Do interest rates perpetuate global poverty?
“God opposes usury and greed, yet no one realizes this because it is not simple murder and robbery. Rather, usury is a more diverse, insatiable murder and robbery" – Martin Luther
Haven’t you ever wondered how modern economies have gotten into this position? I think we would only be wasting time debating which “ism”: socialism, capitalism, collectivism et cetera, is best. Capitalism – like it or lump it – is here to stay. But having said that, was it wise to have ignored the advice given to us by the ancient philosophers and spiritual leaders? What do Plato, Aristotle, Cicero, Seneca, Aquinas, and Moses have in common? They all forbade the lending of money at interest, usury , as they called it. Of course, this lending of money at interest rates, is the foundation of our modern economic system. We call it a good investment. John Calvin defended interest charges, helping to set up the development of capitalism in northern Europe. But after looking at the Quarterly External Debt Database, developed jointly by the World Bank and the International Monetary Fund (IMF), I can’t help but wonder. For those interested in definitions, external debt is defined by the IMF as, “the outstanding amount of those actual current, and not contingent, liabilities that require payment(s) of principal and/or interest by the debtor at some point(s) in the future and that are owed to nonresidents by residents of an economy” (whatever that means).
Visit the database and check the Gross External Debt Position of the G8: Canada, France, Germany, Italy, Japan, United Kingdom, United States of America and Russia. Now if seven of the world’s leading industrialized nations and Russia owe so much money. What hope is there for a place like Indonesia, where the total external debt represents 80% of their national income? Does having a juggernaut for an economy, automatically mean incurring an exorbitant level of debt? What developing country can repay such debt and still fund educational, health or other important social programmes? Maybe Anup Shah, the author at global issues does have a point. Or, maybe we should have listened to Aristotle, Moses and the Christian leaders of the Middle Ages. But, as I alluded to earlier, I write as a layman in economic matters, just asking questions. What do the trained economists make of all this?
