Is Usury Still a Sin?

[00:00:13] Is usury still a sin? [00:00:16] Does it mean the same thing today as it meant a thousand years ago? That's we're going to look, look at today on Crisis Point. We're going to look at the practice of loaning money at interest and whether or not it's still a sin by the standards of the Catholic Church. Hello, I'm Eric Sammons, your host, editor in chief of Crisis magazine. [00:00:35] So this issue of Usury came up this week because Bishop Robert Barron was on the Tucker Carlson show, and Tucker Carlson asked him about usury, asked about loaning money at interest. [00:00:47] And this is something Tucker Carlson's brought up with other guests before, I imagine I, I've heard. And Bishop Barron answered it in a pretty standard Catholic way. He is. He said that the Church has always been against loaning money at excessive interest. And that's essentially what it means today isn't just loaning money at interest, it's not interest itself, but loaning money at excessive interest. [00:01:13] And to be honest, Tucker Carlson was not really satisfied with the answer, and the answer wasn't the greatest answer. But that's not Bishop Barron's fault. I mean, he had a very short amount of time he could answer it. It was probably sprung him. He probably did not expect the on usury. [00:01:30] And to be honest, the Church hasn't done a great job of defining exactly what is and isn't a sin when it comes to usury and when it comes to loaning money, interest over the past few hundred years. Because as we're going to see in this podcast, there's been a lot of development over the past few hundred years in the, in the financial world, economic world and the monetary system world. And so the Church, I believe, I think, I believe it needs to update its teachings, not change. We're talking about a true development here so that it's very clear what it is the Church does and does not condemn. [00:02:09] I was very interested though, in this, bringing up usury and money, loaning money, things like that, because I've actually been interested for decades now in money that might sound a little funny. Like, of course everybody's interested in money and making money, but I mean the economics of money, how money works, how money works historically and in these days. And in fact, I'm very excited to announce, if you've been watching the podcast a lot, you, you will know that behind me is a new book that I have. I've been having Deadly Indifference, which is a book I wrote four years ago up there. But now I have Moral Money. The Case for Bitcoin, which is my new book, I literally received it, the first copies of it today. [00:02:49] And so I have a copy here as well behind me, But I have a copy of my hands here. [00:02:54] And this book is about more than just Bitcoin. It does explain Bitcoin. It does go through the details, but it really talks about money, the modern monetary system, specifically, and why it is deeply immoral and why I believe the Church really needs to speak about this issue more about how the money itself is immoral. The form of money we use is immoral. [00:03:17] And so this is something that I think applies in the context of this discussion of usury. [00:03:24] So how do we understand usury in a modern sense and the Church's condemnation, her historic condemnation of usury in a historic sense? [00:03:36] So let me give a little bit of a history lesson first so we can understand the Church's teaching against usury in a historical context. And then we'll get to the modern times and we'll talk about how it has changed, developed, whatever the word you want, want to use. [00:03:54] So it's very important to note that in the early Church, loaning money interest was condemned. Absolutely. There was no nuance. There was no. There were no caveats. [00:04:08] And these were based upon scriptural passages. [00:04:12] A couple I'll just bring up right now is Exodus 22:20, 25. If you lend money to any of my people with you who is poor, you shall not be to him as a creditor, and you shall not exact interest from him. That was Exodus 22:25, Leviticus 25:35, 37. [00:04:31] And if your brother becomes poor and cannot maintain himself with you, you shall maintain him as a stranger and a sojourner. He shall live with you. [00:04:41] Take no interest from him or increase, but fear your God that your brother may live beside you. You shall not lend him your money at interest, nor give him your food for profit. And there's some other passages as well, but essentially the Church fathers took this as a condemnation of lending money at interest. It should be noted, though, that we're not Protestants. The Bible is not intended to be a economic handbook. [00:05:10] It's not. We're not sola scriptura, where everything just comes from the Bible. Everything we need to know about life comes from the Bible. And so the Bible's not giving economic prescriptions necessarily in its pages. But it is clear there's a problem with loaning money interest, at least in the context of what Exodus Leviticus is talking about. [00:05:30] The Council of Nicaea, in fact, the first ecumenical council church in 325, condemned. [00:05:35] Actually, you know, made it illegal in the Church for clerics to loan