Tag Archives: banking

Hermetic Magick In Double-Entry Accounting And Finance

19 Jun

* Cross-posted from Psalmistice.com


“I would like to continue with an examination of Time. From the moment we enter this life we are in the flow of it. We measure it and we mark it. But we cannot defy it. We cannot even speed it up or, slow it down. Or can we?”

– Eisenheim, The Illusionist


Time. The Fourth Dimension. The Universal Agent.

Imagine having the power to control Time. To manipulate Time. To become its master. Instead of feeling like a slave to Time, imagine what you might do, if you had the power to make Time work for you?

Men have always dreamed of possessing this power. In 15th century Italy, the discovery of mysterious ancient documents in Byzantium finally made it possible.

Today, we often speak of the value of “our time”. We speak of “spending time”, and “buying time”. But in truth, it is not “our” time at all.

Throughout the world, our Time is controlled, manipulated and directed, by ‘Masters of the Universe’. Men who are adepts in these ancient secrets, and have the power to make “our” Time work for them.

They are the bookkeepers. The men who keep score. And just as it is said of the game of golf that “a good scorer can always beat a good player”, so it is with the mystical, magical art of double-entry bookkeeping.


“For every debit there must be a credit, and for every credit there must be a debit” – Alas! How few consider that if this must be the case, the rule to go by, nothing is more easy than to make a set of books wear the appearance of correctness, which at the same time is full of errors, or of false entries, made on purpose to deceive!1


When the “Father of the Renaissance”, a humanist scholar, priest, and astrologer by the name of Marsilio Ficino translated the Corpus Hermeticum from Greek into Latin, he could not have known that his labour would, in time, condemn most of humanity to slave labour for the Lords of Time.


Bust of Ficino by Andrea Ferrucci in Florence Cathedral (Source: Wikipedia)

Bust of Ficino by Andrea Ferrucci in Florence Cathedral (Source: Wikipedia)


Ficino’s lifelong patron was Cosimo de Medici, scion of the famous Italian merchant banking dynasty, and ruler of the Florentine Republic. His circle of friends included the greatest philosophers, mathematicians, and elite movers-and-shakers in the Western world. They now had in their hands the ancient secrets of Hermes Trismegistus, the “Thrice-Greatest”.


Hermes Trismegistus, floor mosaic in the Cathedral of Siena (Source: Wikipedia)

Hermes Trismegistus, floor mosaic in the Cathedral of Siena (Source: Wikipedia)


Starting at the Medici-sponsored Platonic Academy headed by Ficino, the rediscovered Hermetic secret knowledge would light the imaginative fires of the principal scholars, philosophers, and financiers of the Renaissance — also known as the “Hermetic Reformation”2. It would influence the mind of a monk, magician, mathematician, the Father of Accounting and the man who wrote the seminal book on double-entry bookkeeping, Fra Luca Bartolomeo de Pacioli, the “constant companion of Leonardo da Vinci”3. And in a grand syncretism with Neo-Platonism and Jewish Kabbalah, conjured up and expounded by fellow Renaissance men such as Pico della Mirandola (900 Theses), Johannes Reuchlin (De Arte Cabbalistica), and Heinrich Cornelius Agrippa (De Occulta Philosophia Libri Tres), it would spread throughout the western world, deeply embedded in commerce and banking, the arts and sciences, social philosophy, ethics and morality. It would change the course of human history (bold and italicised emphasis added):


Our modern urge to measure everything dates back to the late Middle Ages when a “radical change of perception” took place in which mathematics, Venetian bookkeeping, and Luca Pacioli played a key role. Historian Alfred W. Crosby explains this “radical change”:

‘In practical terms the new approach was simply this: reduce what you are trying to think about to the minimum required by its definition; visualise it on paper, or at least in your mind … and divide it, either in fact or in imagination, into equal quanta. Then you can measure it, that is, count the quanta.’

And once you can measure something, then you have a quantitative or numerical representation of your subject which you can manipulate and experiment with, no matter how great its errors or omissions. Such data can acquire an apparent independence from its human creators and, when fed into a twenty-first century computer model, an authority that appears irrefutable.4


Portrait of Luca Pacioli, traditionally attributed to Jacopo de' Barbari, 1495 (Source: Wikipedia)

Portrait of Luca Pacioli, traditionally attributed to Jacopo de’ Barbari, 1495 (Source: Wikipedia)


Now, it is well worth our time to pause for a moment in our journey through past time, to consider the identity of Hermes Trismegistus. Today, he is considered to be a syncretism of the Greek god Hermes, and the Egyptian god Thoth. The Greeks considered Hermes to be the god of boundaries and transitions – in particular, the transition to the after-life. He was also the god of commerce, travel, the patron of thieves and orators, and a cunning trickster who outwits other gods for his own satisfaction. The Greeks equated him with the Egyptian god Thoth, who shared similar attributes. Thoth was seen by the Egyptians as the god who maintained the universe, the mediator in disputes between good and evil. He was the god of equilibrium, who unified or balanced the opposites. Importantly, in both of their respective cultures, Hermes and Thoth were the gods of writing, and magic.

The more astute reader, and in particular, the reader who has a grasp of the Duality Principle of double-entry bookkeeping — “for every credit there must be an equal debit” — may already be seeing a little light dawning in a corner of their mind.

Ficino and his influential friends at the Medicean court were to discover in the Corpus Hermeticum and in Kabbalah Ma’asit (“practical Kabbalah”) the secrets to controlling Time, the Universal Agent. At the heart of Hermetic teachings was the idea that man could influence or even control the forces of nature. To do so, one needed to master the “Three Parts of the Wisdom of the Whole Universe”. One of these parts, along with Astrology and Theurgy, was the magical art of Alchemy. Similarly, at the heart of Kabbalistic theurgy was the idea that man could magically invoke the creative or Life force — using esoteric knowledge of divine language and writing — for personal advantage in this world.

As with double-entry bookkeeping — and similarly, the dark art of keeping two sets of books — the magic of Alchemy involves a dual aspect or dual nature. In its esoteric (inner) doctrine, it is the work of spiritual purification; a transformation of common impure man, into pure and perfect Man. In its exoteric (outer) doctrine, it is the notion that man can transform common “impure” metals into pure gold, through the discovery and mastery of the “Universal Solvent”.

The magic of Hermeticism, with its emphasis on practical experimentation to discover and control the forces of nature, would have a powerful effect on the greatest scientific minds (such as Isaac Newton) for centuries to come. At the same time, its intrinsic get-rich-quick appeal would pose a constant attraction for over-indebted kings and princes — and for too-big-to-fail international bankers such as the Medici, whose compound interest-bearing loans the princes of Europe could not repay without borrowing even more.


The Emerald Tablet, a key text of Western Alchemy, in a 17th-century edition (Source: Wikipedia)

The Emerald Tablet, a key text of Western Alchemy, in a 17th-century edition (Source: Wikipedia)


Some four hundred years later, a great revival of spiritualism and the magick arts swept over Europe during the late nineteenth through early twentieth centuries. It is from this time, in the writings of adepts such as the famous occultists Aleister Crowley and Eliphas Lévi, that we can see clearly stated the most fundamental principles of Hermetic-Kabbalistic magick.

As we will see, they are precisely the same principles that form the basic rules of double-entry bookkeeping. Hermetic-Kabbalistic magick has been carried down from the Hermetic Reformation of the 15th century to our time, deeply embedded at the very core of all economic and social life; in commerce, economic theory, the fundamentals of capitalism, and banking.

The Hermetic-Kabbalistic magick principle of double perception is embedded at the core of the money system itself. In the very act of ex nihilo (“out of nothing”) creation of “our” money in the form of loans — using nothing more “real” than electronic double-entry bookkeeping — bankers enjoy the power of creator gods, employing “divine” magick principles in writing and language to harness the force of Time, transforming it into wealth for themselves.

“Money” created by bankers is simply the symbolic, written expression of this double perception. Each Dollar, Euro, or Pound created as a new loan magically appears (to the borrower) as both a debt (Liability) that must be repaid plus interest to the bank, and simultaneously, a credit (Asset) that the borrower can spend.




At the same time, to the bank that very same Dollar, Euro, or Pound magically appears as both an Asset (money that must be repaid by the borrower), and, a Liability too, because the bank must make it available to the borrower to spend.




This is the embodiment of the Kabbalistic concept of achdut hashvaah (“Unity of Opposites”) — (bold emphasis added):


The coincidence of opposites that characterizes God, humanity and the world can be approximately understood by the simultaneous adoption of two points of view. As put by the founder of the Chabad movement, Schneur Zalman of Lyadi (1745-1813):

(Looking) upwards from below, as it appears to eyes of flesh, the tangible world seems to be Yesh and a thing, while spirituality, which is above, is an aspect of Ayin (nothingness). (But looking) downwards from above the world is an aspect of Ayin, and everything which is linked downwards and descends lower and lower is more and more Ayin and is considered as naught truly as nothing and null.5




When viewed from this Kabbalistic “higher” logic perspective, the mathematical expression “-1 = +1” is actually true; an object and its exact opposite are seen to be one and the same thing. A single unit of “money” is both credit and debit, liability and asset; it just depends on whose perspective it is seen from. But all things balance themselves out, when viewed from the hidden “All-Seeing Eye” perspective of the divine nothingness or Ein Sof. Each number is created from the same central number (“0”); the space “0” between -1 and +1 is exactly “1” from either side, and so each cancels out the other:


When it arose within Ein-sof (the Infinite) to weave Yesh (Something) from its Ayin (Nothing), Ein-sof performed an act of Tzimtzum, contracting and concealing itself from a point, thereby forming a central, metaphysical void. It is in this void that the Primordial Man, Adam Kadmon, and all the countless Worlds (Olamot) emerge.6




In the cryptic, mystical language of Hermetic-Kabbalistic magick, Aleister Crowley, the man once dubbed “The Most Wicked Man In The World”, explains the fundamentals of Magick In Theory And Practice (bold emphasis added):


…the object of any magick ceremony is to unite the Macrocosm and the Microcosm.

It is as in optics; the angles of incidence and reflection are equal. You must get your Macrocosm and Microcosm exactly balanced, vertically and horizontally, or the images will not coincide.

This equilibrium is affirmed by the magician in arranging the Temple. Nothing must be lop-sided. If you have anything in the North, you must put something equal and opposite to it in the South. The importance of this is so great, and the truth of it so obvious, that no one with the most mediocre capacity for magick can tolerate any unbalanced object for a moment. His instinct instantly revolts.

…the arrangement of the weapons of the altar must be such that they “look” balanced

…And however little he move to the right, let him balance it by an equivalent movement to the left; or if forwards, backwards; and let him correct each idea by implying the contradictory contained therein.

let him show the basis of that Stability to be constant change, just as the stability of a molecule is secured by the momentum of the swift atoms contained in it.

In this way let every idea go forth as a triangle on the base of two opposites, making an apex transcending their contradiction in a higher harmony.

It is not safe to use any thought in Magick, unless that thought has been thus equilibrated and destroyed.7


In his magnum opus Transcendental Magic, French occultist Eliphas Lévi explains that:


There exists in Nature a force which is immeasurably more powerful than steam, and a single man, who is able to adapt and direct it, might change thereby the face of the whole world. This force was known to the ancients; it consists in a Universal Agent having equilibrium for its supreme law, while its direction is concerned immediately with the Great Arcanum of Transcendental Magic. … This agent… is precisely that which the adepts of the Middle Ages denominated the First Matter of the Great Work.8

Now the ancients, observing that equilibrium is the universal law in physics, and is consequent on the apparent opposition of two forces, argued from physical to metaphysical equilibrium, and maintained that in God, that is, in the First Living and Active Cause, there must be recognized two properties which are necessary to each other—stability and motion, necessity and liberty, rational order and volitional autonomy, justice and love, whence also severity and mercy. And these two attributes were personified, so to speak, by the kabalistic Jews under the names of GEBURAH and CHESED.9


Lévi says that to gain control over the “Great Magical Agent”, one must learn how to use the alchemical formula of opposites, “Solve et Coagula” (SOLVE, to dissolve, to project, to move; and COAGULA, to coagulate, to concentrate, to fix):


The Great Magical Agent, by us termed the Astral Light, …this occult, unique and indubitable force, is the key of all empire, the secret of all power. … To know how to make use of this Agent is to be the trustee of God’s own power; all real, effective Magic, all occult force is there, and its demonstration is the sole end of all genuine books of science. To have control over the Great Magical Agent there are two operations necessary — to concentrate and project, or, in other words, to fix and to move.10


Who can fail to see here, hidden in plain sight, the distilled essence, the Philosopher’s Stone, the whole alchemical formulation of double-entry bookkeeping?

The adept takes every single “common” transaction, and on entering it into his books, he first dissolves it (SOLVE) into a pair of opposites (debit entry and credit entry).




When it comes time to determine his Profits — and in turn, his total wealth or Capital — he “coagulates” (COAGULA) all of the entries in each of two columns (DR and CR) into a single number.




This then, is the apex of the triangle, the “higher harmony” of the “base of two opposites”, “transcending their contradiction”.


