Monday, October 06, 2008

Financial Breakdown: Root Cause

I see today Pope Benedict XVI has spoken about the world financial crisis. That's a good thing and he's right. However I think we are all missing the point on what caused this whole meltdown. It is a serious sin which caused this and one that has been blatantly ignored.

If money is the "root" of all evil, then Usury is the ugly stepchild. That's right, usury. Remember that one? It is time the Church re-instated her Usury Laws for the faithful.

Usury is lending money for profit by charging interest. Fr. Hardon's dictionary (found on says this about the change in Church policy:

Taking of excessive interest for the loan of money is the modern understanding of usury. In essence, however, usury is the acceptance of a premium for the mere use of a thing given in loan. Objectively it is the premium paid for a pure loan. The word has come to mean taking advantage of another who is in need. As such, it is forbidden by the natural law, because it is contrary to commutative justice. In the case of the poor, it is also a sin against charity. (Cont...)
Capitalism, with unlimited opportunities for investment, changed the function of money so that it can fructify. Consequently loaning money did not involve loss of profit to the lender and further risk of loss from delay inreturning the money loaned. By the end of the eighteenth century the distinction between usury and interest was recognized in civil law. The Church also recognized the distinction so that now only exorbitant interest is called usury and considered morally wrong. In the process, however, the Church's basic teaching on the subject did not change. Injustice surrounding money lending was and remains condemned. What changed was the economic system. As this changed, the circumstances under which an unjustice is committed changed. The Church necessarily permitted what was no longer unjust.

Perhaps now it has become unjust though, yes? Certainly a system which allows predatory lending and other shady interest-laden practices warrants a revisit of the issue.

A quote from the New Advent entry on this issue:

"Lending money at interest gives us the opportunity to exploit the passions or necessities of other men by compelling them to submit to ruinous conditions; men are robbed and left destitute under the pretext of charity. Such is the usury against which the Fathers of the Church have always protested, and which is universally condemned at the present day."

Robbed under the pretext of charity. Sounds to me like sub-prime mortgages and predatory lending. There is a lot of usury here going on in the name of Social Justice which is really socialism. A lot of people got seriously rich off of these schemes and guess what, Church teaching was ultimately correct again.

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"The whole truth is generally the ally of virtue; a half-truth is always the ally of some vice." - G.K. Chesterton