money at interest. [00:05:42] And then later Church councils actually extended that to the laity. So it was actually forbidden for Catholics to loan money at interest. And this is something that, you know, was stated in the Ecumenical councils. [00:05:56] Now, if we move to the Middle Ages, we see that the condemnation of usury just gets more and more part of the Catholic tradition and more strongly stated at the Council of Vienne in 1314. This is, I think, the 15th Council, the ecumenical Council of Church. [00:06:15] It says, and this is very strong language indeed, it says, if indeed someone has fallen into the error of presuming to affirm perniciously that the practice of usury is not sinful, we decree that he is to be punished as a heretic. [00:06:36] And we strictly enjoin on local ordinaries and inquisitors of heresy to proceed against those they find suspect of such error as they would against those suspected of heresies. [00:06:48] So I think there's two things clear about this. First is thinking usury is not a. [00:06:55] Is not sinful isn't considered a heresy directly because they're talking about, like it should be considered as a heresy. They would just say it's a heresy if it's a heresy. [00:07:04] But they're saying that those who think it's not sinful should be treated like heretics. What They're. They're so wrong in their view of what usury is and their support of it, that they should be considered and treated like heretics. So I think this is a good distinction because it did not say usury. Believing usury is sinful is a heresy, but it did state that you should be. They should be treated as one. So it's clearly a. [00:07:36] Not just a minor ethical. Ethical transgression, but it really is fundamentally contrary to Catholic doctrine. That's how we see it in the Middle Ages. [00:07:46] Now, another thing to note, though, and this is very important, and we'll talk about this more in a minute, how did the early Church, and even the early Middle Ages, how did they understand what money is? [00:08:01] That's something I believe has really been forgotten or ignored or just unknown in the history of the Church by a lot of people, is what is money? [00:08:13] The progression of what people believe money to be and how it works. That's something I go into deeply in my book Moral Money. What exactly is money? [00:08:24] By the early Church, Middle Ages, it was just seen as a medium of exchange, just something that you would exchange for goods. [00:08:34] Now, the Modern definition of money is that it actually has three uses. [00:08:39] One is, yes, a medium exchange. It's something you use to exchange for some third good. So getting us out of barter systems so that no longer do we have to trade cattle for lumber, but instead we can just buy cattle, sell cattle, buy lumber, sell lumber for money, and then exchange it for something else later. So it's a medium exchange. Yes, but also it's a store of value. [00:09:06] It's something that keep. Historically, this is what money is. It's a store of value, meaning it keeps value over time. [00:09:14] So that if you have $100 now, if it's good money, it'll be worth a hundred dollars ten years from now. It's a way to store value beyond just storing value in, for example, real estate or livestock or something like that. You could store it in money because it would be able to exchange for something today or or exchange for something 10 years from now. The third thing, money is, is a unit of account. [00:09:39] Meaning simply it allows you to price things in that money. So, for example, the cattle is, you know, $2,000. The lumber is $500, you know, a pin is maybe $2, whatever the case may be. [00:09:55] So what we see there is the three uses of money. [00:09:58] But in the Middle Ages, in early church, it really was just seen as a medium exchange. This idea of it being a store of value was not really understood or appreciated. [00:10:09] Also, what we see during the Middle Ages, though, we start to see the development. I just quoted the Council of Vienne in 1314 condemning those who say usury is not a sin. But yet we see there's a development in the doctrine of the condemnation of usury and loaning money at interest more specifically, and that is, they started to distinguish between interest and compensation beyond the principal amount. [00:10:41] So I loan you $100 today, and I say give it, you know, pay me back in a year. [00:10:48] Do you pay me back exactly hundred dollars? And if you do, am I doing any compensation beyond that $100 or would it be an unjust transaction if I than $100 in a year? [00:11:01] Well, actually, what happened was, is they started to see there were what are called intrinsic titles on the loan. And these are ways in which a lender did deserve some compensation beyond the principal amount. [00:11:16] So one is emergent loss. If, for example, the lender would incur losses based upon as a result of making the loan, then they could be compensated for that. [00:11:30] Let's say, for example, you loaned out some money to somebody, but you could have gotten, let's Say you're buying tickets to a concert, but you loaned out the money. You could have gotten Early Bird discount. Maybe it was $100 for the tickets, but