finance renders itsafer simply to allow moderate interest than to engage in probablyfruitless endeavors to determine the presence or absence of extrinsictitles. The Church presumes these titles to exist generally and makesthe judgment that even if in some cases they do not, it is better forthe sake of consciences to ignore that fact. The remedy always exists,moreover, for restitution to be made via almsgiving in case apenitent is troubled or there seems a well-founded and probable caseof real usury.Of course, it should go without saying that the interest ratesof loansharks and others on so-called payday or similar loans, whichcan reach even 500% per annum, have clearly no justification in anyextrinsic title, and no Catholic can lawfully have anything to do withsuch loans.48 Such usury is a serious offense against justice and oughtto be strictly prohibited by the civil law. Unfortunately, since 1978in the United States judicial decisions and the gradual repeal of statelaws regulating usury have allowed such gross injustices to flourish.49The ecclesiastical decisions of the 1820s and 1830s wereaddressed to confessors and did not purport to change the usurydoctrine as expressed in Vix pervenit. So even though no one can becriticized for taking moderate interest, I think that in some cases onecan detect the presence of usury in modern interest. For example,while it is certainly correct to point out that today there is usuallyopportunity for productive investment, and that therefore those whoput money out at mutuum but would otherwise invest it in somemanner are entitled to claim lucrum cessans, this reasoning does notalways hold. In certain cases of depression or recession, “the profitIs Usury Still a Sin? 46950Paul Samuelson, Economics, 9th ed. (New York: McGraw-Hill, 1973), 336.51John F. Cronin, Economics and Society (New York: American Book Co., 1939),131.52John P. Kelly, Aquinas and Modern Practices of Interest Taking (Brisbane: AquinasPress, 1945), 33.53Summa theologiae II-II, q. 78, a. 2, ad 2.expectations of businessmen are likely to be so low that they wouldnot employ men and machines on new investment projects even ifyou let them borrow temporarily at a zero interest rate.”50 In suchcases “some savings will follow the sterile path of debt-financedconsumption, with eventual repayment at the expense of currentconsumption.”51 In other words, in such situations a lack ofconsumer demand makes spending on productive investmentunprofitable, so it is likely that someone putting money out atmutuum is not truly forgoing investment profit, because no profit isto be had for the time being. Thus when there is excess savings withno outlet for profitable use, it is hardly in accord with the commongood to reward those who choose to loan by giving them a rate ofinterest based on a merely hypothetical opportunity cost.We must remember that since the extrinsic titles were nevergiven official approval except as compensation for lost opportunitiesfor investment earnings “they can never be advanced as a justificationof a general loan system based on motives of profit.”52 Thus itseems hard to justify lucrum cessans for those who have no realintention of making investments, simply because such opportunitiesare readily available to all. What of ordinary savers who desire to puttheir money into insured savings accounts at banks and who becauseof inexperience or fear of loss have no desire to invest in businessventures, even to buy shares of stock or mutual funds? They are notundergoing a real loss of investment income on account of their loanof money to the bank, since otherwise they might have simplyhidden the money in a mattress. I do not see how the merelytheoretical possibility that they could make gains from investmentsapplies to them, since they are too risk-averse to do so. Can theylicitly claim interest on bank accounts and under what title? I thinkthere is a reason for thinking such interest just, but it is not one ofthe extrinsic titles that theologians approved. It is the mere fact ofinflation. “He who receives a loan of money . . . is not held to payback more than he received by the loan”53—but with our ability to470 Thomas Storck54Garrick Small, “Rapacious Usury: Fact or Fiction?” unpublished paperpresented at the Campion Fellowship meeting in Toongabbie, Australia, in January2002, p. 7. Used with permission of the author.monitor the level of inflation in an economy, we realize that moneysimply left alone, as in a mattress, will actually diminish in value.Therefore payment for inflation for money deposited in a bank orcredit union seems just.Moreover, it does seem possible to roughly distinguish a justrate of interest, anything above which would be usury. If weconsider the rate of interest on government bonds, historically thesafest investment possible, as risk-free for all practical purposes, wecan then examine other interest rates in their light. The followingdiscussion refers to Australian interest rates.For example, on 5 January 2002, the ten year government bondrate was 5.21%, and home mortgages were 6.3% while inflationwas about 2.5%. The gap between home mortgage rates andgovernment bonds of about 1.1% was due to the riskiness oflending to home buyers compared to the government. Bysubtracting inflation, the government bond rate is reduced toabout 2.7% which is known as the real rate of interest. Marketsanticipate a fall in rates, so there is a negligible liquidity preferenceeffect. This means that 2.7% of the loan interest on governmentbonds, home mortgages and all other lending is purely theresult of the expectation of the lender for a return in excess of theprinciple. That