Seal of Solomon, front page of Eliphas Lévi's 'Transcendental Magic, its Doctrine and Ritual' (Source: Wikipedia)

Seal of Solomon; front page of Eliphas Lévi’s ‘Transcendental Magic, its Doctrine and Ritual’ (Source: Wikipedia)


Eliphas Lévi tells us plainly that the purpose of the Great Work is to gain control over one’s future; that is to say, to gain control of Time itself:


The Great Work is, before all things, the creation of man by himself, that is to say, the full and entire conquest of his faculties and his future; it is especially the perfect emancipation of his will, assuring him… full power over the Universal Magical Agent.11



For the man who is greedy for gain, who sees financial wealth as the secret to a long and happy life, the possession of money is the means to attain “the full and entire conquest of his…future”. He can transform himself from a pauper into a prince — “the creation of man by himself” — and become a “self-made man”.

How so?

Money is the means of controlling Time. By lending his money at compound interest, the skillful adept increases his wealth, without risking his health through manual labour. His little pile of wealth (“capital”) grows inexorably, compounding into an ever larger pile over time. Just as in Eisenheim’s great illusion of the Orange Tree, the “seed” which was taken by dividing a single orange into two equal parts, grows at a speed which defies Time, “producing” even more golden fruit – fruit that the magician assures us is “quite real”.

This wondrous power is all thanks to the magic of what has been called “the greatest mathematical discovery of all time” and “the most powerful force in the universe” — compound interest.

But in a classic example of circular reasoning, the alchemical wizard’s “right” to charge compound interest is all thanks to a cunning rhetorical device (remember, Hermes was the god of oratory) — the so-called “Time value” of money.


Money, wrote [Luca Pacioli’s mentor, Leon Battista] Alberti in the 1430s, is “the root of all things”: “with money one can have a town house or a villa; and all the trades and craftsmen will toil like servants for the man who has money. He who has none goes without everything, and money is required for every purpose.” As historian Fernand Braudel argues, something new enters European consciousness in Alberti’s writing – along with his celebration of money went thriftiness and a concern with the value of time12


This clever sophistry of the “Time value of money” has its origin in one of the greatest moral arguments of all time; whether the charging of interest on money (usury) is right, or wrong.

For over 1,000 years the Christian West officially prohibited the practice of charging interest on money (usury). But in the 15th century, the advocates for usury found themselves equipped with a new box of rhetorical and symbolic tricks with which to convince their audience. The syncretism of Neo-Platonic, Kabbalistic, and Hermetic philosophies in the Renaissance (“rebirth” in French) resulted in the resurrection of ancient Greco-Roman paganism. With it came an individualistic, “Me”-centred rather than “God”-centred worldview, with all-pervading emphasis on rationalism, and numerical calculation. In particular, the calculation of profit (bold emphasis added):


[German economist Werner Sombart] says that by enabling a numerical, monetary (and hence, in his view, “rational”) calculation of profit, double-entry bookkeeping provided the basis on which commerce could be seen as a process of acquisition: as an unending, systematic pursuit of profit.13

Like Sombart, [Max] Weber argues that double entry is significant because it makes possible an abstract measure of income and expenses – and therefore enables the calculation of profit, the key component of capitalistic business practice.14

The economist Joseph Schumpeter (1883-1950) also traces the development of capitalism back to double-entry bookkeeping. … Schumpeter says that capitalism adds a new edge to rationality by “exalting the monetary unit – not itself a creation of capitalism – into a unit of account. That is to say, capitalist practice turns the unit of account into a tool of rational cost-profit calculations, of which the towering monument is double-entry bookkeeping.” In his view, double entry’s “cost-profit calculus” drives capitalist enterprise – and then spreads throughout the whole culture: “And thus defined and quantified for the economic sector, this type of logic or attitude or method then starts upon its conqueror’s career subjugating – rationalizing – man’s tools and philosophies, his medical practice, his picture of the cosmos, his outlook on life, everything in fact including his concepts of beauty and justice and his spiritual ambitions.” For Schumpeter, capitalism “generates a formal spirit of critique where the good, the true and the beautiful no longer are honoured; only the useful remains – and that is determined solely by the critical spirit of the accountant’s cost-benefit calculation”.15


Double-entry bookkeeping would then, as now, serve the purpose not only of helping the merchant calculate his profits. It would enable the merchant to “prove” that his profit-making was legitimate; that is to say, in context of the times, that he had not been practicing usury in violation of the Church’s official prohibition (bold emphasis added):


[Luca] Pacioli advises merchants to incorporate explicit signs of Christianity into their books as a way of legitimising their profit-seeking activities. The use of double entry itself was like the Catholic confession: if a merchant confessed – or accounted for – all his worldly activities before God, then perhaps his sins would be absolved.16

This notion of ‘good’ bookkeeping was soon extended to the point that the use of double entry was seen to confer moral legitimacy on a merchant’s work. As Pacioli had, Hugh Oldcastle encouraged merchants to use their account books as a space in which to invoke God. He wrote in 1588: “it behoveth him [the merchant] first in all his workes and business to call to minde the name of God in all such writings, or in any other reckonings, that he shall beginne.” The first cashbook of the Bank of England, established in 1694, opens with ‘Laus Deo‘ – ‘Praise God’. As we saw with the merchants of Prato and with Pacioli, such appeals to God were a common feature of the earliest double-entry books and in some parts of Europe continued until the eighteenth century: through the exactitude of their earthly accounting, merchants hoped to gain divine approval in God’s heavenly accounts.17


If you are a businessman concerned with the morality of making a profit, then keeping the fullest possible set of accounts is a bit like confessing your sins.

Even if you are doing something morally suspect, at least you are making a clean breast of it.18

Indeed exactly because accountancy looks like a dry, value-free activity, it can be used as a kind of moral laundry.

When the Nazis stole the personal property of Europe’s Jews, Himmler insisted that all the looted property be meticulously accounted for.

By enforcing stringent accounting, he argued that “in carrying out this most difficult of tasks… we have suffered no harm to our inner being, our soul, our character.” Theft was transformed into book-


For an enormously successful usurer like Cosimo de Medici, who had the rare quality for a banker of suffering from a guilty conscience20, the matter of having one’s sins absolved had a profound importance. At that time, the only way to be absolved of the mortal sin of usury, and so be assured of a transition to Heaven in the after-life (hello Hermes/Thoth), was by making full restitution of all one’s ill-gotten gains. This meant, of course, that you could not pass on your wealth to your heirs; if you failed to make restitution before death, then in order to set you free from purgatory, your heirs would have to make restitution of all your usurious gains on your behalf:


Giovanni di Bicci de Medici, founder of the Medici Bank and Cosimo de Medici’s father … died intestate because in making out a will “he would have denounced himself as a usurer and might have caused considerable trouble for his heirs.” This practice had become a Medici family tradition, which Cosimo, Giovanni’s son would continue.21


Cosimo de Medici, Portrait by Bronzino (Source: Wikipedia)

Cosimo de Medici, Portrait by Bronzino (Source: Wikipedia)


The popularisation of double-entry bookkeeping in the Medici’s time offered another profoundly important benefit. It gave the merchant a way to “rationally” justify all of his “costs” — including the “costs” he perceives himself to have suffered, in extending (lending) “credit” to customers.

This would prove crucial in context of the historical argument on usury. Then, as now, those who argued in favour of usury have claimed that a man who lends his money to another has a moral right to be compensated for a wholly imaginary expense — the “opportunity cost” of his not being able to use the money he loaned out, to earn more money in some other way.

The “logic” of this argument for charging interest rests on an arrogant presumption — that the lender is certain of earning a “return” in that “other way”, and therefore, he must certainly be suffering a “cost” of lost “opportunity” to “earn”, if he lends his money out instead.

The unstated notion here, of course, is that, one way or another, the owner of money must always receive even more money. Gimme gimme gimme, more more moar!

It is on the foundation of this sophistry of an imaginary “opportunity cost” suffered by the money-lender — and “proven” to be real simply by writing it into his double-entry accounting books — that an even greater sophistry is built — that of the Time Value of Money.


In a 1991 paper on accounting and rhetoric, Bruce G. Carruthers and Wendy Nelson Espeland argue that the symbolic language of double-entry bookkeeping is as significant as its technical capabilities … They argue that a double-entry account is not just a piece of neutral information, but also an “account” or story; that accounting is not merely a technical practice, but also a means of framing a set of business transactions with a rhetorical purpose.22

Accounting’s use of numbers gives it an air of scientific rectitude and certitude, and yet fundamental uncertainties lurk at its heart. Indeed, accounting is as subjective and partial as the art of storytelling, the other meaning of the word “account”.23


The illusion – for that is precisely what it is – that money possesses within itself an innate characteristic called “Time value”, is quite simply the greatest public deception of all time. When the arcane teachings of Hermes Trismegistus were infused and codified in el modo vinegia (“the Venetian method”) of double-entry bookkeeping in the 15th century, the twin magic arts of writing and sophistry were woven together to form the material of the magician’s cloak, and the curtain behind which the Wizards of Oz have hidden ever since.24


As Jakob Burckhardt, and following him, Frederich Nietzsche, said of the Italian Renaissance, it was a time of sophistic. The sophistic character of the Renaissance is apparent not simply from its rhetorical perspectives and practices, but in its use of the first sophists as well.25

In an essay published in 1985, the historian James Aho linked double-entry bookkeeping to the ancient art of rhetoric, the rules used to make persuasive arguments perfected by the Roman lawyer and orator Cicero (an art, incidentally, which Aristotle says sprang from a property dispute). According to this argument, medieval merchants used double-entry bookkeeping as a rhetorical tool of capitalist propaganda, to persuade their ‘audience’ that their business was honest, morally sound and its profit-making justified.

Why would bookkeeping need to persuade? Because, says Aho, it was used to defend these businesses against the Church’s ban on usury. The rhetoric of a well-kept ledger argued for the honesty of a business and the legitimacy of its profits, as this advice from 1683 makes clear: “If [the merchant] be fortunate and acquire much, [double entry] directs him the way to Imploy it to the best advantage, if he be unfortunate it satisfies the world of his just dealing, and is the fairest and best Apologie of his Innocence and honesty to the World.”26


Today, we are born into a world where the “logic” that money possesses a Time Value seems self-evident. The idea is so deeply embedded in our individual and collective consciousness, it has become part of our common language. Everyone knows that “Time is Money”.

This belief that money has an intrinsic Time Value is, however, nothing more than a spectacularly sly, self-serving example of self-interested swindlers successfully selling a self-referential, “self-creating” sophistry. For over 500 years, its purpose has been to persuade us all that money will certainly earn more money over time; and therefore, money possesses the innate power to earn more money over time; and therefore, the Lords of Time must have the right to charge interest for the use of money lent out, as compensation for their “lost opportunity” (ie, Time) to “earn” more money from their money’s innate power to earn more money.

This first half of the “Time Value of money” circular flow of illogical reasoning has come to be universally accepted, largely because so few pause to consider the unstated second half of the circle, which goes like this: and therefore, the Lords of Time must also have the right to pay interest (if they wish) to people who deposit money with them for “safe-keeping” (storage), as compensation for their “lost opportunity” to “earn” more money from money’s innate power to earn more money — err, say what now?! — (and whose deposits the Lords of Time can also lend out and charge interest for); and therefore, since it is now firmly established that money deposited with the Lords of Time will earn interest over time, this proves that money will certainly earn more money over time, and therefore money obviously possesses the innate power to earn more money over Time, etc etc, ad infinitum.

In its definition of the Time Value of Money, Investopedia unwittingly lets the cat out of the bag, highlighting this circular reasoning which lies (pun intended) at the dark heart of the grand mystical numberland of finance (bold and italicised emphasis added):



The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.

Everyone knows that money deposited in a savings account will earn interest. Because of this universal fact, we would prefer to receive money today rather than the same amount in the future.27


Clearly then, the circular logic of the supposed Time Value of Money fails, if ever the “universal fact” that “money deposited in a savings account will earn interest” fails.

Like, err, now.

At this present time, so-called “ZIRP” (Zero Interest Rate Policy) and even “NIRP” (Negative Interest Rate Policy) is spreading all over the moribund economies of the Western world. We now receive zero interest on money deposited in a savings account. Not only that, in an increasing number of Western countries, the Lords of Time are now charging interest (ie, paying negative interest) on money deposited in a savings account. Yes, that’s right … if not now, then very soon, they will charge you interest for “holding” money on deposit in the “safe-keeping” of their bank.

Why are they doing this? As with so many magician’s tricks, the key to successfully pulling off the illusion, is movement. In the sideshow hustler’s game of Thimblerig or Three Shells and a Pea28, the faster the hustler moves his hands, the more difficult it is to see that he has moved or even pocketed the pea.