early bird, it was only $80. [00:11:43] And then you get paid back before the concert your $100, and then it costs $100 for the tickets. Well, you lost $80 because of the fact that you could have made, you could have bought those tickets for 80 instead of 100. You lost $20, so perhaps you should have been compensated those $20. [00:12:05] Another idea, though, is the idea of foregone profit. This is very important in today's context, but in the Middle Ages it was considered you could compensate the lender for profits they would have legitimately made if they invested their money in a productive venture rather than lending it. [00:12:27] So for example, if you could have taken that hundred dollars and made a profit on it through some other legitimate means, and now it's worth 120, well, then, yeah, if you loaning that 100 to somebody, you could get that 120 instead, because you would have made that at a profit. And if you had put it in something else, this is something that was accepted by the Middle, the medieval theologians as acceptable and not sinful. It wasn't really seen as usury because the fact that it's not really loaning money interest, but it's instead making up for the loss or the risk involved, the lack of profit that you could have made in having if you had not gotten the loan taken out, given the loan out. [00:13:13] The second one, that foregone profit is very important. We'll see when we talk about in the modern context of fiat government currency and its diminishing value. [00:13:27] So what we see though is by the end of the Middle Ages, the absolute prohibition on receiving any money beyond the principal in a loan was weakened. It wasn't quite as strong as it had been. The early Church. Now some might be like, well, it shouldn't have been weakened. But the fact is, is the Church definitely accepted the idea that you could be paid back more than the principal. Just to be clear. I realize I keep saying principal just to be clear. Principal is the amount you loan out to them. The $100 and interest or fees, whatever is the amount above the principle that you receive back. [00:14:07] So even by the time of the Reformation, it was already accepted by Catholics, by the Church, that one could receive back more than the principle that they had loaned out. [00:14:23] So now we move to the modern era where frankly, the whole economic and monetary systems and financial systems changed radically changed in the Context of Europe, in particular around the world, but Europe, which is where kind of the Church was most based and was working out these things. [00:14:43] And what we see is of course, the rise of capitalism. But we also see an understanding of money as more than a medium of exchange, but also a productive asset, a way that you could put the use to make money. [00:14:55] And what's interesting is you don't see a return to the idea of all money. Loaning money at interest is to be condemned. In fact, the church started to practice, in fact, loaning out money at interest. They would engage in loans themselves. [00:15:16] Now, again, I want to make this clear. We're talking about now just the modern era. Like that is since the Protestant reformation, since the 1600s. [00:15:25] This isn't something like a post Vatican II thing from a few years ago. This is something that hundreds of years ago, the Church started to engage in actually taking out loans at interest and loaning up my interest, things like that. Church officials, in fact, so it's clear that they no longer believe that all loaning of money in which you only can receive the principal back was. It was sinful at this point. [00:15:51] And so what happened though is with the fact of a deeper understanding of what money is and how it works, there's also understanding of this time preference theory of interest. What I mean by that is if I offered to give you $100 today, or I offered to give you $100 a year from now, those are your two options. [00:16:15] Which would you take? [00:16:17] Almost any rational person would take $100 today. [00:16:20] Why? First, they might just want be able to. They might like the idea they could spend it right now, or perhaps they just know I could put it in the bank and it would make 3% interest. So it'd be worth $103 in a year, even if I do hardly nothing. [00:16:36] And you know, so it's better off there. It's kind of like the parable of the talents. Who did Jesus condemn? He condemned the one who just sat on the money and didn't, didn't do anything with it. [00:16:46] And so the same thing here. [00:16:48] You're going to want the money now. That's a time preference. You prefer to have the money now, the same amount of money, rather than later, because you can make more over time. And today this is even more true because of the fact that we know that money decreases in value over time. And I'll explain why here in a minute. [00:17:14] So essentially what happened is the church then transitioned and stopped actually using even the term usury often. [00:17:21] And instead they talked about condemning people condemning excessive interest. That's essentially usury was defined as excessive interest. [00:17:33] Now this is because the function of money essentially changed over