looks suspiciously like usury.54This analysis justifies the interest paid on government bonds only onthe basis of inflation, apparently without considering the presence orabsence of any extrinsic title. Nevertheless it suggests an interestingway of approaching the question. Another method of analysis is torecall that interest legitimately taken is compensation for an investmentopportunity forgone. Thus a just rate of interest could inprinciple be formulated based on the expected return of an investmentwhich the lender had the opportunity of profiting by, assumingthat it was possible to specify a general rate of profit for any particularplace and time.Abstracting from statutory regulation of interest, and from anyspecial expense or risk of loss incurred by a lender . . . thecriterion [of a just rate of interest] is the just rate of profit frominvestment. This does not mean that the just rate of interest isIs Usury Still a Sin? 47155Lewis Watt, “Usury in Catholic Theology” in Readings in Economics, ed.Richard Mulcahy (Westminster, Md.: Newman, 1959), 278.56Kelly, Aquinas and Modern Practices of Interest Taking, 20.57“The Idea of a Christian Society” in Christianity and Culture (San Diego:Harcourt, Brace Jovanovich,  1977), 77.58Pope Benedict also commends credit unions in his encyclical, Caritas in veritate,65.exactly the same as the just rate of profit . . . [for] the profits ofany business are due, at least in part, to the activities of those whoare running it; and also that ordinary investment involvesfinancial risks which are not inherent in loans of money. Consequently. . . the just rate of interest will be lower than the justrate of profit. How much lower? Evidently by as much ascorresponds to the differential advantage of lending rather thaninvesting.55We must remember that “the modern world . . . has orderedits economic affairs with little reference to moral scruples, and insuch a world it is exceedingly difficult to assess the moral implicationsof loan contracts.”56 Often we will agree with T. S. Eliot’sconfession: “I seem to be a petty usurer in a world manipulatedlargely by big usurers.”57 The point of these last examples is simplythat even in an economy that gives and receives interest as a matterof course we can at times distinguish what might be legitimateinterest from what is probably usury. Although the praxis of theChurch for the past two hundred years has been not to disturbconsciences on the subject, that does not mean that there is anythingwrong with discussion of the matter and with attempts to identifyusury where it is present. An increased consciousness of the evil andthe ubiquity of usury today (cf. Rerum novarum) cannot but help tomake Christians more aware of what to our ancestors was one of thegreatest of sins.Another benefit of discussion of the presence of usury intoday’s financial transactions is that it might lead to steps to establishinstitutions which avoid or minimize usury. One possible means ofovercoming loansharking, for example, is an institution with someresemblance to the medieval montes pietatis, the credit union.58 Acommercial bank has stockholders who expect to receive a return ontheir investment. If establishing a commercial bank can be consideredas a legitimate investment activity, then some return for the472 Thomas Storck59One very important topic which space prevents me from taking up is thequestion of bank-created money. Although it would be possible for a bankingsystem to work otherwise, ours operates by creating money as debt. Most of themoney supply today originates in this way. The banking system creates money outof nothing and yet banks charge interest on this money as they loan it out toborrowers. Almost all of the interest on such loans seems to be nothing but usury.See Rupert J. Ederer, “Is Usury Still a Problem?” Homiletic & Pastoral Review 84,nos. 11–12 (August–September 1984): 18–20.60Islamic banks claim to engage in risk-sharing agreements with their borrowers,although there is some dispute about whether in fact they do that as much as theyclaim. See Timur Kuran, “Islamic Economics and the Islamic Subeconomy,”Journal of Economic Perspectives 9, no. 4 (Fall 1995): 155–73. Kuran claims that thewhole notion of Islamic banking originated with Maududi (or Mawdudi), anIndian/Pakistani Moslem theorist of the mid-twentieth century. But see the twobibliographies on Islamic banking, part of a bibliography on Islamic law, the firstof which lists works earlier than Maududi’s activity: Law Library Journal 78, no. 1(Winter 1986); the section on Islamic banking is at 161–62. The update appearedin the same journal, vol. 87, no. 1 (Winter 1995); the section on banking appearsat 122–25.bank stockholders is just. But still, whatever the stockholders receivemust be paid for by higher interest rates on loans and higher bankfees. This is not the case with credit unions, which are not profitmakinginstitutions in that sense. Of course they pay wages to theiremployees, as did the montes pietatis, and for the necessary expensesof providing loans.59Today the only financial institutions that operate with thegoal of avoiding usury altogether are Islamic banks.60 If usury isunjust, why are Christians not as active in promoting these sorts offinancial institutions as Moslems? Let us in conclusion look brieflyat a few more financial practices and institutions which Christiansmight promote were we to recover the zeal for economic justice thatcharacterized Catholics at an earlier period.The whole Christian doctrine of property with its responsibilitiesof ownership which the modern world has forgotten is wrappedup in this question of money and