"The Conjurer," painted by Hieronymus Bosch (between 1496 - 1520). The painting accurately displays a performer doing the cups and balls routine, which has been practiced since Egyptian times. The shell game does have some origins in this old trick. The real trick of this painting is the pickpocket who is working for the conjurer. The pickpocket is robbing the spectator who is bent over. (Source: Wikipedia)

“The Conjurer,” painted by Hieronymus Bosch (between 1496 – 1520). The painting accurately displays a performer doing the cups and balls routine, which has been practiced since Egyptian times. The shell game does have some origins in this old trick. The real trick of this painting is the pickpocket who is working for the conjurer. The pickpocket is robbing the spectator who is bent over. (Source: Wikipedia)


In the great alchemical trick of Hermes the Thrice-Greatest and his Latter-Day Saints, this vital movement is called “Flow”, or the “Velocity of the Circulation of Money”. So long as the flow of money in the economy is fast enough, no one notices that the game is actually rigged. That is, no one notices that there is insufficient money in the system to pay interest.

This policy of zero (or even negative) interest rates on bank deposits, is all about trying to speed up the flow of money in the economy. The Lords of Time are hoping that this policy will encourage people to spend (“Flow”), not save (“Stock-pile”) money.

Why? Because the only way for the Lords of Time to keep on “earning” compound interest on the intergalactic levels of debt that they have lent to the world, is to make the “money” flow fast enough.

The real truth of the Money Illusion is this: If everyone had to settle their debts at the same time, there is always far more money owed, than there is money to pay with. The game only seems to work fairly and honestly if we only look under one shell at any time, and, if we believe the hustler’s claim that the missing pea really is just hiding under one of the other shells all the time.

In a recent article in Forbes titled “The Principal And Interest On Debt Myth”,29 a modern day mathematician and globally renowned academic economist set out to prove to the now-growing crowd of questioning (and in some cases, hostile) finger-pointers, that we should all just “Move along now, there’s nothing to see here”.

That is to say, he challenged the view that “because banks lend principal, but insist that principal and interest be paid by the debtor, the money supply has to grow continuously to make this possible”.

His proof?

A simple model of a “simplest possible financial system” … based on double-entry bookkeeping:


Screen shot 2015-04-09 at 2.29.53 PM


Alas, the accounting fraud-riddled history of double-entry bookkeeping ever since its Western popularisation by Fra Luca Pacioli (and more importantly, by his powerful patrons in the world of money-lending), strongly suggests that a reliance on the “logic” of double entry to “prove” anything with regard to banking, money, debt, and compounding interest, is tantamount to using the casino’s own roulette wheel in an attempt to “prove” that the game of roulette is not rigged in favour of the house.

Or, to return to our shell game analogy, it is tantamount to relying on a sideshow hustler’s own sleight of hand skills to “prove” that the pea you couldn’t see really was under one of those three shells all the time.

It all works fine (for the hustler), whilst ever the “flow” of the hustler’s hands is fast enough to fool the common man. But if the flow is slowed – in economic terms, by a growing “loss of confidence” in the game, resulting in too many people saving or “hoarding” money (Stability) rather than spending it (Movement) — suddenly the hustle begins to be exposed. At a slower rate of “flow”, it becomes much more easy to see that the hustler has been pocketing the pea all along.

Happily, the economist writing in Forbes did admit that the money-lenders’ money-shuffling game only works “so long as those flows are large enough”:


Critical Caveat - the RATE of Flow is critical to supporting Steves thesis, that the Interest can be paid out of flows


He also admitted that his simple model does not reflect the real world, which “is far more complicated”:


Screen shot 2015-04-09 at 3.21.31 PM


He also admitted that it is possible to enter different values for the limited set of parameters he chose for his simple model, that would make his conclusion (that interest can be paid without increasing the money supply) “untenable”:


Screen shot 2015-04-09 at 2.34.30 PM


But arguably his most important admission of all was not included in his Forbes article. Rather, it is on his Twitter account that we find his admission, that it is mathematically impossible for everyone to pay their debts at the same time:


Screen shot 2015-04-09 at 4.09.44 PM


In his zeal to disprove the claims of a growing crowd of questioning onlookers who are pointing out that the monetary alchemists’ shell game is rigged, the good professor has fallen afoul of the error of oversimplification. A simple double-entry bookkeeping model, of a “simplest possible financial system”, having a limited set of parameters, that obviously does not include all the parameters of the real world’s financial system, but that does include a number of invalid assumptions (eg, the notion that banks are “consumers”, who spend all their earnings back into the “flow” of the national economy); a model that does not reflect the real world “which is far more complicated”, is a model that is quite obviously too simple, and does not prove (or disprove) anything at all.

Jane Gleeson-White, author of Double Entry: How The Merchants of Venice Shaped Modern Finance, relates an interesting and relevant anecdote regarding Fra Luca Pacioli, the acclaimed father of accounting. On 11 August 1508, Pacioli gave an introductory public lecture at the church of San Bartolomeo near the Rialto Bridge in Venice (bold emphasis added):


Some five hundred people came to hear the celebrated mathematician speak … The famous Venetian printer Aldus Manutius was there and may have brought along Erasmus, who was staying with him near the Rialto while supervising the printing of his translation of Euripedes and a collection of ancient proverbs.

Intriguingly, after leaving Italy in 1509 Erasmus wrote his famous satire, In Praise of Folly, in which he mocks scientists who use maths to bamboozle their audience. His description of these boffins rather accurately parodies the methods used by Luca Pacioli in his talk on Euclid: “When they especially disdain the vulgar crowd is when they bring out their triangles, quadrangles, circles, and mathematical pictures of the sort, lay one upon the other, intertwine them into a maze, then deploy some letters as if in line of battle, and presently do it over in reverse order – and all to involve the uninitiated in darkness.” In his book, Erasmus set out to deflate the pretensions of anyone who claimed special knowledge or importance, whether they were philosophers, merchants or clerics.30


In his Praise of Folly .. he calls Mercury the inventor of tricks or of conjuring (“Quos nos ludos exhibet furtis ac praestigiis Hermes?”“What entertainments does Hermes show us, with his tricks and sleight-of-hand?”)31


Bernard Lietaer is a former central banker, fund manager, and co-designer of the European Currency Unit (precursor to the Euro), who was named “the world’s top currency trader” by Businessweek in 1992. Today, Lietaer is a currency system reformer with almost 40 years active experience in the field. In Rethinking Money, he uses the brilliant analogy of the game of musical chairs, to help explain how “our” alchemical money system really works.

His analogy helps to illuminate this fundamental point – that it is only when the music (money “flow”) slows (“economic slowdown”) or stops (“credit crunch”), and people get nervous (“economic con-fidence”) and start looking for a chair to sit on, that we discover there never was enough chairs (“money”) for everyone:


Essentially, to pay back interest on a loan requires using someone else’s principal. In other words, not creating the money to pay interest is the device used to generate the scarcity necessary for a bank-debt monetary system to function. It forces people to compete with each other for money that was never created, and it penalizes them with bankruptcy should they not succeed. When a bank checks a customer’s creditworthiness, it is really verifying his or her ability to compete successfully against the other players – that is to say, assessing the customer’s ability to extract from others the money that is required to reimburse the interest payment. One is obliged in the current monetary system to incur debt and compete with others in order to perform exchanges and pay the resulting interest to the banks and lenders.32

Although new loans are being created, the interest on the principal is not. Nowhere in the system is this additional money created. This gives rise to scarcity, which, in turn, creates competition to acquire the extra money to cover the loans’ interest. This magic, where one person’s loan becomes another’s deposit, and whereby when you pay interest you are using someone else’s principal, is really monetary alchemy. This monetary alchemy is one of the esoteric secrets of the monetary system.33

A key point to keep in mind is that this entire money-creation process hinges on loans. If all debts were repaid, money would simply disappear, because the entire process of money creation would reverse itself. Reimbursing all loans would automatically use up all the deposits.34




When a banker checks a customer’s credit score, it is to assess how successful or aggressive that individual or business will be in contending with others to obtain funds that are not created in sufficiency to pay back the interest on the loan.35

In a manner of speaking, it’s like a game of musical chairs in that there are never enough seats for everyone. Someone will end up getting squeezed out. There isn’t enough money to pay the interest on all the loans, just like the missing chair. Both are highly competitive games. In the money game, however, the stakes are elevated, as it means grappling with certain poverty or, worse still, having to declare bankruptcy.36


The real brilliance of Lietaer’s musical chairs analogy is that it helps the “common” man and woman to easily visualise, and understand, the alchemists’ critical need for monetary “motion” as opposed to “stability”, in order to conjure an apparent economic “equilibrium” of “constant change” (ie, constant economic “growth”) moving through time. It is, we now see, an illusory “equilibrium”, built on the ancient magic of sophistry and numbers, and contrived to “produce” compound “yields” for the Wizards of Oz hiding behind the curtain:


let him show the basis of that Stability to be constant change, just as the stability of a molecule is secured by the momentum of the swift atoms contained in it.

In this way let every idea go forth as a triangle on the base of two opposites, making an apex transcending their contradiction in a higher harmony.

It is not safe to use any thought in Magick, unless that thought has been thus equilibrated and destroyed.37


Unlike these present-day Lords of Time and their legions of high priests all preaching the obscure doctrines of Hermetic-Kabbalistic economic theology, Lietaer is speaking an everyday, “common” language — of “common” imagery and symbols — that we can easily understand. Most important to notice though, is that his clear and simple language is a result of his motivation. He seeks not to obfuscate but to elucidate.

In a telling passage of John Maynard Keynes: Vol 2 The Economist As Saviour 1920-1937, Keynes’ biographer Robert Skidelsky informs us that (bold and italicised emphasis added):


In Keynes’s view capitalism’s driving force is a vice which he called “love of money” … in the General Theory “the propensity to hoard” or “liquidity preference” plays a vital part in the mechanics of an economy’s rundown, once something has happened to make investment less attractive. And this links up with Keynes’s sense that, at some level too deep to be captured by mathematics, “love of money” as an end, not a means, is at the root of the world’s economic problem.38


Nearly two thousand years earlier, Jesus of Nazareth pointed to the same thing, in debunking the money-lenders’ illusion (delusion) that “‘Time’ (‘God’) is ‘Money'”:


No one can serve two masters; for either he will hate the one and love the other, or else he will be loyal to the one and despise the other. You cannot serve God and mammon [money].39




“To know and not to know, to be conscious of complete truthfulness while telling carefully constructed lies, to hold simultaneously two opinions which cancelled out, knowing them to be contradictory and believing in them both, to use logic against logic, to repudiate morality while laying claim to it (…) To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just as long as it is needed, to deny the existence of objective reality.”

— George Orwell, defining “doublethink” in his book 1984


“Today, many nations are revising their moral values and ethical norms, eroding ethnic traditions and differences between peoples and cultures. Society is now required not only to recognise everyone’s right to the freedom of consciousness, political views and privacy, but also to accept without question the equality of good and evil, strange as it seems, concepts that are opposite in meaning. This destruction of traditional values from above not only leads to negative consequences for society, but is also essentially anti-democratic, since it is carried out on the basis of abstract, speculative ideas, contrary to the will of the majority, which does not accept the changes occurring or the proposed revision of values.”

— Vladimir Putin, Presidential Address to the Federal Assembly, December 12, 2013


Added Faivre quotation, footnote 31.



[1] Edward Thomas Jones, Jones’ English System of Book-Keeping by Single or Double Entry, 1796

[2] James D. Heiser, Prisci Theologi and the Hermetic Reformation in the Fifteenth Century, 2011

[3] Jane Gleeson-White, Double Entry: How The Merchants of Venice Created Modern Finance, 2013

[4] ibid.

[5] Sanford L. Drob, The Doctrine of Coincidentia Oppositorum in Jewish Mysticism, 2000

[6] Sanford L. Drob, The Theosophical Kabbalah, 2001

[7] Aleister Crowley, Magick in Theory and Practice, Book IV, Part III, Chapter VIII; Of Equilibrium: and of the General and Particular Method of Preparation of the Furniture of the Temple and the Instruments of Art

[8] Eliphas Lévi, Transcendental Magic, Its Doctrine and Ritual, 1896

[9] ibid.

[10] ibid.

[11] ibid.

[12] Jane Gleeson-White, Double Entry: How The Merchants of Venice Created Modern Finance, 2013

[13] ibid.

[14] ibid.

[15] ibid.

[16] ibid.

[17] ibid.

[18] Jolyon Jenkins, How Men In Grey Suits Changed The World, 2010 – http://news.bbc.co.uk/2/hi/uk_news/magazine/8552220.stm

[19] ibid.

[20] E. Michael Jones, Barren Metal: A History of Capitalism As The Conflict Between Labor And Usury, 2014

[21] ibid.

[22] Jane Gleeson-White, Double Entry: How The Merchants of Venice Created Modern Finance, 2013

[23] ibid.

[24] Bill Still, The Wonderful Wizard of Oz: A Monetary Reformer’s Brief Symbol Glossaryhttp://www.themoneymasters.com/the-wonderful-wizard-of-oz-a-monetary-reformers-brief-symbol-glossary/

[25] Richard Marback, Plato’s Dream of Sophistry, 1999

[26] Jane Gleeson-White, Double Entry: How The Merchants of Venice Created Modern Finance, 2013

[27] Investopedia, Time Value of Moneyhttp://www.investopedia.com/terms/t/timevalueofmoney.asp

[28] Wikipedia, Shell Game – http://en.wikipedia.org/wiki/Shell_game

[29] Steve Keen, The Principal And Interest On Debt Myth, Forbes, 2015 – http://www.forbes.com/sites/stevekeen/2015/03/30/the-principal-and-interest-on-debt-myth-2/

[30] Jane Gleeson-White, Double Entry: How The Merchants of Venice Created Modern Finance, 2013

[31] Antoine Faivre, Eternal Hermes: From Greek God to Alchemical Magus, 1995

[32] Bernard Lietaer and Jacquie Dunne, Rethinking Money, 2013

[33] ibid.

