THE PROBLEM WITH INTEREST

Many people think that the Bible says certain things, when in fact, it is silent on the matter. Others think the Bible is quiet on some issues, when in fact, its voice is loud and clear. The beauty of the text is that its value is eternal, so what applied to the ancients at the time it was written still has as much force and validity now. Here’s an example: What if I told you there are passages in the Bible that would revolutionize the way banks, mortgage brokers, and money lenders do business? What if I told you there is an explicit Biblical prohibition against charging interest? What if I told you that charging interest is so deeply embedded in our way of life that rejecting it would result in financial collapse?

The problem with interest is that it is in defiance of God’s law. The problem with interest is that it ultimately concentrates wealth into the hands of a select few. The problem with interest is that everyone has become so accustomed to it that they fail to see it as a weapon used by few to enslave many.

Interest is “a sum paid or charged for the use of money or for borrowing money.” Interest is a bedrock of modern capitalism, but being obedient to God means rejecting this cornerstone of the modern financial system.

Here are several verses that speak about interest (all from the ESV; all italics are mine):

If your brother becomes poor and cannot maintain himself with you, you shall support him as though he were a stranger and a sojourner, and he shall live with you. Take no interest from him or profit, 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 (Leviticus 25:35-37).

You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. You may charge a foreigner interest, but you may not charge your brother interest, that the Lord your God may bless you in all that you undertake in the land that you are entering to take possession of it (Deuteronomy 23:19-20).

If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him (Exodus 22:25).

Whoever multiplies his wealth by interest and profit gathers it for him who is generous to the poor (Proverbs 28:8).

Who does not put out his money at interest and does not take a bribe against the innocent. He who does these things shall never be moved. (Psalm 15:5).

It is important to note that the verses from Leviticus, Deuteronomy, and Exodus are commands given to God’s people after they were set free from Egyptian bondage and before they entered into the Promised Land, a place of great wealth. God thought His edict against interest was so important that He repeated Himself on three different occasions in three different ways.

In Ezekiel, God speaks through the prophet in order to relay all the “abominations” that His people are committing. The Lord mentions bloodshed, dishonoring of parents, violation of women, and harm to one’s neighbor, and then He says, “In you they take bribes to shed blood; you take interest and profit and make gain of your neighbors by extortion; but me you have forgotten, declares the Lord God” (Ezekiel 22:12).

And for anyone who read Deuteronomy 23:19-20 and thinks that the prohibition on lending applies only between Jews or between believers, note that the covenantal relationship that was only open to Israel then is now open to all of humanity because of the atoning sacrifice of Jesus (Jeremiah 31:31-34). Hence, in the New Testament Jesus says:

“And if you lend to those from whom you expect to receive, what credit is that to you? Even sinners lend to sinners, to get back the same amount. But love your enemies, and do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Most High, for he is kind to the ungrateful and the evil” (emphasis added; Luke 6:34-35).

Christ’s words take the prohibition on lending one step further by advising the lenders to give without expectation of return of the principal. Try suggesting that to your local financial institution.

By now some people will say, “So what? Who cares what God says. I’m not going to change my way of life because of some outdated book. Why do God’s commands matter?”

And that is the powerful conclusion. God’s commands do not exist in a vacuum with a self-generated legitimacy. The validity of the edict against interest can be deduced by reason and intellect alone. Here is what I mean: Let’s assume that the entire world exists in a box. For simplicity’s sake, let’s also assume that in this system, only $100 of money exists. Mr. Banker has $50, and Mrs. Doe has $50. If Mrs. Doe takes out a loan from Mr. Banker ($25) without interest and then repays it over time, in the end, both parties end up where they started, and both have the same purchasing power. Neither is indebted, and both can use their money as they see fit.

But, if Mr. Banker now charges interest—let’s say 20%—Mrs. Doe will owe Mr. Banker the principal ($25) plus interest ($5). At the end of the loan repayment, Mr. Banker will have $55 and Mrs. Doe will have $45. The interest, then, alters the distribution of wealth to those with financial resources and away from those without. And, the most dangerous part of charging interest is that it creates “value” (through debt) out of thin air without any tangible connection to reality. Interest is a manufactured concoction that demands material payment but was born by speculation.

In our example, a loan without interest keeps the total amount of money in the box at $100. But with interest, that value goes up to $105 because $5 in “interest” was arbitrarily created by the impulse of Mr. Banker. Hence, immediately after the $25 loan, Mr. Banker has $25 + Mrs. Doe has $75 + Mrs. Doe also owes $5 interest. So, the financial demand of interest exceeds the ability of the system to repay. This is a surefire recipe for collapse. (And this is a minor example, of course, because in many loans over time, the amount of interest owed can exceed the principal borrowed many times over.) Charging interest, then, works the same way as printing money: It benefits those who get to use it first to the detriment of those without this advantage.

The problem with interest is that because it demands money to be repaid against resources that do not exist, there will reach a point where Mr. Banker will hold all the money yet will still be owed money.

The only way, then, to keep this perverse financial system moving is for an external source (e.g., the Federal reserve or the government) to capriciously “create” more money by printing it and then inject the funds into the box through a stimulus. (Does this sound familiar?) One way to distribute these funds is to give it to Mr. Banker so that he can lend it to more people, who will then owe him more interest, so he can collect more money, so that he can get an even greater “stimulus” of money. Another way to distribute these funds is through social entitlements, so that those without can be well funded in order to give their wealth to those with. In this paradigm, there are certainly some people who will borrow, repay, and get out ahead. But the cumulative result across society and over time is to concentrate wealth into the hands of the affluent at the expense of the poor. The only way to destroy this system is for everyone to reject it (not going to happen) or for the system to collapse, a precursor of which happened during the financial crisis.*

God was fully aware of the dangers of interest, and His people fell into the same trap that prior civilizations (e.g., the Babylonians and the Romans) did many times before. The dynamic is so tempting because it gives some folks all they ever wanted: the power to buy, manipulate, and control without limits. This is exactly why while in the Promised Land, Isaiah can lament and prophesize: “How the faithful city has become a whore, she who was full of justice! Righteousness lodged in her, but now murderers. Your silver has become dross, your best wine mixed with water” (Isaiah 1:21-22). Silver is inherently valuable because it is a precious metal. The only way silver can become “dross” is if it is not really silver but purposely mixed with something impure. In a similar way, many people have been sold the “American dream” as something as pure as silver, yet that dream is fueled by interest and tainted by the impurity of perpetual debt and economic slavery.

The words of the prophet Micah will serve us well. He spoke in a time of great inequality:

Woe to those who devise wickedness

and work evil on their beds!
When the morning dawns, they perform it,

because it is in the power of their hand.
They covet fields and seize them,

and houses, and take them away;
they oppress a man and his house,
a man and his inheritance.
Therefore thus says the Lord:
behold, against this family I am devising disaster,

from which you cannot remove your necks,
and you shall not walk haughtily,
for it will be a time of disaster.
In that day they shall take up a taunt song against you

and moan bitterly,
and say, “We are utterly ruined;
he changes the portion of my people;
how he removes it from me!
To an apostate he allots our fields.”
Therefore you will have none to cast the line by lot

in the assembly of the Lord (2:1-5).

 

 

Dr. C. H. E. Sadaphal

 

* Notably, this simplified example does not consider the deleterious effects of inflation and the diminished purchasing power of money as more and more fiat currency floods the box through multiple “stimuli.” Consideration of this variable portends even more disastrous results.

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