the taking of interest thereon.If I am in possession of money, I am in possession of somethingthat is vital to the society in which I live. I, as a Christian,therefore, have very definite responsibilities with respect to theownership of that money. Christian morality knows of no theoryof an unqualified and unconditional ownership of property of anydescription. Property must be used according to its true end andpurpose and in the case of money that true end and purpose is asIs Usury Still a Sin? 47361Kelly, Aquinas and Modern Practices of Interest Taking, 46–47.62Pius XI, Quadragesimo anno, 49 (Paulist translation).a means of exchange. Therefore, the wrongful withholding ofthat money from circulation for the purpose of making a profitby waiting is a misuse of property.61Such a doctrine of money is akin to Paul VI’s doctrine of propertyin Populorum progressio.[P]rivate property does not constitute for anyone an absolute andunconditioned right. No one is justified in keeping for hisexclusive use what he does not need, when others lack necessities. . . . If certain landed estates impede the general prosperitybecause they are extensive, unused or poorly used, or becausethey bring hardship to peoples or are detrimental to the interestsof the country, the common good sometimes demands theirexpropriation. (23–24)Clearly expropriation of funds that are being used merely in idleusury should be a last resort, and normally the law will use financialincentives and penalties to direct such funds toward uses more inaccord with the common good. But no Catholic need be afraid toacknowledge that “the public authority, in view of the commongood, may specify more accurately what is licit and what is illicit forproperty owners in the use of their possessions.”62 A Christiansociety, then, by outlawing true usury completely, and by forbiddingor discouraging the kinds of contracts that during the Renaissancehelped undermine the usury prohibition among both theologiansand merchants, would seek to direct money toward its proper use.Some form of credit union might be adequate to provide financingfor non-productive consumer loans. The demand for commercialcredit could be satisfied either by merchants diverting funds frominvestments, and licitly claiming lucrum cessans, or by some form ofcommercial credit union run by associations of businesses.Just as in the Great Depression of the 1930s, so also nowevents are forcing theologians and moralists to turn their attention tothe economy. But in reality, Catholics should have as lively a senseof the demands of the moral law relative to the economy as they dorelative to sexuality or war.474 Thomas Storck63Cronin, Catholic Social Principles: the Social Teaching of the Catholic Church Appliedto American Economic Life, 43.In the Middle Ages, it was taken for granted God’s law appliedto the totality of life. The idea of a double standard of morality,with a strict code for private life and a minimum of moralobligation for business and public life, is an innovation based onphilosophical and religious individualism of the eighteenthcentury.63However far we are today from a Christian society or a Christianeconomy, the goal “to impress the divine law on the affairs of theearthly city” (Gaudium et spes, 43) is always present. With respect tousury the Church has been clear in setting forth a principle, aprinciple it is true that must be intelligently applied to the complexcircumstances of financial life, but which nonetheless is a standard forboth individual and social conduct. The doctrine on usury establishesa social goal, and even if we cannot fully achieve that now there arevarious intermediate goals that we can work toward implementing. GTHOMAS STORCK is the author of The Catholic Milieu, Foundations of aCatholic Political Order, Christendom and the West and numerous articles andreviews on Catholic culture and social teaching. He is a member of the editorial boardof The Chesterton Review.
Maurice Allais, a french Nobel price, described the ex nihilo ( ex nihilo means out of nothing, out of thin air, out of a pen, out of a computer, out of a subtle robbery from your pocket…) creation of money by the banking
system as identical to the creation of money by “counterfeiters,”
the only difference being that those who profit are different.
He proposed, therefore, that although all banks would be
private, except for the Central Bank, all income derived by the
Central Bank’s creation of money should be returned to the
State, enabling the latter, under present circumstances, to do
away with practically the whole of the progressive tax on income.
This would eliminate the present circumstance where profits
and their beneficiaries are not transparent. Such revenues, he
wrote, “merely generate inflation, and by encouraging investments
that are not really profitable for the community…
The Wall Street Pentagon Papers: Biggest Scam In World History Exposed – Are The Federal Reserve’s Crimes Too Big To Comprehend ?
By David DeGraw, AmpedStatus
What if the greatest scam ever perpetrated was blatantly exposed, and the US media didn’t cover it? Does that mean the scam could keep going? That’s what we are about to find out.
I understand the importance of the new WikiLeaks documents. However, we must not let them distract us from the new information the Federal Reserve was forced to release. Even if WikiLeaks reveals documents from inside a large American bank, as huge as that could be, it will most likely pale in comparison to what we just found out from the one-time peek we got into the inner-workings of the Federal Reserve. This is the Wall Street equivalent of the Pentagon Papers.