[34] ibid.

[35] ibid.

[36] ibid.

[37] Aleister Crowley, Magick in Theory and Practice, Book IV, Part III, Chapter VIII; Of Equilibrium: and of the General and Particular Method of Preparation of the Furniture of the Temple and the Instruments of Art

[38] Robert Skidelsky, John Maynard Keynes: Vol. 2, The Economist As Saviour 1920-1937, 1994

[39] Matthew 6:24, The Sermon on the Mount, New King James Version


Looking For A Root

28 May


“In Keynes’s view capitalism’s driving force is a vice which he called ‘love of money’ … in the General Theory ‘the propensity to hoard’ or ‘liquidity preference’ plays a vital part in the mechanics of an economy’s rundown, once something has happened to make investment less attractive. And this links up with Keynes’s sense that, at some level too deep to be captured by mathematics, ‘love of money’ as an end, not a means, is at the root of the world’s economic problem.”

Robert Skidelsky; “John Maynard Keynes: Vol. 2, The Economist As Saviour 1920-1937″ (1994)

“There are a thousand hacking at the branches of evil to one striking at the root.”

– Henry David Thoreau

Would you be inclined to agree, that the best way to solve a problem, is to begin by looking for a root?


Definition of economy

1. the state of a country or region in terms of the production and consumption of goods and services and the supply of money

Oxford Dictionary

Who is responsible for the “supply of money”?

Changes in the quantity of money may originate with actions of the Federal Reserve System (the central bank), depository institutions (principally commercial banks), or the public. The major control, however, rests with the central bank.

– Federal Reserve Bank of Chicago, Modern Money Mechanics: A Workbook on Bank Reserves and Deposit Expansion

How is “money” supplied?

The actual process of money creation takes place primarily in banks. As noted earlier, checkable liabilities of banks are money. These liabilities are customers’ accounts. They increase when customers deposit currency and checks and when the proceeds of loans made by the banks are credited to borrowers’ accounts.

– Federal Reserve Bank of Chicago, Modern Money Mechanics: A Workbook on Bank Reserves and Deposit Expansion

Why is money supplied (by banks)?

…banks basically make money…


How do banks “make money” (ie, make profits)?

by lending money at rates higher than the cost of the money they lend. More specifically, banks collect interest on loans and interest payments from the debt securities they own, and pay interest on deposits, CDs, and short-term borrowings. The difference is known as the “spread,” or the net interest income…


Er… let’s hear that again … HOW do banks “make money” (profits)?

They make money just like any other business. The difference is that their product is money. In other words banks sell money, mostly in the form of loans. Their profit is the difference between what they pay in interest on your deposits and what you pay them in interest for the loan they made you. Banks also charge fees for services.

National Australia Bank, How Banks Work

What is “interest”?

The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.


Is interest on money natural?

The most hated sort (of money-making), and with the greatest reason, is usury, which makes a gain out of money itself and not from the natural use of it. For money was intended merely for exchange, not for increase at interest. And this term interest (“tokos”, i.e., “children”), which implies the birth of money from money, is applied to the breeding of money, because the offspring resembles the parent. Wherefore of all modes of money-making, this is the most unnatural.

– Aristotle, Politics, Book One, Part X (c. 350 BC)


  • The global economy has a problem.
  • The supply of money is a defining component in the functioning of the economy.
  • Banks supply the money in the economy.
  • Banks supply the money by creating it ex nihilo (“out of nothing”).
  • Banks create new money when they make loans.
  • Banks make loans in order to make profits.
  • Banks make profits by charging interest on money they create.
  • Banks make profits by charging more in interest, than they pay in interest.
  • Interest is a charge for the “privilege” of borrowing money.
  • Making money out of money, by charging “interest” / usury on money … is not natural.

Would you be inclined to agree, that it is not a “privilege” but a burden, to have to borrow money at interest?

Would you be inclined to agree, that it is banks who have an incredibly privileged position and role in the functioning of the economy?

Would you be inclined to agree, that it is immoral and unjust to charge “interest” for the “privilege” of “borrowing” something that was created out of nothing — mere electronic digits, typed into a computer?

Would you be inclined to agree, that because banks are legally permitted to make profits from the production of money“their product is money” — that bankers are likely to have a vested interest in selling as much of their product — that is, creating as much debt — as they can get away with?

Is it possible that usury — the making of gains (profit) on the lending of money; the unnatural “birth of money from money” — is the root of the problem in the global economy?

For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.

– St. Paul, 1 Timothy 6:10

…no one shall deposit money with another whom he does not trust as a friend, nor shall he lend money upon interest; and the borrower should be under no obligation to repay either capital or interest.

– Plato, Laws, Book V (c. 348 BC)

And if you lend to those from whom you hope to receive back, what credit is that to you? For even sinners lend to sinners to receive as much back. But love your enemies, do good, and lend, hoping for nothing in return; and your reward will be great, and you will be sons of the Most High.

– Jesus Christ, Luke 6:34-35

See also:

Imagine A World With No Banks

A Tale Of Usury, Explosions, And A Used Car Salesman

Babylon = Usury: We Want Interest-Free Money at realcurrencies.com

Imagine A World With No Banks

27 Apr


Imagine a world where banks are redundant … because everyone is a bank.

Read more here…

Usury – The Golden Age Of Big Money Oligarchy

8 Apr

Further to my continuing strident opposition to the practice of Usury, I hope that readers will be encouraged to visit the excellent Applied Philosophy blog after reading author Anonemiss’ superb exposition Bacon on Usury, which is cross-posted below with kind permission –

In Sovereign Credit is State Usury I mentioned a post about usury, the following is what I planned as the first section of that post.

Usury Forbidden

Although usury was invented in ancient Sumer all three Abrahamic religions prohibit the taking of interest on debt. In ancient times money was extended by the temples to the farmers, secured by their land, after four years they either paid or the amount was doubled. When debts on the farmers grew too large there would be a general amnesty and all debt owed by farmers would be annulled. To this day orthodox Jews, marginal Christian sects and devout Muslims will have nothing to do with usury, neither a lender nor a borrower.

The current worldwide domination of usury is the result of the worldwide domination of Europe and Western culture in general for the last couple of centuries, thus to understand how this happened we have to review the history of usury in Europe.

In the early medieval period some Jews lent money against interest-arguing that the prohibition did not apply to non-Jews-they were tolerated by those in power when financing was needed and prosecuted when it was time to pay, the history of national debt default is long and sordid. This association is why the moneylender in The Merchant of Venice is Jewish, the play is about usury and has nothing to do with anti-Semitism (at Shakespeare’s time there was not a single Jewish person in the whole of England).

The good Christians soon took over this lucrative trade when the central authority declined in the second half of the thirteenth century (see The Catholic Empire) at the same time there was ethnic cleansing of Jews all over Europe. The Knights Templar, who had left crusading and turned into banking, also came under attack; their legendry fortunes did not come from the East but rather from usury. Little was found in their vaults, they had nothing to give up even to save their lives, just like modern banks that after years of record profits turned out to be bankrupt.

The practice of usury flourished in North Italy, where there was no central power to hold it back and big money oligarchy took over the government, first in republican form and when the money was concentrated in a single family, the Medici in Florence for example, power became absolute. The religious prohibition still held even in the hearts of bankers: the Italian countryside is dotted with chapels built by guilt-ridden bankers.

“Usury was still banned by the powerful Church in this period, with an interpretation concisely expressed as Quidquid sorti accedit, usura est (“Whatever exceeds the principle is usury”). So the Medici Bank could not openly adopt the modern formula of promising to pay interest on demand deposits and loaning out a fraction of the deposits at greater interest to pay for the interest on the deposit, since a depositer would gain revenue on the principal without any risk to the principal, which would have made both parties usurers and sinners; nor could they charge fees or other such devices.”

Medici bank, Wikipedia

To get around the prohibition they would use commercial transactions to mask the usury. This kind of usury by other names is currently being practiced by Islamic Banking and in Islamic states that formally prohibits usury (e.g. Iran).

When regional central power was re-established usury was again assailed. The kings of France and England prevented their domestic merchants from becoming bankers, while at the same time ruining the Italian bankers by defaulting on huge debts-the interest paid by these Christian kings was implicit and not explicit-like king Edward III who ruined the societies of the Peruzzi and the Bardi of Florence in 1345 when he defaulted on a debt equal to 4.8 tonnes of gold (1,365,000 florins times 3.5 gram). Their ruin cleared the way for the Medici to establish their bank in 1397.

The last Tudor male sovereign, king Edward VI (1547-53), outlawed usury by parliamentary decree:

“(Act relating to Usury.) Another bill was brought in against usury, which passed both houses, and was made a statute. By it, an act passed in the 37th of the late king (Henry VIII), that none might take above 20 per cent. on money lent, was repealed; which they said was not intended for the allowing of Usury, but for preventing farther inconveniences. And since Usury was by the word of God forbidden, and set out in divers places of Scripture as a most odious and detestable vice, which yet many continue to practise, for the filthy gain they make by it; therefore, from the 1st of May, all usury or gain from money lent was to cease; and whosoever continued to practise to the contrary, was to forfeit both principal and interest, to suffer imprisonment, and to be fined at the king’s pleasure.”

-Cobbett, Parliamentary History of England, vol. I, p.596. [my emphasis]

Notice how the act prescribes the punishment while the prohibition follows from Scripture, thus equating usury with murder and theft. The anti-usury law was repealed in 1571, when the oligarchy-friendly regime of Elizabeth was in power.

There was a need not only to legalise usury, but also to legitimise it. Usury had to become a ‘normal’ part of life, not something that might be one day questioned or even condemned; in short the whole question of usury had to disappear even the word had to change its meaning.

When the Reformation exploded in 1517-The pope at the time was Leo X, the first of three Medici popes-it found its first adherents in the oppressed classes of Europe: the peasants, the artisans, the knights and the merchants. These four existed under the double alliance of nobility and church that ruled since the end of the Catholic Empire. The peasants and the artisans were being crushed by the weight on them, the knights were being constantly grinded down, while the merchants were restrained and blocked by the medieval structures of societies.

The militant knights were crushed early on in 1522, the rebellious peasants in the Peasants War of 1526. Henceforth those two only played the role of the follower never the leader. The peasants became the ardent supporters of absolute power, a central power that would protect them from local abuse.

“Martin Luther warned about the mathematics of compound interest as the monster Cacus, devouring all. Yet Luther’s denunciations of usury are excluded from his collected works in English, and are available in this language only in Vol. III of Marx’s Capital and Book III of his Theories of Surplus Value.”

-Michael Hudson, The Big Bank Job

In 1566, two years prior to the start of the Eighty Years War, the knights summoned themselves and presented a petition against the Inquisition to the Duchess of Parma, the regent of the Netherlands at the time, while emphasising their loyalty to the king and the church. They adopted the name of the Beggars, after being described so by a royal councillor. Their time had since past and they had no role left to play except asking for mercy-like any group in the middle of two warring factions they tried to play the peacemaker, such was the end of the knights who conquered the Holy Land five centuries prior.

The artisans took their time, first developing an ideology, then organising and acting. The anti-usury Anabaptists were resolutely crushed in the Münster Rebellion (1535) leaving only an echo of itself, like European communist parties that once thundered and now squeak from parliamentary obscurity. Their ideology lived on with the pacifist wing of the movement, who quit Europe and immigrated to North America.

The sects that remained adapted to the power structure of the time, feudal Germany adopted Lutheranism and cut its ties with Rome. The merchants in the Netherlands adopted and promoted Calvinism, which in turn spread to Scotland. England ended up with a mix of Catholic, Lutheran and Calvinist church; few notice that the Anglican Church is officially an offshoot of the Catholic Church and not a protestant faction.

The choice of Calvinism by the merchants is not by chance, its doctrines more then rhymed with their economic and social interests:

“Calvin expressed himself on usury in a letter to a friend, Oecolampadius, in which he criticized the use of certain passages of scripture invoked by people opposed to the charging of interest. He reinterpreted some of these passages, and suggested that others of them had been rendered irrelevant by changed conditions. He also dismissed the argument (based upon the writings of Aristotle) that it is wrong to charge interest for money because money itself is barren. He said that the walls and the roof of a house are barren, too, but it is permissible to charge someone for allowing him to use them. In the same way, money can be made fruitful.”

Calvinism, Wikipedia [my emphasis]

Either the Scripture is the absolute truth valid for all times or it is not. Edward VI changed the conditions when they did not comply with Scripture; the argument of “changed conditions” is an argument to change Scripture to comply with the times.

Religion is the absolute truth valid for all times and places. Philosophy is the absolute truth valid for some times and some places. Religion is by definition principles external to the world, while philosophy is the summation of all the worldly knowledge at a certain time. Hegel explains how philosophy could be absolute and yet change over time:

“Each principle has reigned for a certain time, and when the whole system of the world has been explained from this special form, it is called a philosophical system.”