time. [00:17:38] The way money worked in the year 500 AD is not the way it worked in the year 2000. [00:17:46] During that time the function of money did change. [00:17:51] And so the Church adapted to that and recognized what is it that we really care about? What is it that we're really condemning when we condemn usury? And that kind of brings us into our question of what should the Church condemn as usurists today if you look at the modern catechism, it doesn't mentioned usury really at specifically talks about users practices I think once or twice. [00:18:15] Well like Bishop Baron said in his interview with Tucker Carlson, he talked about being excessive interest. [00:18:21] But I don't really like that because that's very generic and it's very subjective. What is exactly excessive interest? Is it 1%, 2%, 5%, 10%, 15%, 20%, 30%, 50%? [00:18:36] And before you answer very quickly and say, oh, it's definitely anything over 10%, what if the inflate the real inflation rate's 10%. What if your money is actually decreasing in value by 10% each year? Is it users then to loan it out at 12% or 15% because your real return is only going to be 2% or 5% in those cases, which isn't. I don't think most people would think that's excessive. [00:19:01] And so the fact is that it's very difficult to just say usury is simply excessive interest because you know, when is that you can almost always justify it. Now I do think by the way, there, there is excessive interest that that should be condemned and is immoral. [00:19:18] I think in general, based upon our modern inflation rates, anything over 20% like you find with the credit cards would qualify for that. [00:19:27] But I'm just not willing to put a number on it and say anything over 10% or anything over 15% or whatever. And in fact even over 20%, I wouldn't condemn if the real inflation rate is let's say 18% or 20%, then it's just like you're just trying to make up your money you loaned and make a little bit extra if you charge 20, 22% or something like that. [00:19:46] So excessive interest is just a difficult way to do it. [00:19:51] So what is that fundamental core of what is being condemned? When the Church has condemned usury in the past, it's essentially condemning the practice of using money as an instrument to enrich the already rich and to harm the poor. [00:20:10] And so if you're using money to enrich yourself, that harms the poor, that really is users, if you're doing something in some way that you are making money on money that exploits those who are not, not as well off. Because typically in a situation of a lender and borrower, the lender is in an advantageous position financially over the borrower. Yes, I know there's lots of rich people who take out loans in order to build business, things like that. But in general, when you're talking about loans, it's somebody who doesn't have the money for something they, they really need and, or maybe just want. [00:20:48] And so they have to go to somebody who has more money than them, at least more free money than them. This is just how it works. [00:20:54] And so what happens is if you get this excessive interest, that is a way of exploiting the poor. [00:21:02] And so what we see though is usury, really, that's the condemnation, is the use of money to enrich the rich and to put the poor in even more poverty. [00:21:15] And I would argue, and this is, this is where I think the Church really needs to look into this and explore it more deeply, is I would argue that our money system, our form of money itself is userous. [00:21:30] Our form of money itself is userous. What I mean by that is fiat money. What I mean by fiat money we all probably know as Catholics, if you're Catholic listeners, you probably know what fiat means. Let it be done. Our lady says fiat, you know, let it be done to me according to your will, when, when the Angel Gabriel comes to her. [00:21:48] And fiat basically just means let it be done, let it be, make it happen so some power that somebody can have to happen. Fiat money refers to money that's created by the government out of nothing historically. Remember, money has always been based upon some hard asset. Gold is the most obvious example, and there's a reason it's used. Gold is used, and not seashells or anything like that, which were used as money at one point. But gold is something like gold is used because it has the properties of hard money. [00:22:20] So it's fungible, meaning it can be exchanged. You know, one ounce of gold is the same worth the same as another ounce of gold. It's divisible. You can have a pound of gold, an ounce of gold, or whatever the case may be, all these different properties of money gold has. But fiat money, it has a lot of the properties of money. I mean, it's obviously divisible. You can pay a penny for something or a dollar or $100, where the case may be, has other, it's fungible and things like that. [00:22:47] But it's based upon simply the backing of the government that says, yes, it is worth something. [00:22:54] And this is fiat. This is what fiat money is. The problem with fiat money is that the government can just create more whenever they need it. [00:23:02] And we've seen they go, they never hold back from doing