Usury and Rewarding the Wicked

The Bible appears to condemn the charging of interest. (See an opposing view here.) 

Opposing the charging of interest seems so "ideological," impractical," and "unrealistic." Charging interest seems like such a "practical," "realistic," "real-world," "business-like" thing to do. 

On the left is an essay from Richard Russell's Dow Theory Letters. It is available here:

On the right are some questions. I don't claim to have all the answers. I have highlighted some lines from Russell's essay.

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Mr. Russell may be e-mailed at this e-mail address, but unfortunately he will not be able to respond to any of the e-mails (due to sheer volume, which sometimes amounts to as many as three dozen a day). Correspondence may be mailed to Mr. Russell at PO Box 1759, La Jolla, CA 92038.

MAKING MONEY:  The most popular piece I've published in 40 years of writing these Letters was entitled, "Rich Man, Poor Man." I have had dozens of requests to run this piece again or for permission to reprint it for various business organizations.

Making money entails a lot more than predicting which way the stock or bond markets are heading or trying to figure which stock or fund will double over the next few years. For the great majority of investors, making money requires a plan, self-discipline and desire. I say, "for the great majority of people" because if you're a Steven Spielberg or a Bill Gates you don't have to know about the Dow or the markets or about yields or price/earnings ratios. You're a phenomenon in your own field, and you're going to make big money as a by-product of your talent and ability. But this kind of genius is rare.

For the average investor, you and me, we're not geniuses so we have to have a financial plan. In view of this, I offer below a few items that we must be aware of if we are serious about making money.

Rule 1: Compounding: One of the most important lessons for living in the modern world is that to survive you've got to have money. But to live (survive) happily, you must have love, health (mental and physical), freedom, intellectual stimulation -- and money. When I taught my kids about money, the first thing I taught them was the use of the "money bible." What's the money bible? Simple, it's a volume of the compounding interest tables.

Compounding is the royal road to riches. Compounding is the safe road, the sure road, and fortunately, anybody can do it. To compound successfully you need the following:  perseverance in order to keep you firmly on the savings path. You need intelligence in order to understand what you are doing and why. And you need a knowledge of the mathematics tables in order to comprehend the amazing rewards that will come to you if you faithfully follow the compounding road. And, of course, you need time, time to allow the power of compounding to work for you. Remember, compounding only works through time.

But there are two catches in the compounding process. The first is obvious -- compounding may involve sacrifice (you can't spend it and still save it). Second, compounding  is boring -- b-o-r-i-n-g. Or I should say it's boring until (after seven or eight years) the money starts to pour in. Then, believe me, compounding becomes very interesting. In fact, it becomes downright fascinating!

In order to emphasize the power of compounding, I am including this extraordinary study, courtesy of Market Logic, of Ft. Lauderdale, FL 33306. In this study we assume that investor (B) opens an IRA at age 19. For seven consecutive periods he puts $2,000 in his IRA at an average growth rate of 10% (7% interest plus growth). After seven years this fellow makes NO MORE contributions -- he's finished.

A second investor (A) makes no contributions until age 26 (this is the age when investor B was finished with his contributions). Then A continues faithfully to contribute $2,000 every year until he's 65 (at the same theoretical 10% rate).

Now study the incredible results. B, who made his contributions earlier and who made only seven contributions, ends up with MORE money than A, who made 40 contributions but at a LATER TIME. The difference in the two is that B had seven more early years of compounding than A. Those seven early years were worth more than all of A's 33 additional contributions.

This is a study that I suggest you show to your kids. It's a study I've lived by, and I can tell you, "It works." You can work your compounding with muni-bonds, with a good money market fund, with T-bills or say with five-year T-notes.


Rule 2: DON'T LOSE MONEY: This may sound naive, but believe me it isn't. If you want to be wealthy, you must not lose money, or I should say must not lose BIG money. Absurd rule, silly rule? Maybe, but MOST PEOPLE LOSE MONEY in disastrous investments, gambling, rotten business deals, greed, poor timing. Yes, after almost five decades of investing and talking to investors, I can tell you that most people definitely DO lose money, lose big time -- in the stock market, in options and futures, in real estate, in bad loans, in mindless gambling, and in their own business.

RULE 3: RICH MAN, POOR MAN: In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader. The advantage that the wealthy investor enjoys is that HE DOESN'T NEED THE MARKETS. I can't begin to tell you what a difference that makes, both in one's mental attitude and in the way one actually handles one's money.

The wealthy investor doesn't need the markets, because he already has all the income he needs. He has money coming in via bonds, T-bills, money market funds, stocks and real estate. In other words, the wealthy investor never feels pressured  to "make money" in the market.

The wealthy investor tends to be an expert on values. When bonds are cheap and bond yields are irresistibly high, he buys bonds. When stocks are on the bargain table and stock yields are attractive, he buys stocks. When real estate is a great value, he buys real estate. When great art or fine jewelry or gold is on the "give away" table, he buys art or diamonds or gold. In other words, the wealthy investor puts his money where the great  values are.