-Hegel’s Lectures on the History of Philosophy, Introduction A. [my emphasis]

Religion is a blueprint for society; philosophy is a summation of society. Conditions are changed according to religion, while philosophy changes according to conditions. Sometimes philosophy turns into religion as happened with the Bolsheviks who took a social philosophy and turned it into a blueprint for social construction.

What would be Calvin’s reaction if he should come back today and witness Christian denominations that accepts female and homosexual priests because of “changed conditions”, would he accept their argument or condemn them? And in turn how would they react if, in few centuries, incest or child murder were accepted in the name of “changed conditions”? Either it is religion or philosophy; one cannot pick and choose between the two because then he will end up with the ills of both.

By adapting the principles of the Scripture to the current conditions the Protestants-unlike the Anabaptists who wanted the opposite-ensured that their creed would be forever changing, their churches forever reforming. Each new generation adapts the inherited principles to suit their conditions. This is compounded by a fast developing world in which every generation has “changed conditions”.

The Amish-who trace their ideas to the Anabaptists-tried to solve this conundrum by fixing their life at the point of time when their religion was fixed. They abhor all innovation that followed their religion, even though none of the gospels tell of Jesus taking the scenery in a horse-and-buggy. Their unnatural existence is already unravelling and will soon come under external pressure as the entire social structure of the US is transformed.

The second argument is predicated on a false premise: the walls and the roof of a house are extremely fruitful and anyone who does not agree should go outside and sit in the rain, either he will change his mind or die of pneumonia. The fruits of a dwelling could easily be monetised by renting the dwelling-In the past people never let a room stay empty, but quickly found a lodger to supplement their income-This is a fair exchange of actual value for actual money, neither side loses and the circulation of money in the economy increases.

Money, on the other hand, is indeed barren, because its value is potential and not actual, only realised after an exchange (see Defining Inflation). Interest is earned regardless of production and the creation of wealth, this exchange is actual only for the lender: if the potential profit is realised all is well and good but otherwise the borrower suffers while the creditor’s profits are guaranteed.

This exchange is unfair and will only be conducted if capital has an advantage and the lender has means to force the borrower to comply, either by his own force (e.g. loan shark) or through a legal framework that admits usury. In times when capital has no advantage it flows to rent (buying land, walls and roofs), equity (partnership in profit & loss) or charity & monuments. A finance-based economy always flourishes at the end of an era never at the beginning (end of the Roman Empire, end of he Catholic Empire, end of the British Empire, et cetera), because it is unable to produce only to consume.

And if the money be rented
Who shd pay rent on that money?
Some fellow who has it on rent day,
or some bloke who has not?

-Ezra Pound, Canto XLVIII

Usury Legitimised

Legalisation and tacit religious acceptance were not enough and there was a need to rationalise usury and make it acceptable within the new secular-humanistic paradigm.

Francis Bacon (1561-1626) was one of the “workmen in the State” (see Weekly Lesson (14)) in the golden age of big money oligarchy. In 1618 he was appointed to the position of Lord Chancellor by James Stuart, the monarch imported from Scotland to ‘sit’ on the thrown. That position was similar to today’s position of prime minister.

“His public career ended in disgrace in 1621. After having fallen into debt, a Parliamentary Committee on the administration of the law charged him with twenty-three counts of corruption.”

Francis Bacon, Wikipedia

The fact that he was prosecuted by the parliament is very important. The parliament represented the commercial and country interests, while the sovereign represented the interests of big money. This situation was reversed in the Netherlands where the parliament represented big money and the sovereign represented commercial and country interests. In the Netherlands Oldenbarneveldt, who was in a position equivalent to prime minister, was also prosecuted but by the sovereign. Bacon’s fall in 1621 followed Oldenbarneveldt’s fall from grace and execution two years earlier, though he was lucky to keep his head on his shoulders. The king remitted the high fine and his imprisonment lasted only few days.

In the Netherlands the sovereign was the rival of the oligarchy, while in England the Stuarts were chosen by the oligarchy-dominated court of Elizabeth. James saved Bacon’s head, but his son Charles failed to do the same for his own. The end of the Stuarts came when the sovereign of the Netherlands was crowned joint king of England.

Bacon tried to rationalise usury in his Essays, first he starts by listing all the objections against it:

“The discommodities of usury are, First, that it makes fewer merchants. For were it not for this lazy trade of usury, money would not he still, but would in great part be employed upon merchandizing; which is the vena porta of wealth in a state. The second, that it makes poor merchants. For, as a farmer cannot husband his ground so well, if he sit at a great rent; so the merchant cannot drive his trade so well, if he sit at great usury. The third is incident to the other two; and that is the decay of customs of kings or states, which ebb or flow, with merchandizing. The fourth, that it bringeth the treasure of a realm, or state, into a few hands. For the usurer being at certainties, and others at uncertainties, at the end of the game, most of the money will be in the box; and ever a state flourisheth, when wealth is more equally spread. The fifth, that it beats down the price of land; for the employment of money, is chiefly either merchandizing or purchasing; and usury waylays both. The sixth, that it doth dull and damp all industries, improvements, and new inventions, wherein money would be stirring, if it were not for this slug. The last, that it is the canker and ruin of many men’s estates; which, in process of time, breeds a public poverty.”

-Essays of Francis Bacon, Of Usury

In summary Bacon gives the following seven “discommodities” for usury:

  • 1. It makes fewer merchants.
  • 2. It makes poor merchants.
  • 3. The decay of customs of kings or states.
  • 4. It bringeth the treasure of a realm, or state, into few hands.
  • 5. It beats down the price of land.
  • 6. It doth dull and damp all industries, improvements, and new inventions.
  • 7. It is the canker and ruin of many men’s estates; which, in process of time, breeds a public poverty.

First, no merchant can make a profit every year without interruption, but usury is like a hungry beast following the merchants whomever stumbles is devoured. When the cycle picks up instead of new merchants entering the market the existing merchants expand using debt, this is the reason constant growth is sought in the market. As this process is repeated it results in one giant dominating every sector in the economy with competition only coming from foreign owned companies.

This is now the case in the world, especially in the US. Let me give an example from one of the most lucrative sectors: The defence sector.

The Air Force has only supplier for fighters: Lockheed Martin with Boeing providing bids without the production capability to manufacture them, only to give cover. The result is that the Air Force has two new very expansive high-altitude fighters, F-22 & F-35, while it needs low-altitude close support aircrafts.

The supplier for cargo and tanker planes is Boeing, without even a US counterpart providing cover bids. The Air Force was so exasperated with Boeing’s illegal efforts (two people going to prison) to sell it a sub-standard tanker it chose the European bid, the outcry from Congress and the media was so loud, after all that bid was only for cover, the Air Force restarted the much delayed process of selecting a new tanker.

The Navy has one ship supplier, General Dynamics, who asked Congress to order some ships just so they could keep their shipyards working. The saga of producing the new destroyer class has oscillated between Greek tragedy and vaudeville farce until it was cancelled; a similar fate is awaiting the Littoral Combat Ship.

Some will cite sector-specific reasons for this phenomenon, but the fact that it is found in every sector means the reason must be economic and not sector-specific. The reason is simply usury: first companies that take credit in the good years get devoured in the bad years, second banks collects a huge amounts of money paying only a fixed interest then invest it in one monopoly that makes huge profits and ruins the competition (e.g. investment banks creating U.S. Steel with Carnegie as the front man, or Wall Street powering Microsoft with Gates as the front man).

Now everything is a ‘chain’: hotels, restaurants, cinemas, et cetera. In the past all such concerns were wholly owned and usually managed by their owners. They would yield enough profits to sustain a respectable living without the need for expansion or constant growth. The owners did not need credit to facilitate their business and debt was considered a stigma, those were the real middle class and not corporate slaves one paycheck from insolvency. The small business of today is a fake masquerading as the real thing, like “homeowners” with negative equities.

Second, family owned companies have become an endangered species. Small manufacturers fold, relocate or are bought by those with access to financing. Commercial companies either fold, inflate themselves by debt, franchising, et cetera and then go public or get bought out by private investors, like the odious Warren Buffett who levered his insurance companies and bought out the best run family companies; apart from this basic strategy he has no other profitable venture, losing money in silver and derivatives, his latest call to “Buy American” will be his swan song.

When people sell out and take the cash they are faced with a problem: what to do with it? Since 1971 there has been an enormous growth in the financial sector, until it became the biggest sector in the equity market at the start of 2007, and of course the most profitable. One of the reasons is the constant inflow of cash to paper securities of all kinds, not just liquidated capital but also the savings and pensions of wage earners.

“The Dutch civic élite of the mid-eighteenth century, including that of The Hague (…), thus held as astonishingly high proportion of their assets in paper securities. This meant that, at least in Holland and Zeeland, the country’s wealthy were to a high degree dependent on the state, and the VOC [colonies], for sustaining their wealth. As De Pinto stressed, bonds, obligations, dividends, shares, and foreign funds were the linchpin of civic wealth and status, the principal pillar of the social system, a situation quite unlike that existing in other European countries. De Pinto was already predicting, in the 1760s, the disaster that would ensue for Dutch society, and its élite, should the state and the VOC encounter major difficulties. For the collapse of Dutch Generality and provincial bonds would effectively mean the destruction of regent, and much other élite, civic wealth.”

-Israel, The Dutch Republic, p.1007. [my emphasis]

The equity market has since collapsed; in terms of gold it stands at a fourteen years low. People who invested their money in so-called ‘emerging markets’ made big losses on equity decline and currency exchange. People who put their lifesavings in Icelandic banks or “guaranteed” Lehman Brothers bonds lost substantially. Every pension fund, private and public, is in crisis as their combined assets falls short of their combined liabilities due to huge losses this year alone.

“But, in order to keep up their credit, the Board of XVII [of the VOC] continued to pay large dividends out of capital, with the inevitable result that the Company got into debt and had to apply for help to the State. The English war completed its ruin. In June, 1783, the Estates of Holland appointed a Commission to examine into the affairs of the Company. Too many people in Holland had invested their money in it, and the Indian trade was too important, for an actual collapse of the Company to be permitted [i.e. too big to fail]. Accordingly an advance of 8,000,000 florins was made to the directors, with a guarantee for 38,000,000 of debt [i.e. a government bailout]. But things went from bad to worse. In 1790 the indebtedness of the Company amounted to 85,000,000 florins.”

History of Holland By George Edmundson, Chapter XXVI. [my additions]

Third, usury corrupts the law, the ethics and the morals of the people. A society needs at least two of those three to survive, usury destroy them all. As I explained above usury is basically an unfair practice. Those who lend against interest must make sure that the government will not annual their contracts if there is a poplar outcry against usury, as used to happen regularly in ancient times.

Usury will also create great wealth with very little intrinsic capital or need for labour, this means that the big lenders are not obliged to anyone or held back by mutual connections. For example the big landowners of the feudal time had mutual obligation with their tenants, there was a social structure supporting them and they existed according to the rules of that structure.

The Earl of Warwick, called the kingmaker, was not influential in the war between the house of York and the house of Lancaster during the fifteenth century because he had vast amounts of gold; most probably he never had any great amounts of cash. Warwick had agricultural land with people who lived on it and worked it; they also fought with Warwick as part of their obligations. By the time of Henry VIII that social structure was gone, the nobles had no power and the king was an absolute ruler.

Usury on the other hand produces vast amounts of income without any social obligation or structures to underpin it. This wealth is used according to the wishes of the individual who has it without any social constraint; the gold coin will then buy anything, even honour and virtue-two words that have lost meaning in this age.

Fourth, there is a need for discrepancy in wealth and income in society to enable social circulation for the benefit of the whole. Like water and air streams that circulate from the tropics to the poles driving the climate cycle and enabling life to flourish. This discrepancy must satisfy two conditions: it must be within limits and it must circulate its human composition.

Many have written on the futility of making everyone alike and how such social systems breakdown, but that is only one side of the limits, i.e. an extremely low discrepancy. The other side is an extremely high discrepancy when most of the wealth is concentrated in the top. The concentration of wealth has now entered into the most dangerous levels. Wealth is today concentrated at the top at higher levels that just prior to the depression of the thirties that swept the world and ushered global war.

In a healthy society there is a constant convection, with people rising upward while others descending downward. Although sometimes the wealthy will end up in the poorhouse and the poor will reach the top, most movement will be gradual and intergenerational. Usury cuts this circulation at the top; the rich get richer and everyone else get poorer. The only paths open to riches are the most base and frivolous, e.g. entertainment and sport.

Sometimes the state tries to hold the different social stratums from sinking, this would be like the roof trying to hold the walls upright. The state soon starts dropping those at the bottom of the welfare ladder. We see nowadays how the middle class who voted right-wing governments in the eighties to dismantle the welfare state, that supported the poorest, complain about the destruction of the middle class and demand that the state do “something” about it.