I’ve written many reports detailing the crimes of Wall Street during this crisis. The level of fraud, from top to bottom, has been staggering. The lack of accountability and the complete disregard for the rule of law have made me and many of my colleagues extremely cynical and jaded when it comes to new evidence to pile on top of the mountain that we have already gathered. But we must not let our cynicism cloud our vision on the details within this new information.
Just when I thought the banksters couldn’t possibly shock me anymore… they did.
We were finally granted the honor and privilege of finding out the specifics, a limited one-time Federal Reserve view, of a secret taxpayer funded “backdoor bailout” by a small group of unelected bankers. This data release reveals “emergency lending programs” that doled out $12.3 TRILLION in taxpayer money – $3.3 trillion in liquidity, $9 trillion in “other financial arrangements.”
Wait, what? Did you say $12.3 TRILLION tax dollars were thrown around in secrecy by unelected bankers… and Congress didn’t know any of the details?
Yes. The Founding Fathers are rolling over in their graves. The original copy of the Constitution spontaneously burst into flames. The ghost of Tom Paine went running, stark raving mad screaming through the halls of Congress.
The Federal Reserve was secretly throwing around our money in unprecedented fashion, and it wasn’t just to the usual suspects like Goldman Sachs, JP Morgan, Citigroup, Bank of America, etc.; it was to the entire Global Banking Cartel. To central banks throughout the world: Australia, Denmark, Japan, Mexico, Norway, South Korea, Sweden, Switzerland, England… To the Fed’s foreign primary dealers like Credit Suisse (Switzerland), Deutsche Bank (Germany), Royal Bank of Scotland (U.K.), Barclays (U.K.), BNP Paribas (France)… All their Ponzi players were “gifted.” All the Racketeer Influenced and Corrupt Organizations got their cut.
Talk about the ransacking and burning of Rome! Sayonara American middle class…
If you still had any question as to whether or not the United States is now the world’s preeminent banana republic, the final verdict was just delivered and the decision was unanimous. The ayes have it.
Any fairytale notions that we are living in a nation built on the rule of law and of the global economy being based on free market principles has now been exposed as just that, a fairytale. This moment is equivalent to everyone in Vatican City being told, by the Pope, that God is dead.
I’ve been arguing for years that the market is rigged and that the major Wall Street firms are elaborate Ponzi schemes, as have many other people who built their beliefs on rational thought, reasoned logic and evidence. We already came to this conclusion by doing the research and connecting the dots. But now, even our strongest skeptics and the most ardent Wall Street supporters have it all laid out in front of them, on FEDERAL RESERVE SPREADSHEETS.
Even the Financial Times, which named Lloyd Blankfein its 2009 person of the year, reacted by reporting this: “The initial reactions were shock at the breadth of lending, particularly to foreign firms. But the details paint a bleaker and even more disturbing picture.”
Yes, the emperor doesn’t have any clothes. God is, indeed, dead. But, for the moment at least, the illusion continues to hold power. How is this possible?
To start with, as always, the US television “news” media (propaganda) networks just glossed over the whole thing – nothing to see here, just move along, back after a message from our sponsors… Other than that obvious reason, I’ve come to the realization that the Federal Reserve’s crimes are so big, so huge in scale, it is very hard for people to even wrap their head around it and comprehend what has happened here.
Think about it. In just this one peek we got at its operations, we learned that the Fed doled out $12.3 trillion in near-zero interest loans, without Congressional input.
The audacity and absurdity of it all is mind boggling…
Based on many conversations I’ve had with people, it seems that the average person doesn’t comprehend how much a trillion dollars is, let alone 12.3 trillion. You might as well just say 12.3 gazillion, because people don’t grasp a number that large, nor do they understand what would be possible if that money was used in other ways.
Can you imagine what we could do to restructure society with $12.3 trillion? Think about that…
People also can’t grasp the colossal crime committed because they keep hearing the word “loans.” People think of the loans they get. You borrow money, you pay it back with interest, no big deal.
That’s not what happened here. The Fed doled out $12.3 trillion in near-zero interest loans, using the American people as collateral, demanding nothing in return, other than a bunch of toxic assets in some cases. They only gave this money to a select group of insiders, at a time when very few had any money because all these same insiders and speculators crashed the system.
Do you get that? The very people most responsible for crashing the system, were then rewarded with trillions of our dollars. This gave that select group of insiders unlimited power to seize control of assets and have unprecedented leverage over almost everything within their economies – crony capitalism on steroids.
This was a hostile world takeover orchestrated through economic attacks by a very small group of unelected global bankers. They paralyzed the system, then were given the power to recreate it according to their own desires. No free market, no democracy of any kind. All done in secrecy. In the process, they gave themselves all-time record-breaking bonuses and impoverished tens of millions of people – they have put into motion a system that will inevitably collapse again and utterly destroy the very existence of what is left of an economic middle class.
