This is what the Catholic internet is good for. There is an interesting topic in the blogosphere lately, that of the Church’s unchanging teaching on usury and how it applies today.

Two interesting posts on the topic come Zippy Catholic and Jay Richards at Crisis Magazine.

I am naturally skeptical of any attempt to change doctrine, especially by clever word tricks. Thus I am naturally inclined to Zippy’s way of thinking about the matter. Yet, unfortunately, I don’t think it is as simple and straightforward as Zippy would have it.

Read both articles as they are both worth the time. A small exceprt from Zippy’s article.

7) I don’t get it. Why is charging interest on a loan always morally wrong?

St. Thomas Aquinas explains that usurious lending involves selling something which does not exist. This is very counterintuitive to people indoctrinated in modernity, and yet obvious once you’ve set aside modern relativism about value. Aquinas compares it to attempting to sell wine and the consumption of the wine as two separate things.

Imagine that Bob lends Harry $100, Harry lends Fred $100, and Fred lends Bob $100. They each spend the money on beer, and charge 10% interest in the form of a deferred fee. The contracts attempt to entitle each of them to an additional $10 – for a total of $30. This $30 worth of new financial entitlements on the books is not connected to anything ontologically real. The 2008 financial crisis was the result of a usurious network of real estate loans and ultimately circular insurance-like schemes which created this kind of ‘fake’ wealth. All usurious lending involves the creation of fake wealth.

I can see Zippy’s case if Money had a fixed and intrinsic value, such as when money can be exchanged for a commodity such as silver or gold.

But we don’t live in an age in which money is merely a convenient replacement for something of value. Money itself, today, is something created out of nothing, fiat currency. As such, while time cannot have value, it can have cost as inflationary pressure is a built in feature of fiat currency.

The value of fiat currency is based on market factors and supply, having no intrinsic value. So time can and almost always does have an impact on value, meaning repayment of debt would be of less value than that which is loaned. As such, I don’t think it is as simple as Zippy would have it.

Never the less, an interesting topic.  What do you think?