In reality the middle class has been surviving on welfare for the last thirty years, not only indirect state welfare, state higher education for example, but also corporate welfare. The latter is an invisible form of welfare, but it is just as much welfare as the games organised by rich Roman Senators at the end of the Roman Republic. Let me give one example: a large number of middle class people work for magazines that are completely financed by corporations, as opposed to readers; they can thus partake in a lifestyle beyond their means. Fashion, cars, computers, et cetera are all covered by a multitude of magazines and television programs. Considerable money is spent on a press junkets, influential bloggers are flown in private jets to preview upcoming movies, et cetera, et cetera.

All the brightest and smartest middle class people are either tied to the state sector or the corporate welfare sector, effectively binding them to the status quo. As the current crisis deepens they also will be dropped, no danger will come from them now. All social activities that depend on corporate sponsoring will greatly contract in the coming years, while the state sector will further decline in quality and quantity.

Fifth, the land in question is agricultural land. Every economy is built on agriculture, whether it is dominated by commerce or industry people have to have breakfast after waking up and supper before going to sleep. Those who try to argue away the Biblical injunction against usury as a relic from an agrarian past should make a choice: either breakfast or usury. Usury’s destruction of small farmers is beyond dispute, as the local farming sector declines food is imported from less developed areas and the populace are kept quite with bread handouts.

This has happened many times in history: Ancient Greece was dependent on grain shipments from the Black Sea area, ancient Rome on Egyptian grain, North Italy on grain from the south, et cetera. Modern Western agriculture might appear sufficient, even dumping produce in third-world markets, but in reality it is highly dependent on shipments of oil from outside the West. The Green Revolution has succeeded in transforming agriculture into a profitable business at the cost of ruining farmers. Without oil agriculture in the West would not survive a week, there is no longer a vibrant countryside or a rural society in the West there is only agribusiness.

Modern agribusiness is also highly dependent on the financial sector, like all business, making the food supply vulnerable to financial disruption, this must be added to disruption due to the weather, that despite all the technology is still unconquered. One result of this is the decline in food stores, in an effort to maximise profits, from months to weeks; worldwide grain stores would only last weeks in case of a major disruption.

The modern agriculture potential for catastrophic decline has already been demonstrated in Cuba. When the Soviet Union stopped its oil shipments to Cuba the latter’s agriculture collapsed. The West should have learned the lesson of that event and proclaimed a worldwide agricultural emergency, instead they used it to deride the regime in Cuba purely for ideological reasons.

Cheap food in the West is the modern equivalent of Roman grain dole. Instead of handing out the grain directly an environment is created in which food is cheaply produced. This is done with subsidies, tariffs, et cetera. Romans who lived on bread suffered poor health, so does their modern equivalent living on starch, fat and refined sugar.

People living in the West think they are immune from hunger. Such a thing, they believe, could only happen in backward countries in Africa. They are deeply mistaken; agricultural production in the West is falling into an abyss, once it hits the bottom people will wake up and discover the truth; then there will be no breakfast, only usury.

Despite modern technology, government subsidies and protective tariffs farmers in England are committing suicide just like the poor farmers of India. Disappearing farmers are like disappearing bees: omens of famine.

Sixth, Walter Bagehot & I completely agree, you can read Bagehot’s explanation of this process and my comments in Bagehot on Money (see bottom for Ezra Pound’s summation).

This phenomenon is now aggravated by the fact that every facet of society has been commercialised and turned into a product peddled to the consumer: art, religion, history, science, et cetera. When every aspect of society loses its quality and become just another “dull” product to be consumed, then this degradation of the environment must reflect on society itself. Now we can see how usury corrupts society, we have a whole generation brought up in a world where everything is for sale.

Seventh, a man’s estate is land rented to tenant farmers yielding him a fixed income. Why does usury ruin people on fixed incomes? To understand this let us look at Spain at exactly the time of Bacon when Cervantes was writing about a man living on a fixed income driven completely mad to the point he imagined himself a knight errant, I am talking of course about Don Quixote. In Spain what ruined the gentry was the rivers of gold pouring from the Americas, that money concentrated in the hands of the few created extravagance and inflation that ruined the Spanish national economy.

The men of estates would mortgage some land and go to the capital to obtain a court position and get ahead in life. In the capital they would have to mortgage more lands to keep up their social standing. Unlike compounding interest agricultural prices fluctuate, one bad season and the men of estates find themselves in too much debt. To get out of debt these “gentlemen” will do anything, regardless of honour. Shakespeare ridiculed such men in many of his plays. The character Falstaff is the most famous example of a ruined gentleman gambling and robbing without shame.

We see a similar process, today, with young people from middle class background; they finance their college education through debt to get ahead in the world. After graduating they either fail to find a job with high salary or even fail to find a job that demands their qualification. They try to keep up by getting into more debt, mortgage and credit cards, after which no reality show is too humiliating and no job is too demeaning from personal assistant to prostitute.

The art of Bacon’s time, from Cervantes to the melancholy songs of John Dowland, reflected the plight of those on fixed income. Next time you view a production of The Taming of the Shrew notice that Petruccio is an impoverished countryside gentleman and Katherina is the daughter of a rich city merchant, that is the central point of the whole play. Sadly the modern novel has utterly failed to rise above solipsistic drivel and pointless historical accuracy.

Religion also reflected what was happening in society, the simplicity of the Puritans was a reaction against the extravagance of the big money dominated society. The demise of the consumer driven economy will produce a new generation of frugal puritans.

Usury concentrates money in the hands of the few producing extravagance and inflation to the ruin of men living on fixed income. Today we see exactly the same process: those living on fixed income are slowly ruined, money concentrated in the hands of the few, extravagance beyond limit, et cetera.

Let me put this point in more grim and current terms: usury is the ruin of widows, orphans and old-age pensioners all of whom live on fixed income. The damage done is psychological as well as financial. Children living under such stress run the risk of two extremes: either growing up to be spendthrifts who throw their money on luxury without regard of the future or misers who horde enough money to pay the debts of a small country.

The negatives of usury cause long-term and terminal damage to the heart of society. The third point alone is enough to severely punish any who would suggest legalising usury; law is like a maiden’s virtue, once lost never regained. These deadly seven are enough, for any disinterested thinker, to reject usury. Bacon on the other hand only lists them to pre-empt any attack, the speaker’s trick of listing the ills of his subject before brushing them aside. After listing the negatives he goes on to list the positives:

“On the other side, the commodities of usury are, first, that howsoever usury in some respect hindereth merchandizing, yet in some other it advanceth it; for it is certain that the greatest part of trade is driven by young merchants, upon borrowing at interest; so as if the usurer either call in, or keep back, his money, there will ensue, presently, a great stand of trade. The second is, that were it not for this easy borrowing upon interest, men’s necessities would draw upon them a most sudden undoing; in that they would be forced to sell their means (be it lands or goods) far under foot; and so, whereas usury doth but gnaw upon them, bad markets would swallow them quite up. As for mortgaging or pawning, it will little mend the matter: for either men will not take pawns without use; or if they do, they will look precisely for the forfeiture. I remember a cruel moneyed man in the country, that would say, The devil take this usury, it keeps us from forfeitures, of mortgages and bonds. The third and last is, that it is a vanity to conceive, that there would be ordinary borrowing without profit; and it is impossible to conceive, the number of inconveniences that will ensue, if borrowing be cramped. Therefore to speak of the abolishing of usury is idle. All states have ever had it, in one kind or rate, or other. So as that opinion must be sent to Utopia.”

-Essays of Francis Bacon, Of Usury

He can think of only four “commodities” for usury, lets see if they compensate in quality what they lack in quantity:

  • 1. It advanceth merchandizing.
  • 2. It provides easy borrowing.
  • 3. Without it borrowing would be cramped.
  • 4. There has always been usury, so there should always be usury.

First, is this the same merchandising that left fewer and poorer merchants? Credit fuels a boom and a bust always follows it. Whatever advantage is gained in the short term is not worth the long-term damage. In the US any advancement for industry from usury is currently beside the point, because the industrial base has been ruined and gutted. Such ‘advancement’ is akin to a man hooked on speed working fourteen hours a day, six days a week only to die from a massive heart attack at the age of forty.

Second, this reminds me of the joke: How is your wife? Compared to what! The whole discussion is about the advantages and disadvantages of this borrowing method, one cannot cite the fact that it is a ‘borrowing method’ as an advantage!

Wealth liquidation and pawning are not the only methods to obtain cash: there is mutual credit, non-interest credit, et cetera. One pawning his valuables might not be able to repay at time and thus lose the difference, but then the loss would stop there and not be compounded continuously until payment becomes impossible.

Bacon seems blind to the historically documented cruelty of moneylenders-documented in history, art and religious texts-and sees cruelty in the competitors of big money usury. Profiting from mortgages and bonds by countryside “moneyed” men is cruel, while London-based oligarchy profiting from usury becomes a public service. No wonder the career of this servant of oligarchy ended in disgrace, prosecuted by a countryside-based parliament.

Third, this seems to me the second advantage in the negative, nonetheless I will let it pass as a third advantage of usury. As the current financial crisis enfolds many commentators have remarked that debt is like a drug, the more one takes it the more one becomes dependent on it. A person might be dependent on his morning coffee or late night sherry, but that is an acquired dependency. Dependence on usury is also an acquired need, which increases with usage.

Let us imagine a world without usury, will be there a great need for it? The answer is that there would be hardly a need for usury in such a world. Let us imagine how such a world would function: The auto industry in the US in the good times should have at least fourteen companies each producing a little more than a million car of one model (a million car is the minimum economical run). There would be less engine manufacturers, because they must produce more engines to be profitable, but they would be separate companies and not consolidated vertically with car builders.

When the economy slums then those with the olds plants, the oldest models, the least efficient production methods will go bankrupt, three auto and at least one engine manufacturer will close doors; the rest will lower utilisation rates. When the economy picks up those still operating will ramp up production but they will not be able to finance further expansion. Without credit the market will provide an opportunity for those with capital to invest, new companies will be set up with new models and more efficient production methods. Capital will flow into the production sector instead of financing industrial expansion via the financial sector. Profits will flow to the investors directly without the banks taking their cut.

In reality usury has consolidated and concentrated the auto sector to just two companies: GM & Ford. Both have lost billions and now teeter on the brink of bankruptcy (they are already bankrupt).

Fourth, there has always been murder, should society, the state and the law admit it and let people kill each other. Sure merchants will always borrow money and pay interest, but only between themselves and payment will only be extracted by an honour system not by the force of organised society, i.e. the bailiff.

Prohibiting usury is not the same as abolishing it completely from the face of the earth. Those who want to legalise prostitution make a similar mistake. Society must strive to create conditions where negative practices are suppressed by social custom and individual prohibition. Society might fail and find itself in conditions where negative practices are widespread. At such points the people must not give up and accept the status quo as inevitable, because if they do they will only invite more corruption.

In the second half of the eighteenth century it seemed that society in Britain was thoroughly corrupted, but within fifty years the Victorian age began with a complete moral rehabilitation. When society, on the other hand, accepted the post-war corruption of the twenties it started a slide that has ended in the gutter of humanity. What is truly Utopian is to think that by admitting one vice, all vices will disappear; history has proven many times that admitting one vice only invites ten other to take its place.

Bacon wants to send those who oppose usury to Utopia, such is the argument of this great ‘thinker’ against those who oppose the rule of big money: to send them to exile in nowhere! This is the last argument of the tyrant, physical elimination of all who oppose him, coached in terms of the ‘thinker’.

I would like to add few words on Utopia: Thomas More (1478-1535) was the first layman not a member of the higher nobility to be appointed Lord Chancellor. He was prosecuted and beheaded, unlike Bacon & Oldenbarneveldt it was not base corruption but because he refused to let the king, Henry VIII, rule his conscience like he ruled his body. Thomas More wrote Utopia in Latin, it tells the story of a traveller who visits an island called Utopia, he then returns to Europe and tells about its ideally constituted society, the traveller’s opinion of the governments of his day is:

“I can have no other notion of all the other governments that I see or know, than that they are a conspiracy of the rich, who on pretence of managing the public only pursue their private ends, and devise all the ways and arts they can find out.”


Sadly just a hundred years after Thomas More held the position of Lord Chancellor Bacon took his place. Bacon epitomized the government criticized in Utopia. Twenty years after Bacon revolution erupted and the king was beheaded.

After listing these anaemic advantages he does not make a fair balance because that would have meant rejecting usury and the whole point of this essay is to legitimise usury. In the scales of usury Bacon throws a primitive scheme for a central bank to balance the seven deadly disadvantages, disingenuously forgetting that death is incurable and usury is the death of a robust economy. I will not quote and argue his scheme because the passage of time has done our work for us, let us see what has happened since the time of Bacon:

In 1694 the Governor and Company of the Bank of England was incorporated. In 1844 the Bank of England by an act of parliament (Peel’s Act of 1844) was recognized as a de facto central bank. In 1873 Walter Bagehot wrote Lombard Street: A Description of the Money Market in which he gives rules and recommendations for the setting up of a formal central bank. In 1913 the Federal Reserve System was set up in the US as a central bank, mostly following the blueprint of Bagehot.