That is not hyperbole. That is what happened.
We are talking about trillions of dollars secretly pumped into global banks, handpicked by a small select group of bankers themselves. All for the benefit of those bankers, and at the expense of everyone else. People can’t even comprehend what that means and the severe consequences that it entails, which we have only just begun to experience.
Let me sum it up for you: The American Dream is O-V-E-R.
Welcome to the neo-feudal-fascist state.
People throughout the world who keep using the dollar are either A) Part of the scam; B) Oblivious to reality; C) Believe that US military power will be able to maintain the value of an otherwise worthless currency; D) All of the above.
No matter which way you look at it, we are all in serious trouble!
If you are an elected official, (I know at least 17 of you subscribe to my newsletter) and you believe in the oath you took upon taking office, you must immediately demand a full audit of the Federal Reserve and have Ben Bernanke and the entire Federal Reserve Board detained. If you are not going to do that, you deserve to have the words “Irrelevant Puppet” tattooed across your forehead.
Yes, those are obviously strong words, but they are the truth.
The Global Banking Cartel has now been so blatantly exposed, you cannot possibly get away with pretending that we live in a nation of law based on the Constitution. The jig is up.
It’s been over two years now; does anyone still seriously not understand why we are in this crisis? Our economy has been looted and burnt to the ground due to the strategic, deliberate decisions made by a small group of unelected global bankers at the Federal Reserve. Do people really not get the connection here? I mean, H.E.L.L.O. Our country is run by an unelected Global Banking Cartel.
I am constantly haunted by a quote from Harry Overstreet, who wrote the following in his 1925 groundbreaking study Influencing Human Behavior: “Giving people the facts as a strategy of influence” has been a failure, “an enterprise fraught with a surprising amount of disappointment.”
This crisis overwhelmingly proves Overstreet’s thesis to be true. Nonetheless, we solider on…
Here’s a roundup of reports on this BernankeLeaks:
Prepare to enter the theater of the absurd…
I’ll start with Senator Bernie Sanders (I-Vermont). He was the senator who Bernanke blew off when he was asked for information on this heist during a congressional hearing. Sanders fought to get the amendment written into the financial “reform” bill that gave us this one-time peek into the Fed’s secret operations. (Remember, remember the 6th of May, HFT, flash crash and terrorism. “Hey, David, Homeland Security is on the phone! They want to ask you questions about some NYSE SLP program.”)
In an article entitled, “A Real Jaw-Dropper at the Federal Reserve,” Senator Sanders reveals some of the details:
At a Senate Budget Committee hearing in 2009, I asked Fed Chairman Ben Bernanke to tell the American people the names of the financial institutions that received an unprecedented backdoor bailout from the Federal Reserve, how much they received, and the exact terms of this assistance. He refused. A year and a half later… we have begun to lift the veil of secrecy at the Fed…
After years of stonewalling by the Fed, the American people are finally learning the incredible and jaw-dropping details of the Fed’s multi-trillion-dollar bailout of Wall Street and corporate America….
We have learned that the $700 billion Wall Street bailout… turned out to be pocket change compared to the trillions and trillions of dollars in near-zero interest loans and other financial arrangements the Federal Reserve doled out to every major financial institution in this country.…
Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations including two European megabanks — Deutsche Bank and Credit Suisse — which were the largest beneficiaries of the Fed’s purchase of mortgage-backed securities….
Has the Federal Reserve of the United States become the central bank of the world?… [read Global Banking Cartel]
What this disclosure tells us, among many other things, is that despite this huge taxpayer bailout, the Fed did not make the appropriate demands on these institutions necessary to rebuild our economy and protect the needs of ordinary Americans….
What we are seeing is the incredible power of a small number of people who have incredible conflicts of interest getting incredible help from the taxpayers of this country while ignoring the needs of the people. [read more]
In an article entitled, “The Fed Lied About Wall Street,” Zach Carter sums it up this way:
The Federal Reserve audit is full of frightening revelations about U.S. economic policy and those who implement it… By denying the solvency crisis, major bank executives who had run their companies into the ground were allowed to keep their jobs, and shareholders who had placed bad bets on their firms were allowed to collect government largesse, as bloated bonuses began paying out soon after.
But the banks themselves still faced a capital shortage, and were only kept above those critical capital thresholds because federal regulators were willing to look the other way, letting banks account for obvious losses as if they were profitable assets.
So based on the Fed audit data, it’s hard to conclude that Fed Chairman Ben Bernanke was telling the truth when he told Congress on March 3, 2009, that there were no zombie banks in the United States.
“I don’t think that any major U.S. bank is currently a zombie institution,” Bernanke said.