this. Fiat money had been experimented with in America since the time before the revolution, even in the 1700s. But it really came into being in the 1910s in this country. That's when it really, the Fed was created and we really had the expansion of the fiat currency. Yes, it was based on gold to about 1933 and then slightly until 1971. But definitely since 1971 we're a 100%. [00:23:29] Fiat money is what we use in America and most countries also today are fiat money systems. Well, I would argue fiat money itself is users. Why? Because it exploits the poor and it enriches the rich. Because basically what it does is it steals money from the poor. It's kind of the reverse of a high rate of interest. [00:23:50] So if you charge them a high rate of interest, you loan them $100 and then you say, okay, in a year you owe me $200. Well, that's a ridiculous 100% rate of interest. Right? Well, what would happen if I said okay, you, I, I give you a hundred dollars, I pay you one hundred dollars today, in a year that hundred dollars is worth fifty dollars. [00:24:11] Is that not basically a very similar thing? Let's use the example. If it was went from 100 and you owed $150 for a loan versus it's worth a hundred and then it's only worth 50 in a year, you're losing $50 either way of purchasing power of what really matters. [00:24:29] And so I would argue that fiat money itself, because the fact that when you print more money, it devalues all money in the system, it is a very userous system. There's also fractional reserve banking, which I'm not even going to get into details here, but that also I would argue is users, because it's basically creating money out of nothing. [00:24:50] It's creating money to make more loans and things of that. [00:24:53] Now the problem, in fact, let me just talk about fiat currency. What happens always a fiat currency. I have here, if you're watching this, not just listening to this, this is a one million dollar bill. That's right. I must be rich, right? I have a $1 million bill. Here, but it's a $1 million Zimbabwe dollars. [00:25:13] And this is, this is from 2008, I believe. Yeah, 2008. Because what happened was Zimbabwe, when it went into an economic crisis, it started printing more and more money to try to solve the problem. And all it did was devalue the, the, the value of the current money. It debased the currency. So they, $1 million was worth so little. They actually printed out these, these dollars, these one million dollar bills, in order to spend them. Because one million dollars was worth like nothing. It's worth like maybe a buck or two or something like that in American dollars. [00:25:48] And so that is if you have a $1 million bill that like people is worth like almost nothing. That's users. That's users. In my mind now, I would just argue that I think it's a scandal on some levels that the Church has not spoken out about fiat money. I honestly think it's mostly through ignorance. If you poll the vast majority of people in the church or in the world today, they have no concept of what fiat money is. They don't even know what the term means. They have no concept of what money is, what money is intended to be. And so they can't. They're not going to condemn something they don't understand. They just look at it as, this is just the way things are. It's like the weather. You can't control it, you just live with it. [00:26:29] Likewise, church officials just say, well, this is our monetary system. They basically have gone along with the monetary system and said, okay, but don't, don't have these excesses. Okay, fine, but I think they need to go deeper. And in fact, that's one of the reasons I wrote my book, Moral Money the Case for Bitcoin, because it goes deeper than just explaining bitcoin, but it's really explaining why our fiat system is immoral and why more men and women of goodwill need to speak out against it and escape from it. And I believe bitcoin is the escape of this, this fiat, evil fiat money system. [00:27:03] And so the Church, like I said, has been silent on this. But this is, this exploits and steals from the poor, the fiat system. And I'm hoping and praying that perhaps my book Moral Money will begin within the Catholic Church. The process of church officials speaking out against it and recognizing how much this harms the poor far harms the poor far more than all the things they talk about within politics, about all the government needs to help them with this or that or whatever the case may be. This harms the poor far more, and it harms the middle class too. Now the rich, they, they're fine because they have ways. They can have hard assets. They're very close to the money creation, so they can get it first and spend it before it gets devalued, all these things. And so I really think that I'm hopeful, I'm praying that the Church will start to speak out against fiat money. [00:27:56] Now, one last thing I want to bring up, and that is, I understand there might be Catholics who are a little uncomfortable with this talk about usury being the teaching about usury being changed since the early Church or the Middle Ages. Does that mean the Church can just change her teachings? Can she change her teaching on contraception, for