Almost a hundred years later the end result is clear: since the setting up of the Federal Reserve the dollar has lost 97.7% of its value (gold from $20.67/oz. to $900/oz.), the national debt has exploded, the industrial base have been gutted, the countryside depopulated, the professional class grinded down. Today we are told the whole economy is depended on the financial sector functioning, that without credit (i.e. debt) nothing can be done; the banks it seems have imitated the creature in the film Alien which attached itself to the victim in such a way that its removal would result in the death of its victim. The record of central banking speaks for itself.

The passage of time has had another effect; it has brought back the golden age of big money oligarchy on a worldwide scale. Billionaires now dominate the world. They are even openly taking over the government, as happened in: Italy, Bolivia, Thailand, and Lebanon. In Britain they sit in the House of Lords and in Russia they are appointed province governors. Small and medium size capitalist have completely vanished, replaced by bank-owned zombies who are nothing but glorified managers.

The train of the West has long since left the station of industrial capitalism and arrived at the final destination of finance capitalism, but instead of gently stopping it thundered through and hit the concrete barriers head-on at full speed. People fail to recognise the difference between big land & big industry oligarchy on the one hand and big money oligarchy on the other, but there is a difference and it is akin to the difference between a benign and a malignant tumour.

With usury has no man a good house
made of stone, no paradise on his church wall
With usury the stone cutter is kept from his stone
the weaver is kept from his loom by usura
Wool does not come into market
the peasant does not eat his own grain
the girl’s needle goes blunt in her hand
The looms are hushed one after another
ten thousand after ten thousand
Duccio was not by usura
Nor was ‘La Calunnia’ painted.
Neither Ambrogio Praedis nor Angelico
had their skill by usura
Nor St Trophime its cloisters;
Nor St Hilaire its proportion.
Usury rusts the man and his chisel
It destroys the craftsman, destroying craft;
Azure breaks short the young man’s courting
Usury brings age into youth; it lies between the bride
and the bridegroom
Usury is against Nature’s increase.

-Ezra Pound, Canto LI

Why Celebrity Chefs Herald The End Of Empire

30 Mar

“And this again is typifying the end of an empire. Where things were so great, we have this last oomph of momentum that we used to be great, and we felt great, and we don’t feel it anymore. So everyone is out searching for it. Well, maybe it’s in the best food, or the best clothes, or the best music, or the best movies, or a reality TV show, or another magazine. But you can never get enough of what you don’t need. What you need is a strong moral conviction that is pervasive throughout the society and integrity reigns.”

Have you ever contemplated why the West has witnessed an increasing obsession with food, cooking, and celebrity chefs?

Or why we are obsessed with sports, and why sportsmen who once held regular jobs through the week, are now celebrities earning millions?

A multi award-winning new documentary explores the end of empires, the signs of those times, and how it has come to be that the modern day Four Horsemen again ride roughshod over the people who can least afford it.

Your humble blogger questions the balance of emphasis given to causal factors (eg, neo-classical economics), and proposed solutions (eg, gold-backed currency).

Those reservations aside, this is verily a “must watch” documentary:

8:00 – Common features of every Age of Decadence

“An undisciplined, over-extended military. The conspicuous display of wealth. A massive disparity between rich and poor. A desire to live off a bloated State. And an obsession with sex. But perhaps the most notorious trait of all is the debasement of the currency.”

10:00 – Sports stars paid like Roman charioteers

“Just as our sports stars today earn vast sums, so too did Roman charioteers. In the 2nd century, one by the name of Gaius Apucleius Diocles amassed a fortune of 35 million sesterces in prize money, equivalent to several billion dollars today.”

11:00 – Chefs disproportionately hallowed as empires decline

“Strangely perhaps, there’s another profession that is disproportionately hallowed as an empire declines. The Romans, the Ottomans, and the Spanish all made celebrities of their chefs.”


And the hunger to rediscover that feeling of greatness goes on; a special feature from BBC News magazine –

Chocolate: The rise of the cocoa purists

Why Do We Trust People Who Don’t Even Trust Each Other?

6 Mar


Have you ever stopped to reflect on the fact that powerful people need our trust, to accomplish their purposes?

Politicians, and elite bankers, both spring to mind.

Last week I critiqued a speech by one of the world’s most powerful central bankers titled “Rebuilding Trust In Global Banking”.  A primary concern for central bankers, is to rebuild public con-fidence in them, and in their system:

The real economy relies on the financial system. And the financial system depends on trust.

most fundamentally, there has been a significant loss of trust by the general public in the financial system.

Without our continued trust – or at the least, our meek complicity – people who do the wrong thing, who benefit themselves at the expense of harming others, could not continue getting away with doing the things they do.

So, have you ever stopped to reflect on why we continue to trust people, who clearly do not even trust each other?

From the Daily Bell (emphasis added):

The New Era In Gold Repatriation Will Affect Everything

Mexico to audit its gold holdings at the Bank of England … The Mexican Government Audit Office has issued an official statement, criticizing the Bank of Mexico for not auditing the gold it has supposedly bought and stored at the Bank of England. The auditors ask the Central Bank of Mexico to “make a physical inspection with the counterparty that has the gold under its custody, in order to be able to verify and validate its physical wholeness and compliance with the terms and conditions of dealing with this asset.” – Voice of Russia

The move toward auditing gold holdings is getting more pronounced as we can see from this demand by Mexico in the above article excerpt. German officials have asked the US government for gold repatriation and so has Venezuela. Now it’s Mexico’s turn to start the process.

The old era in which central banking trust was ingrained in the system is gone now – and the ramifications are many even though they have not yet been felt. Central banks and bankers rely on joint programs and coordinated currency approaches. Without trust, strategies are difficult to create and programs are hard to implement.

This is not a hypothetical observation. As gold prices have moved up and Western currencies have looked increasingly subject to a currency competition, the pressure on politicians to assure gold reserves has increased. Couple this with the overseas storage of much gold reserves, and the situation becomes combustible.

In the case of Mexico, questions have been raised about the country’s off-shore storage of precious metals and its ability to take possession if necessary. These concerns have been magnified by Germany’s experience. Germany’s Bundesbank intends to repatriate a large portion of gold reserves abroad and by 2020 seeks to have at least 50 percent of its total gold reserves at home.

This amount includes 300 tons from the Federal Reserve – which the US Fed may or may not have available. It is unclear, as the Fed refused to submit to an audit of Germany’s gold.

Bill Gross, the Chief Investment Officer of PIMCO (the world’s largest bond fund) has recently said that “Central banks distrust each other”. The pending audit of the Mexican gold reserves is not a singular case of actions that show a high level of mutual distrust among central banks. The latest move of the Bundesbank, which demanded the repatriation of its gold holding from Bank of New York, Bank of England and Banque de France, is another sign of distrust in the world’s financial system.

Clearly, the elite of the global banking system do not even trust each other.

But you are not supposed to notice that.

Their aim is to restore public con-fidence in them, and the system that supports them in the manner to which they have become accustomed.

How are they attempting to do this?


Comforting and reassuring news announcements. Of new financial regulations (which won’t change bankster behaviour). “Strong” banks (which means, bigger profits).  AAA credit ratings (which the GFC proved to be fraudulent, misleading and deceptive). Planned caps on bankers’ bonuses (which won’t happen, or, will have as many holes as a kitchen colander). Financial transaction “Tobin” taxes (which will raise slush funds for politicians, but not change bankster behaviour). And more.

The choice is yours.

To believe.

Or not.

Just remember the old wisdom, that “actions speak louder than words”:

It is long past time to replace the bankers, and their global banking system.

The only way I can see of doing that, is by making every one of us our own central banker.

A History Of The Legal Case Against Usury

24 Feb

Schistosoma mansoni is an endoparasite that lives in human blood vessels.

Regular readers will know that I am an ardent opponent of the practice of usury.

In the classical meaning of the word.

Indeed, it is my view that the practice of usury is The Key to the power of the money-lenders.

While many others have argued that the key to their power is their exclusive right to create money (debt) whenever they make a loan, I tend to disagree.

In the absence of the legal right to charge interest (usury) on those loans, the money-lenders’ power would be effectively nobbled.

They could be replaced by full public banking. Or by alternate, free currency solutions like my own.

This key issue of the charging of interest on “money” lending, its origins, and its legal history, is awash with myths, theories, distortions, and outright falsehoods.

There are many eloquent and brilliant advocates for the alleged “need” for the charging (and offering) of a rate of usury on money. The theory of the so-called “time-value of money” is commonly cited in justification of what is, in truth, plain and simple parasitism –

Parasitism is a non-mutual relationship between organisms of different species where one organism, the parasite, benefits at the expense of the other, the host.

First used in English 1539, the word parasite comes from the Medieval French parasite, from the Latin parasitus, the latinisation of the Greek παράσιτος (parasitos), “one who eats at the table of another” and that from παρά (para), “beside, by” + σῖτος (sitos), “wheat”. Coined in English in 1611, the word parasitism comes from the Greek παρά (para) + σιτισμός (sitismos) “feeding, fattening.”

What I hope to do in today’s post is dispel some of the banking industry’s most powerful falsehoods.  That the charging (and offering) of “interest” on money is normal. That, at worst, it is a “necessary evil”.  That it is really something natural, and good, like a law of the universe, and vital to keeping our world turning.

I also hope to encourage readers to STOP using the banksters’ language.

And instead, to “call each thing by its right name.”

The original word used for the charging of interest on money … is USURY.

Usury does not mean charging “excessive” rates of interest.

The etymology of the word “usury” shows that it originally meant the charging of any interest, at all:

usury (n.)

c.1300, from Medieval Latin usuria, from Latin usura “usury, interest,” from usus, from stem of uti (see use (v.)). Originally the practice of lending money at interest, later, at excessive rates of interest.

How very convenient for the modern day money-lenders, that we have changed our language over the centuries.

No doubt with more than a little help from our “friends”.

In researching for more information on the origins of the word “usury”, recently I happened across an article published in the American Bar Association Journal, Volume 51, September 1965. It was written by a J.L. Bernstein, NYU Law School graduate and editor-in-chief of the New York State Bar journal. Following are some extended excerpts. It really is fascinating stuff.

But if you are tempted to leave before finishing, please do me one favour. Skip to the end, and read my closing observations concerning ancient Sumeria, the true origin of debt jubilees and New Year’s Eve celebrations, and the deeper meaning behind the Biblical story of Abraham.

Now, to the history of the legal case against usury (my bold emphasis added):

Background of a Gray Area in Law: The Checkered Career of Usury

Tracing the ancient and medieval history and development of usury, Mr Bernstein shows that at first it was any charge for the use of property, but later became only the charge of excessive interest on money. With the advent of our present consumer society, various procedures and methods of conditional selling have enabled what might otherwise be usury to escape illegality. It is time, the author suggests, to delineate what is fact and what is fiction in this shadowy world.

A CASE MAY BE MADE for usury as one of the oldest professions of man, yet the complexities of modern economic life “make fundamental a review” of the problem, as the late C.S. Lewis, Oxford and Cambridge don, scholar and theologian pointed out. The checkered career of usury cum interest is too long to detail here, but this mixed question of theology and law has always been a gray area for the courts – a veritable hodgepodge of legal decision, as this Journal once put it, with “no clearcut rationale”.

Even an elementary statement in a leading New Jersey case is questionable. The Supreme Court said: “Although the common law did not prohibit usurious exactions, our statutes have done so since 1738.” This view of the common law is challenged in Mark Ord’s authoritative Essay on the Law of Usury (1809), which states: “Usury in its strict and legal sense was always considered unlawful.” Likewise, Robert Buckley Comyn says: “Usury was in England an object of hatred and legal animadversion at least as early as the time of Alfred; and Glanville, Fleta, and Bracton bear ample testimony to the abhorrence in which it was held.”

All Interest Once Was Usury

At common law a usurious contract could not be enforced, and usury appears to have been an indictable offense, the punishment for it being fines and imprisonment. The fact is that from the earliest recorded times until the later Middle Ages even interest was forbidden by both canon and civil law, for interest then was synonymous with usury. Indeed, interest had no significant usage in English law until the statute of 21 Jac. 1, c. 17 (1624), although it had been employed in commerce, having been adapted from the Justinian Code of the Roman Empire.

The Lombard merchants, the principal moneylenders of medieval times, had made it a practice to charge a penalty on default, and the custom spread. Thus interest was not a charge for the use of money, but an exaction to make the creditor “whole”. In time it came to mean permissible usury, but it is noteworthy that neither the Old nor the New Testament recognizes this concept, except for the new Catholic edition of the Holy Bible (1954) which substitutes interest for usury and banker for exchanger.

Comyn describes the gradual transformation: “Usury was an offense which having first become odious from religious prejudices, at length became the object of political consideration, and parliamentary restraint. And as at first the taking of any profit upon money was denominated usury, so afterwards, when such profit was authorized by law, the profit was termed interest, and the illegal excess alone retained the odious name.” Thus usury began as malum in se, but at least from the time of Charlemagne in the ninth century (he considered all profit as “filthy lucre”), the secular arm had sought to reinforce the spiritual, making it also malum prohibitum. Speaking of the earliest English statutes, those of Henry VII (1487-1495), Coke declared that all usury was “damned and prohibited”. According to an ancient book of the Exchequer, entitled Magister et Tiburiensis, usury was ranked with murder as an offense.