As Bernanke spoke those words banks had been pledging junk bonds as collateral under Fed facilities for several months…
This is the heart of today’s foreclosure fraud crisis. Banks are foreclosing on untold numbers of families who have never missed a payment, because rushing to foreclosure generates lucrative fees for the banks, whatever the costs to families and investors. This is, in fact, far worse than what Paul Krugman predicted. Not only are zombie banks failing to support the economy, they are actively sabotaging it with fraud in order to make up for their capital shortages. Meanwhile, regulators are aggressively looking the other way.
The Fed had to fix liquidity in 2008. That was its job. But as major banks went insolvent, the Fed and Treasury had a responsibility to fix that solvency issue—even though that meant requiring shareholders and executives to live up to losses. Instead, as the Fed audit tells us, policymakers knowingly ignored the real problem, pushing losses onto the American middle class in the process.” [read more]
Even the Financial Times is jumping ship:
Sunlight Shows Cracks in Fed’s Rescue Story
It took two years, a hard-fought lawsuit, and an act of Congress, but finally… the Federal Reserve disclosed the details of its financial crisis lending programs. The initial reactions were shock at the breadth of lending, particularly to foreign firms. But the details paint a bleaker, earlier, and even more disturbing picture…. An even more troubling conclusion from the data is that… it is now apparent that the Fed took on far more risk, on less favorable terms, than most people have realized. [read more]
In true Fed fashion, they didn’t even fully comply with Congress. In a report entitled, “Fed Withholds Collateral Data for $885 Billion in Financial-Crisis Loans,” Bloomberg puts some icing on the cake:
For three of the Fed’s six emergency facilities, the central bank released information on groups of collateral it accepted by asset type and rating, without specifying individual securities. Among them was the Primary Dealer Credit Facility, created in March 2008 to provide loans to brokers as Bear Stearns Cos. collapsed.
“This is a half-step,” said former Atlanta Fed research director Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Sarasota, Florida. “If you were going to audit the facilities, then would this enable you to do an audit? The answer is ‘No,’ you would have to go in and look at the individual amounts of collateral and how it was broken down to do that. And that is the spirit of what the requirements were in Dodd-Frank.” [read more]
Fed Data Dump Reveals More Contradictions About its $1.25 Trillion MBS Purchase Program Fed Created Conflicts in Improvising $3.3 Trillion Financial System Rescue Meet The 35 Foreign Banks That Got Bailed Out By The Fed Ben Bernanke’s Secret Global Bank
Here’s the only person on US TV “news” who actually covers and understands any of this, enter Dylan Ratigan, with his guest Chris Whalen from Institutional Risk Analytics. This quote from Whalen sums it up well: “The folks at the Fed have become so corrupt, so captured by the banking industry… the Fed is there to support the speculators and they let the real economy go to hell.”
The Progressive’s Matthew Rothschild has a good quote: “The financial bailout was a giant boondoggle, undemocratic and kleptocratic to its core.”
Matt Stoller on NewDeal 2.0:
End This Fed
The Fed, and specifically the people who run it, are responsible for declining wages, for de-industrialization, for bubbles, and for the systemic corruption of American capital markets. The new financial blogosphere destroyed the Fed’s mythic stature…. With a loss of legitimacy comes a lack of public trust and a vulnerability to any form of critic. The Fed is now less respected than the IRS…. Liberals should stop their love affair with conservative technocratic myths of monetary independence, and cease seeing this Federal Reserve as a legitimate actor. At the very least, we need to begin noticing that these people do in fact run the country, and should not. [read more]
In case anyone is confused into believing that this is just another right vs. left partisan issue, enter Fox Business host Judge Andrew Napolitano with his guest Republican Congressman Ron Paul, who is, of course, a longtime leading Fed critic. Paul hopes to see some Wikileaks on the Federal Reserve:
The Sunlight Foundation shines a light on Bank of America and the Federal Reserve’s brother money manager BlackRock:
Federal Reserve Loan Program Allowed Bank of America to Benefit Twice
Bank of America was one of several banks that was able to play both sides of a Federal Reserve program launched during the 2008 financial crisis. While Bank of America was selling its assets to firms obtaining loans through the Fed program, the investment firm BlackRock—partially owned by Bank of America—was potentially turning a profit by using those loans to buy assets similar to those sold by Bank of America. [read more]
Gretchen Morgenson at the New York Times jumps into the act:
So That’s Where the Money Went
How the truth shines through when you shed a little light on a subject….
All of the emergency lending data released by the Fed are highly revealing, but why weren’t they made public much earlier? That’s a question that Walker F. Todd, a research fellow at the American Institute for Economic Research, is asking.
Mr. Todd, a former assistant general counsel and research officer at the Federal Reserve Bank of Cleveland, said details about the Fed’s vast and various programs should have been available before the Dodd-Frank regulatory reform law was even written.
