Interest

It's not an accident that the world's largest religions forbade the lending of money at interest. History has plenty of examples where the practice has led to societal catastrophes - some several millenia ago and plenty within the last decade. Those religions have since found workarounds or otherwise swept the prohibition under the rug, and for good reasons. Lending is one of the most efficient means for mobilizing the capital that makes economic progress possible.

One of my folk theories is that governments came into being mainly to enforce contracts. Failure to pay up was enforced with draconian penalties, including enslavement of entire families. The predictable consequence was that when a crop failure occurred, leaving many farmers bankrupt, those farmers grabbed the family livestock and headed for the hills - leaving the bankers to starve and society to collapse.

Debtors prisons have largely been abolished, but the calamitous effects of unsound lending continue to redound. The Sumerian farmer who couldn't pay would find his whole family enslaved. The modern equivalent is the pillage of whole countries based on the improvident loans of a few of their banks, as happened in Ireland and Spain.

In ordinary times, it's obvious that some forms of legal compulsion are necessary to avoid scoundrels skipping out on their debt. When systemic abuses or natural calamity provoke widespread financial collapse, what should be done? Bankers quite naturally believe that debts - or at least debts owed to them - are a moral issue, and that debtors should pay to the last drop of their blood. Since they are corporations, shielded by law, the same rules don't apply to them, of course. Many of the scoundrels who drove the banks they ran into bankruptcy retired in comfort to their own mansions. Since bankers have the money, and consequently the power, the laws tend to conform to the bankers notion of morality.

At some point the ancient Mesopotamians introduced jubilee and other forms of loan forgiveness to stabilize society. The modern equivalent is bankruptcy. Greece is a currently a bankrupt country, and German intransigence in refusing to recognize this has driven the country into deep depression. Similar thick headed insistence in imposing post WW I reparations helped provoke the great depression and WW II. Germany is now playing the opposite role in sending Europe into depression.

Can super Mario save Europe from itself (and German bankers in particular)? TBD.