But the general detestation was diminished by 37 Hen. 8, c. 9 (1545) which, while entitled “A Bill Against Usury”, tacitly legalized it to a maximum of 10 per cent per annum. This statute inaugurated the serviceable fiction that usury no longer meant any interest, but only excessive interest. As Ord puts it, this was the first English statute to “give any connivance to the practice of lending at interest”.

The statute still called usury “a thing unlawful”; it was an attempt at moderation, following the lead of the church. Earlier attempts to ban all interest had failed ignobly, but so did this new approach, and by 5 & 6 Edward 6, c. 20 (1552), repeal made interest and usury one and the same again. But this didn’t work, as before, and 13 Eliz. 1, c. 8 (1571) repealed the Edwardian edicts and revived the statute of Henry VIII. In order, 21 Jac. 1, c. 17 (1624); 12 Car. 2, c. 13 (1660); and 12 Anne, c. 16 (1713), toyed mainly with the rates, which went from a maximum of 10, to 8, to 6 and finally to 5 per cent in the statue of Anne of 1713. This is the one followed in this country. But the most common maximum rate of 6 per cent is derived from the Justinian Code.

The statute of 12 Anne, which served as a common model here, was abrogated 110 years ago in England by 17 & 18 Vict., c. 90 (1854). Therefore, the mother country has no general usury law today and interest of 48 per cent may be quite legal – even more, if the courts can be convinced. As H. Shields Rose puts it in his book, The Churches and Usury (1908), this was “the final capitulation of the state … as regards the maintenance of a legal maximum rate of interest in England”.

Note:  The abrogation of this 183-year-old English law placing limits on the charging of interest, came just ten years after the privately-owned Bank of England was granted exclusive power to issue the nation’s banknotes (Bank Charter Act, 1844). Coincidence? I think not.

The etymology of usury is from the Latin words usa and aera, meaning “the use of money”. But both by ecclesiastical and civil law it was always held that usury could exist in nonpecuniary transactions as well. Many state statutes, following the language of 12 Anne, speak generally of “money, wares, merchandise, goods and chattels”. The Bible is more inclusive: “Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury.”

But courts that maintain that usury was not prohibited by the common law are on firmer ground if they mean thereby the common law as it was interpreted by the colonial judges here. Blackstone says that the common law of England consists of “That ancient collection of unwritten maxims and customs …”. Our early courts seemed to regard English authority on the subject so dubious, indifferent or contradictory that, without legislative enactment, anything by way of usury was legal. This led to such abuses that the colonists petitioned for action, and general usury statutes were adopted everywhere.

It is useless to deny that confusion abounded in the common law, for usury was no less a gray area and a hodgepodge of thinking then. Coke, for example, said that: “All usury is not only against the law of God [but] the laws of the realm, and against the law of nature.” But on another occasion he avers that what was actually forbidden was “biting usury”, i.e., unconscionable charges…

Note: It is your humble blogger’s firm opinion that, in a technological age where 97% of all “money” is no more than electronic binary code, mere digital bookkeeping entries, created at the click of a bankers’ mouse in the form of new debt, there is no question that ALL usury charges are unconscionable.

Genesis of the Problem Is of Ancient Origin

But if the common law is no less a puzzle than our decisional law, the trouble goes far back – to Holy Writ itself. Until the later Middle Ages all interest was interdicted, for it was abhorrent that money – “barren” as Aristotle and the inspired writers of the early Church had taught – should increase unnaturally while lying fallow. That a lender should profit in his own idleness and that a borrower should be charged even though he may have lost money in the transaction, both were intolerable. Indeed, the worst form of usury in medieval times is considered a most respectable practice in our own. This was the custom of paying interest from the day of the loan. Banks today not only pay interest “from the date of deposit”, but even from before, so that money deposited by the fifteenth of a month will draw interest from the first.

Note how the author first refers to “paying interest from the day of the loan”, then immediately switches gears to speak of banks paying interest “from the day of deposit”? This is a classic and oh so subtle mind trick, commonly used in justification of the practice of charging interest on lending. How so? By redirecting the focus of the argument on the fact that banks pay interest as well.  It is a clever distraction, because what is overlooked, is that banks never pay more interest than they charge. As a so-called “intermediary” in the payments system of the economy, the banks achieve the easiest of profits.  Not just because they charge more interest than they pay, which in itself would be a form of parasitism. But because they are not mere intermediaries – banks are able to create money (debt), and charge interest on it.  Contrary to popular belief, banks do not simply lend out money deposited by other customers. See The World’s Most Immoral Institution Tells You How

We have come a long way in our view of the fertility of money. But, oddly, the statute of James I, which gave the word interest its first significance in Anglo-Saxon law, contained the proviso that “… no words in this statute contained shall be construed or expounded to allow a practice [of charging interest] in point of religion or conscience”. But what did morality actually hold? That is the most vexatious of all inquiries.

The Fifteenth Psalm is clear without cavil: “Lord, who shall abide in thy tabernacle? Who shall dwell in thy holy hill … He that putteth not out his money to usury…”. Throughout the Bible the angry prophets denounce what the early theologians called “horrible and damnable sinne”. But there are also loopholes born of contradiction, and the frustrations of the moralists came to be visited upon the jurists.

Although the quoted passage from Deuteronomy forbids all usury, the next verse is most tantalizing: “Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury…”. What does this mean?

Indeed. There is much that can be said, and much evidence raised, in answer to that question.  But we will leave that particular controversy for another time.

From Biblical times until the later Middle Ages, a moneylender was simply a usurer, and a banker an exchanger. The distinction of moderate usury, called interest, received no recognition in the Church until after the Reformation. In a sense, therefore, the liberalization of religious thought also marked the turn to the “Money Society”, in which the medium of exchange achieved the status of a commodity of intrinsic value and became the lifeblood of commerce. The burgeoning materialism of the age, trading on the discovery of the New World, was in a mood no longer to tolerate philosophical and religious thought treating money as “infertile” and profit from it as “unnatural”, since it was not endowed by God or nature “with genital and procreative faculties” in the words of St. Basil (fourth century). In the end, it was the lawgiver, Justinian, who prevailed, rather than the philosophers and theologians.

And there you have it. What has ultimately prevailed with respect to usury, is the code of man. The Corpus Juris Civilis of the “lawgiver”, Justinian, a ruler of the late Roman Empire (c. 529AD), are the foundational documents of the Western legal tradition. It is ancient Roman law that serves as legal justification for the resurrected, and globally-dominating practice of usury in our day.

Theory of Moderate Usury or Interest Is Approved

This same logic, that there is nothing immoral about usury, was advanced in Parliament in the last century during the debates on the proposed abolition of the general usury statute of 12 Anne. “God did not so hate it, that he utterly forbade it”, contended one member; while another stated: “He could not have desired that the ban against all usury should be of moral and universal application”, for the Bible did not so clearly provide. An economist with the United States Treasury Department even advanced the view that usury could be traced “to the Creator Himself”, who first caused “all things to grow and increase”.

Nevertheless, that the total prohibition of all interest was at the center of canonist doctrine until the later Middle Ages is clear. “Not until sixteen hundred years after Christ did interest find any defenders”, proclaimed Roger Fenton. Then it was the Church which led the way to its acceptance, and the State which followed. Two principal reasons may be advanced for it: (1) the growing power of economic forces which chafed under enforced unselfishness and (2) the equivocations of Scriptures which encouraged the casuistries of “permissible instances”. Ultimately, perhaps, it was a hopeless struggle against human cupidity, or maybe only against “progress” for it is unlikely that, no matter what position it assumed, the Church could have stemmed the tide that was running.

Assailed on either side by those who, like St. Basil, called usury “the last pitch of inhumanity” and those who found it out of harmony with the facts of life, the Church sought to steer a middle course. Since its primary object has always been to protect the weak against the economically strong, it saw justifications for exceptions in commercial transactions between sophisticated parties.

“Sophisticated” parties? Now where have we heard that justification used more recently?

Moreover, on the allegation that, after 16 centuries, the Church succumbed to the pressures of economic greed and “progress”, it behooves one to point out that, in doing so, its ecclesiastical leaders and learned theologians all managed to lose sight of the simplest teachings of their own namesake, The Christ: 

“No one can serve two masters: Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.”

It is this blogger’s view that the vast, unfathomable wealth of “the Church” – the sheer obscenity of which induced a sense of nausea on his sole tour of the Vatican – stands as ample testimony to the identity of which “master” it has long chosen to serve.

“Interest”, laconically comments Roger Fenton, “is the brat of commerce.” By what Mark Twain would have called “theological gymnastics” the Church has been charged with acquiescing in contrivances and subterfuges; and its capitulation to usury – limited or otherwise – has been held to constitute a virtual abdication of the precept against avarice, a former “venal” sin.

The Church first approved the idea of interest as it originated in the Justinian Code, which implied a justified penalty on default, although it is likely that this in itself was a subterfuge to avoid the ban against usury. But theological approval of the dammum emergens, for actual loss incurred, was not satisfactory to business or its lawyers, who argued also for the lucrum cessans, certain gain lost. This the Church resisted for at least a century more, for it was not ready to concede that money, the love of which is “the root of all evil” in the Bible, was fertile. But in time it acceded to this, provided that the money was lent for an initial gratis period. Thus, technically, the interest was still not for the use of money, but as compensation for its nonreturn on the due date.

This attempt at charity led to an ingenious evasion. The grace period, accepted with high good humor in the market place, became a mere sham. The lenders merely fixed a due date so close that borrowers could not hope to repay by then, following which huge penalties were added. The evasion and the practice survive to this day, and the courts commonly enforce, after default, a rate of charge in excess of that permitted by general usury laws. It persists in “revolving” or “flexible” charge accounts, in which no charge is made if a bill is paid within ten days or so, after which interest (called a “service charge”) of 18 per cent is added.

But the Church never approved of lending to the poor in order to profit from their poverty, nor of such things as “consumer’s loans”, formerly called “consumptive loans”, a rather more descriptive phrase. Indeed, to lend for any but productive purposes or to engage in commerce except as a service to the community was still immoral. In 1515 the Lateran Council pronounced: “This is the proper interpretation of usury, when gain is sought to be acquired from the use of a thing not in itself fruitful, without labor, expense or risk, on the part of the lender.” The element of risk loomed larger in importance, but the Church having made distinctions, it was not long before the law of England followed suit. Within thirty years, in 1545, came 37 Hen. 8, the first statute to legalize moderate usury.

Today it is commonly argued that the charging of interest on loans simply represents a fair and reasonable “rate of return” to moneylenders, to compensate them for their “risk” in making the loan.

This is self-serving bunkum.

As we have seen previously, there is no labor or “risk” involved in the modern process of “money” creation and lending. It is simply typed into existence, as a new digital bookkeeping entry. And even when the moneylenders take their money debt-creation schemes to stratospheric levels, blowing asset bubbles that lead to the total insolvency not just of millions of common people, but of their own institutions – (eg) the predatory mortgage lending practices in the USA preceding the GFC – the government conspires with the bankers to make them “whole” again. In the modern era, it is perfectly clear and beyond refutation that the lending of money by the banking system is risk-free … for the bankers.

In closing this post on usury, there is one more piece of research I’d like to share.

Biblically-literate readers will be familiar with the story of Abraham. As the man chosen by God to be “the father of many nations”, he is a central figure in the history of three powerful world faiths and their billions of adherents. Indeed, they are named after him – the “Abrahamic” faiths of Christianity, Islam, and Judaism.

In the Genesis 11-12 account of Abraham, we learn that he lived in the region of ancient Sumeria (or Babylonia), in a place called “Ur of the Chaldees”. God told him to get out of Ur, and to go to a land that He would show him.

The Promised Land.

A metaphor for Heaven.

In David Graeber’s masterful work Debt: The First 5,000 Years, we learn a wealth of fascinating, myth-busting information on the true anthropological history of money, exchange, barter, and debt throughout recorded history. It is a “must read” book.

Many of us would be aware that the earliest written records of humankind are the clay tablet (cuneiform) writings from ancient Sumeria. The concept of a debt jubilee now being revived by Professor Steve Keen has its earliest origins in Sumeria/Babylonia, where actual “money” (eg, coins) was very little used; instead, the economy functioned almost entirely on a system of debts and credits, which (like today) were nothing more than bookkeeping entries, written originally on clay balls, later, on clay slates. The phrase “a clean slate”, meaning to have a fresh start or new beginning, has its origins here. New Year’s Eve celebrations also have their origins here – it was not uncommon practice for Sumerian kings to declare all debts annulled, to destroy all the records of debt and so begin with “a clean slate” in the new year; a cause for joyous celebration if ever there was one!


In chapter 7 of Graeber’s book, we also discover the meaning of the word “Ur,” from an early Sumerian dictionary:

ur (HAR): n, liver; spleen; heart; soul; bulk; main body; foundation; loan; obligation; interest; surplus; profit; interest-bearing debt; repayment; slavewoman.

I think there may well be a significance to the story of Abraham and his journey out of Ur to the Land of Promise, that is both far deeper, and far more practical, than most give it credit for.

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