“The Fed’s current set of powers and the shape of the Dodd-Frank bill over all might have looked quite different if this information had been made public during the debate on the bill,” he said. “Had these tables been out there, I think Congress would have either said no to emergency lending authority or if you get it, it’s going to be a much lower number — half a trillion dollars in the aggregate.” [read more]
Welcome to the “global pawnshop:”
The Fed Operates as a “global pawnshop:” $9 trillion to 18 financial institutions
What the report shows is that the Fed operated as a global pawnshop taking in practically anything the banks had for collateral. What is even more disturbing is that the Federal Reserve did not enact any punitive charges to these borrowers so you had banks like Goldman Sachs utilizing the crisis to siphon off cheap collateral. The Fed is quick to point out that “taxpayers were fully protected” but mention little of the destruction they have caused to the US dollar. This is a hidden cost to Americans and it also didn’t help that they were the fuel that set off the biggest global housing bubble ever witnessed by humanity. [read more]
“No strings attached.” Financial reporter Barry Grey unleashes the truth:
Fed report lifts lid on Great Bank Heist of 2008-2009
The banks and corporations that benefited were not even obliged to provide an account of what they did with the money. The entire purpose of the operation was to use public funds to cover the gambling losses of the American financial aristocracy, and create the conditions for the financiers and speculators to make even more money.
All of the 21,000 transactions cited in the Fed documents―released under a provision included, over the Fed’s objections, in this year’s financial regulatory overhaul bill―were carried out in secret. The unelected central bank operated without any congressional mandate or oversight.
The documents shed light on the greatest plundering of social resources in history. It was carried out under both the Republican Bush and Democratic Obama administrations. Those who organized the looting of the public treasury were long-time Wall Street insiders: men like Bush’s treasury secretary and former Goldman Sachs CEO Henry Paulson and the then-president of the New York Federal Reserve, Timothy Geithner….
The Fed documents show that the US central bank enabled banks and corporations to offload their bad debts onto the Fed’s balance sheet. Now, in order to prevent a collapse of the dollar and a default by the US government, the American people are being told they must sacrifice to reduce the national debt and budget deficit.
But as the vast sums make clear, the “sacrifice” being demanded of working people means their impoverishment―wage-cutting, mass unemployment, cuts in health care, Social Security, Medicare, Medicaid, etc.
The very scale of the Fed bailout points to the scale of the financial crash and the criminality that fostered it…. The entire US capitalist economy rested on a huge Ponzi scheme that was bound to collapse…
The banks were able to take the cheap cash from the Fed and lend it back to the government at double and quadruple the interest rates they were initially charged―pocketing many billions in the process….
The ongoing saga of the looting of the economy by the financial elite puts the lie to the endless claims that “there is no money” for jobs, housing, education or health care. The ruling class is awash in money. [read more]
Here’s an old Jim Rogers interview from two years ago when this whole thing was originally going down:
Here are two videos that I made last year, with an assist from Alan Grayson and Dylan Ratigan:
The Wall Street Economic Death Squad – Part I
The Greatest Theft in History – Wall Street Economic Death Squad – Part II
And on a final note, you may as well rock out to this new song while Rome burns…
WORLD PREMIERE ~ Ben Bernanke: Public Enemy #1 – Mr. Big Shot (((Music Video)))
Ben Shalom Bernanke is wanted for violating the United States Constitution, committing acts of financial terrorism and crimes against humanity. As a leading member of the Global Banking Cartel, he is considered a highly dangerous enemy combatant. Citizens of the United States hereby demand that he be properly detained under the laws and customs of war.
After Cardinal Agré and Archbishop Concessao, a new Cardinal, Cormac Murphy O’Connor, says credit crisis has killed capitalism.
After Cardinal Bernard Agré and Archbishop Concessao, a new Cardinal, Cormac Murphy O’Connor, says credit crisis has killed capitalism…
The leader of the Roman Catholic Church in England and Wales has declared that capitalism is dead because of the credit crunch.By Andrew Pierce
Last Updated: 11:46PM GMT 05 Jan 2009
http://www.telegraph.co.uk/news/newstopics/religion/4125339/Cardinal-says-credit-crisis-has-killed-capitalism.htmlThe Cardinal has set up a £3 million appeal for Westminster Cathedral which he fears will be forced to close within a decade if cash is not found for urgent repairs
Photo: HEATHCLIFF O’MALLEY
Cardinal Cormac Murphy O’Connor, 76, made the astonishing claim at a lavish fund-raising dinner at Claridges which secured pledges of hundreds of thousands of pounds for the catholic church.
The Cardinal, dressed in his full clerical regalia, said in a speech at the black tie dinner that he had worried whether the dinner should go ahead because of the troubled economic times.