And if no outstanding values are available, the wealthy investors waits. He can afford to wait. He has money coming in daily, weekly, monthly. The wealthy investor knows what he is looking for, and he doesn't mind waiting months or even years for his next investment (they call that patience).

But what about the little guy? This fellow always feels pressured to "make money." And in return he's always pressuring the market to "do something" for him. But sadly, the market isn't interested. When the little guy isn't buying stocks offering 1% or 2% yields, he's off to Las Vegas or Atlantic City trying to beat the house at roulette. Or he's spending 20 bucks a week on lottery tickets, or he's "investing" in some crackpot scheme that his neighbor told him about (in strictest confidence, of course).

And because the little guy is trying to force the market to do something for him, he's a guaranteed loser. The little guy doesn't understand values so he constantly overpays. He doesn't comprehend the power of compounding, and he doesn't understand money. He's never heard the adage, "He who understands interest -- earns it. He who doesn't understand interest -- pays it."  The little guy is the typical American, and he's deeply in debt.

The little guy is in hock up to his ears. As a result, he's always sweating -- sweating to make payments on his house, his refrigerator, his car or his lawn mower. He's impatient, and he feels perpetually put upon. He tells himself that he has to make money -- fast. And he dreams of those "big, juicy mega-bucks." In the end, the little guy wastes his money in the market, or he loses his money gambling, or he dribbles it away on senseless schemes. In short, this "money-nerd" spends his life dashing up the financial down-escalator.

But here's the ironic part of it. If, from the beginning, the little guy had adopted a strict policy of never spending more than he made, if he had taken his extra savings and compounded it in intelligent, income-producing securities, then in due time he'd have money coming in daily, weekly, monthly, just like the rich man. The little guy would have become a financial winner, instead of a pathetic loser.

RULE 4: VALUES: The only time the average investor should stray outside the basic compounding system is when a given market offers outstanding value. I judge an investment to be a great value when it offers (a) safety; (b) an attractive return; and (c) a good chance of appreciating in price. At all other times, the compounding route is safer and probably a lot more profitable, at least in the long run.











Planning is good.

Self-discipline to keep one's plan is good.


"Can't buy me love" -- The Beatles




Compare Rushdoony, "The Royal Virtue"
















































When you invest your money in a way that charges fixed rates of interest, to be compounded over time, you are giving money to a lender, who will take your money and loan it to . . . well, to a loser. To someone who doesn't have money for his project. He hasn't been blessed by God. He needs money. He can't wait. He wants it now. He is a loser.

Is this fair to say: "a loser?"

This is the big question. This may be one  reason why the Bible speaks so poorly of charging interest. (The primary reason is surely charitable. But there may be much more.)

Everything about Russell's plan seems so reasonable. To condemn it is implicitly to condemn nearly all Americans.  How many people -- good, everyday, middleclass Christians -- have gotten married after college, gotten a mortgaged home and built up their life by making their house payments for 30 years? How can these people -- the middle class bedrock of America -- be called losers?

Because the Bible says they are slaves:

Proverbs 22:7 (RSV)
The rich rules over the poor, and the borrower is the slave of the lender.
I Corinthians 7:23
You were bought at a price; do not become slaves of men.

These conservative, middle class Americans don't have the money they need for a house, so they borrow. They don't have a responsible, free, God-honoring, God-blessed family they can turn to, so they borrow from an impersonal bank. Ideally, their forefathers would have been blessed by God and left an inheritance for their children. But culturally speaking, each mortgagor is a person who has not benefited from the patient godliness of a patriarch like Abraham, and hasn't learned the lessons of cultural dominion and reconstruction, and so they let a federally-chartered bank debase the currency for them (your interest-bearing savings are not the only source for the loan) and become the mortgagee over their home.

By saving with the bank, and earning your compound interest, you are rewarding cultural losers by letting a bank bestow financial blessings on those who are cursed.

It's true, some people who borrow turn out to be cultural winners, even Biblically speaking. But you won't loan your money to them directly because there might be risks involved. You would rather save with a federally-chartered bank, because they are more experienced (adept) in making people their slaves, keeping them in line so that they will slavishly pay their interest, thus lowering the risks for you while guaranteeing you higher rates of interest. That means the odds are higher that your interest-bearing funds are rewarding a cultural loser.

The earning of interest perpetuates a secular culture of long-term losers.







Cleansing the Home  | | The Ungodliest Man in the World!   | | God's Law Concerning Money    | | Usury and Unabombers   | | What About Borrowing?  | | "The Evils of Capitalism" -- Wrong Enemy  | | FRACTIONAL RESERVE BANKING AND VIOLENCE  | | Getting out of Paper  | | A Purified Life  | | The Freemen of Montana | | For Further Reading

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