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"I and my brothers and my men are also lending the people money and grain. But let the exacting of usury stop."
It has been a long time since people have obeyed the prohibition of usury. But today the total consumer debt, business debt and government debt has reached unsustainable levels which can never be paid back. The economy based on such unsustainable debts cannot continue to grow.
The government encouraged banks to loan money to low income families for mortgages. Houses were sold with no down payments and no income checks to people who could not afford them. These loans were repackaged and sold as mortgage backed securities with AAA credit ratings given by the biggest bond rating agencies. The result was the biggest mortgage bubble in history with rapidly rising house prices. Eventually a lot of the borrowers could not make their payments and forclosures rose to record highs. This resulted in lower housing prices and a large number of home owners owed more on their mortgages than their houses were worth. This led to a vicious circle of spiraling foreclosures and lower house prices.
Credit card interest rates of 20% to 30% are certainly usury and are at ridiculously high rates. It is better not to borrow at such rates for things which are not needed.
Mortgage rates, however, 30 year fixed rates at 5.03% are not usury. In fact some time before thirty years are up it is likely that inflation will go way up along with interest rates. The money will be paid back with cheaper dollars. It is not a good business model for banks to borrow money in the short term markets and lend long term. To insure profits these loans are resold to the public as mortgage backed securities, insuring an underwriting profit for the banks. A large part of these loans are resold to Fannie Mae and Freddie Mac which were insolvent and whose bonds are now guaranteed by the government.
The total national debt is $12.3 trillion dollars and the deficit for this year alone is projected to be $1.6 trillion dollars. Such a deficit will be hard to finance. This is the sovereign debt crisis. The debt will never be paid back but each year the debt is rolled over with new lenders to pay back the old lenders plus new deficit. This is what is called a Ponzi scheme. The Madoff Ponzi scheme was very small compared to the sovereign debt Ponzi scheme. Now the deficit has reached a crisis stage. It is hard to find new buyers of the debt. Recently a large percentage of the debt was monetized by the Fed. That is to say the Fed created the dollars out of nothing to buy the debt. If this continues it will be highly inflationary. The US Government is no different than Zimbabwe printing money. Inflation was so high in Zimbabwe that they started printing $100 trillion dollar bank notes which are now worthless. The Fed does not say in advance that there will be high inflation but tries to talk down inflationary expectations. The Chinese are uneasy about the large amount of treasuries which they own worrying if they will become worthless. They have good reason to worry.
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