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Should usury be legal?

By usury I'm talking interest-bearing loans in general. I know there are usury laws prohibiting interest at a certain rate, but I'm referring to interest lending in the more general sense.

Here's my take:

Almost all of us are touched by and benefit from some form of usury. Even if the drawbacks outweigh those benefits, which is debatable, we all benefit either directly or indirectly. It shapes markets.

Supposedly it creates wealth because a certain percentage (say 80%) of every loaned dollar will be spent, and then a percentage of that will be spent by the person who receives it. And by the next person. And so on.

Usury allows us to purchase homes, cars, and college tuition at prices we would not be able to pay based on our wages and savings. However, because loans are available to everyone, their is a bigger pool of potential buyers for a given supply of goods, which supports higher prices. The cost is even higher when you factor in the interest you will pay on a loan for these price-inflated good. Even if you choose to avoid this interest cost by not taking out a loan, you are still buying and selling goods in markets which are inflated by many financed consumers. In essence, you can opt out of taking a loan, but you can't opt out of being part of a market inflated by usury.

If we ended all usury today, I think the pain would be extreme. Who would have paid for a $300,000 house knowing no one would be able to afford anything close to that because usury was ended? What would happen to our markets and currency value if suddenly no one had borrowed money to spend, and the people who sold to borrowers had no more eligible buyers? Who would be hurt worse? The 'skilled' workers or the producers of tangible things?

And as far as I'm aware, the only difference between lending with interest and usury is the connotation. The latter being negative. Correct me if I'm wrong on that point.

What are your thoughts?

edit: many small edits

By usury I'm talking interest-bearing loans in general. I know there are usury laws prohibiting interest at a certain rate, but I'm referring to interest lending in the more general sense. Here's my take: Almost all of us are touched by and benefit from some form of usury. Even if the drawbacks outweigh those benefits, which is debatable, we all benefit either directly or indirectly. It shapes markets. Supposedly it creates wealth because a certain percentage (say 80%) of every loaned dollar will be spent, and then a percentage of that will be spent by the person who receives it. And by the next person. And so on. Usury allows us to purchase homes, cars, and college tuition at prices we would not be able to pay based on our wages and savings. However, because loans are available to everyone, their is a bigger pool of potential buyers for a given supply of goods, which supports higher prices. The cost is even higher when you factor in the interest you will pay on a loan for these price-inflated good. Even if you choose to avoid this interest cost by **not** taking out a loan, you are still buying and selling goods in markets which are inflated by many financed consumers. In essence, you can opt out of taking a loan, but you can't opt out of being part of a market inflated by usury. If we ended all usury today, I think the pain would be extreme. Who would have paid for a $300,000 house knowing no one would be able to afford anything close to that because usury was ended? What would happen to our markets and currency value if suddenly no one had borrowed money to spend, and the people who sold to borrowers had no more eligible buyers? Who would be hurt worse? The 'skilled' workers or the producers of tangible things? And as far as I'm aware, the only difference between lending with interest and usury is the connotation. The latter being negative. Correct me if I'm wrong on that point. What are your thoughts? edit: many small edits

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[–] • 1 pt

I'm just thinking out loud here, but I'm wondering if usury/interest is any different than any other kind of financial transaction. If I go into a retail shop and buy something for 100, I can be sure that that thing cost less than 100 to make. So I bought something for 100 that's not really worth 100. Let's say it's worth 80. So if the thing is not worth 100, what's the extra stuff that I'm paying 20 for? Well, it's for the ability to buy the thing right here at this retail shop. Without the retail shop, where would I get this thing for 80? Would I have to travel to the manufacturer? Maybe avoiding that is worth 20 to me. I think that's what I've implied by paying 100 right here for this thing that's worth 80 if I travel over there. So I've paid the retailer 20 to do the legwork for me. I'm contributing to his daily sustenance so that he can continue to be here so that I can buy these things from him.

Now, unrelated to the foregoing, let's think of a loan. I need something that costs 80, but I've got no money. My neighbor has some money, so he gives me 80, with the promise that I'll pay him back 100 at a future date. Once again, I'm paying 100 and getting something that's worth 80. So why am I paying that extra 20 to my neighbor? It seems like the same, but opposite, reason I paid 20 to the retailer. With the retailer, I paid 20 to provide him with sustenance. With the neighbor, I paid 20 for having deprived him of sustenance. After all, maybe that's all the money he had. Or maybe he has a million times that amount. There's a reason he has it -- maybe to provide for his clan, maybe he plans to do something grand someday. Maybe that day will arrive tomorrow and he'll find himself short because he gave me a loan. In any case, I have deprived him of his own resources.

Just as I willingly pay 20 to the retailer to contribute to the resources he needs to sustain himself, so I pay 20 to the neighbor to compensate for the resources that I have deprived him of. They're both giving me something I need, and I'm buying them bread.