example, on abortion, something like that? [00:28:17] Because we know that an ecumenical council can declare usury as sinful and should be punished as the one would punish a heretic. [00:28:27] And now the Church clearly allows loaning at interest, doesn't see any problems with it at all, just. It just condemns loaning excessive interest. Is this a contradiction? Does this mean that the Church's promises that it won't, it won't fail, it won't, won't change its teachings are something we have to worry about? Because remember, this is not something that just from the last few years, this is not from Vatican ii. This is not. Or from Pope Francis or anything like that. No, this dates back hundreds and hundreds of years that the Church has accepted loaning at interest. [00:29:00] I think what we need to note is that the Church cannot change her fundamental teachings. This is still very true. [00:29:08] But in cases where the situation changes, she can develop them to explain them in the new situation. And in the case of usury, what we're talking about is the economic and monetary systems changed. [00:29:25] They no longer were the same as they were in, for example, the year 500. And so the Church recognized that, and recognized, okay, we need to develop our teachings on usury in order to be applicable to the modern world. Now, I think she still needs to develop more, like I said, to address the evils of fiat currency. [00:29:45] But at the same time, she's done a good job of recognizing, okay, just simply saying that loaning money at interest is a sin is not really true because it just based upon everything we've talked about here and so much more. So does that mean the Church can then one day change her teachings on, for example, contraception? No. Why? Because the underlying, the underlying aspects of what is based on did not change. Because what is contraception based upon it? It's Based upon the marital union, the dignity of the human person, the purpose of the marital union. These things don't ever change. They never will change. [00:30:24] It's not like all of a sudden, yes, I recognize people might not no longer agree with it. People might reject that, what, what the marital union is and what, what the dignity of human person. But that doesn't mean it actually changed. It's not. It's fundamental to our nature. How money works, how economies work is not fundamental to our human nature. Like things like the marital union, the dignity of the human person. [00:30:52] And so therefore, since humans haven't changed how we work, the teaching on contraception or abortion or whatever does not change. However, because our economic systems have changed. [00:31:06] So the teaching against you about usury, about loaning interest, loaning money and interest, those things do change. [00:31:14] So I wanted to, I wanted to bring this up. I'll kind of end it there, but I want to encourage people. I'm going to have a link in the show Notes to buy the book Moral Money. I also have a link in the show Notes to the clip of Bishop Barron talking to Tucker Carlson. But I have a link. You can buy it. It might even still say pre order, but I have them in hand now and I can ship them out. [00:31:33] So like I said, it goes much deeper than Bitcoin because basically what I say is I talk about what money is, how our current system is immoral. But I don't want to just be saying bad things like, okay, negative things like, okay, it's bad, it's immoral, it's great. But where do we go from there? And that's where I talk about Bitcoin. Now some might say, well, why don't you have gold as your solution? I don't say anything against gold in my book. [00:31:59] At the same time, what I do do is I. [00:32:03] I say that gold is not sufficient as a form of money in today's economy. It just simply is not. You cannot make online purchases of the gold. If you say, well, you could use some type of gold note or something like that, well, guess what? That's exactly what happened in the past. And it led to fiat currency in the case of Bitcoin. Because, I mean, that's what happened. That's the progression, the evolution. Gold. They needed paper notes that represented gold. [00:32:29] That then led to fractional reserve banking, which led to digital and fiat money. All that with Bitcoin. It's native to our economic landscape, meaning the Internet, meaning including, like direct, Direct payments between two people. [00:32:48] That's why I think Bitcoin and not gold is the answer going forward to our immoral system. And that's why, of course, the book is called Moral Money. Okay, enough for now. I just wanted to review that because I think that's that's an important topic that people, a lot of times Catholics are confused by is teaching against usury and what it means, what means in the current context. And also, like I said, I encourage you to buy my book, Moral Money if you want to learn a lot more. I do a deep dive into it, into all these issues there. I don't talk about usury in that book because I'm really talking about the economic systems that led to the churches developing her teaching on usury. So like I said, it'll be a link to the in the show notes to be able to buy it. Okay, everybody, until next time, God love you.