But he went on to say that in 1989, with the collapse of the Berlin wall, that “communism had died”. In 2008, he said, ” capitalism had died”.
The remarks will cause dismay in Downing Street as the Cardinal’s remarks will be interpreted as a signal that the entire economic order has collapsed.
The Government has clashed with the Cardinal before over homosexual adoption, abortion and the Embryology Bill. One Whitehall source said: “We would like the church to work with us, not against us.”
The remark caused astonishment in the ballroom, where the dinner was held, to launch an £8 million Faith in the Future appeal for money for the work of the bishops in England and Wales.
One guest who was present, who declined to be named, said: “I could hardly believe my ears. The Cardinal announced that, in his view, that Communism had died in 1989 and capitalism had died in 2008 because of the credit crisis.
“His remarks were part of a carefully considered thesis that it was capitalism that had got us into this mess and had died because of it. It was not just remarkable that he thinks that but it was remarkable that he said it in a room packed with some of the richest and most influential catholics in the land. Those same capitalists pledged a six figure sum to the church appeal.”
The four course dinner, with a champagne reception, had been provided free of charge by Derek Quinlan, the property developer, who owns Claridges who is worth an estimated £60 million.
Sir Rocco Forte, the hotelier and prominent Roman Catholic, was in charge of the decoration. He decked out the ballroom in red flowers and red lights to match the Cardinal’s clerical outfit.
The guest list included Baroness Williams, the Lib Dem peer and former Labour Cabinet minister, Lord Brennan, the Labour peer, Lord Guthrie, the former Chief of Defence staff, the Conservative MP Nicholas Soames, and a clutch of bishops from England and Wales.
Nicola Benedetti, the violinist, serenaded the guests and Julie Etchingham, the presenter of the ITV News at 10, compèred the proceedings.
Last month the Cardinal, 76, issued a statement on the economic crisis which said: “Religious leaders are not normally economists, however, they cannot ignore the damaging human consequences of the rise and fall of economic indicators. Behind the gloomy headlines are cities, neighbourhoods, families, individuals deeply affected by the economic breakdown; and the hardest hit will be the poor: those already struggling to survive. Christians have a paramount concern for the poor. This “preferential option for the poor” is a constant theme in Catholic social teaching”.
A sopokesman for the Cardinal said: “They were private remarks at a private dinner.”
The Cardinal has also set up a £3 million appeal for Westminster Cathedral which he fears will be forced to close within a decade if cash is not found for urgent repairs.
Parts of the building, which opened in 1903 but has never been completed, are in danger of structural collapse. The cathedral is recognised as one of the finest examples of Victorian architecture and Byzantine art.
The remarks by the Cardinal come as leading bishops in the Church of England have launched a withering attack on the Government, questioning the morality of its policies.
Five of the Church’s most senior figures said the Government now presided over a country suffering from family breakdown, an unhealthy reliance on debt and a growing divide between rich and poor.
The Rt Rev Nigel McCulloch, the Bishop of Manchester, accused Labour of being “beguiled by money” and “morally corrupt”. He said: “The Government believes that money can answer all of the problems and has encouraged greed and a love of money that the Bible says is the root of all evil. It is morally corrupt because it encourages people to get into a lifestyle of believing they can always get what they want.”
The Rt Rev Tom Wright, the Bishop of Durham, said: “Labour made a lot of promises, but a lot of them have vanished into thin air,” he said. “We have not seen a raising of aspirations in the last 13 years, but instead there is a sense of hopelessness.
“When a big bank or car company goes bankrupt, it gets bailed out, but no one seems to be bailing out the ordinary people who are losing their jobs and seeing their savings diminished.”
The bishops of Hulme, Winchester and Carlisle joined in the attacks.
Kucinich “…the manipulation of the Federal Reserve!”
Kucinich: Federal Reserve No More “Federal” Than Federal Express!
Kampf der kathol. Kirche in Oesterreich gegen den Liberalismus (=Kathol. Stimmen aus Oesterreich N. Ausz. (H. 1) ) 1873http://stabikat.de/DB=1/FKT=1016/FRM=Blome,%2BGustav%2Bvon/IMPLAND=Y/LNG=DU/LRSET=1/MAT=/SET=1/SID=67d3b9a5-1/SRT=YOP/TTL=1/SHW?FRST=3
The WIR Bank, formerly the Swiss Economic Circle (German: Wirtschaftsring-Genossenschaft), orWIR, is an independent complementary currency system in …
The Swiss WIR, or: How to Defeat the Money Power. by Anthony Migchels on April 19, 2012. For eighty years a major not for profit, private currency has been …
The Swiss WIR Bank is the best example we have of a successful large-scale mutual credit clearing system that has stood the test of time and continues to thrive.