Is the interest(on loans) based system destrucitve for society?

[blueplasma]

Our current financial and monetary system is based on interest.

Many religions like islam, christianity, judaism etc.. all have considered it a sin.

I don't think its immoral to make money off of fixed capital (like if you have a house & give it for rent) but to earn off of fluid capital (cash) by charging interest is immoral in my opinion... I mean the creditor also takes collateral for issuing loan on top of charging interest, so what risk if he taking ? ..basically its free money.

Also, I think this interest based system is the cause of a lot of problems in our society, like, people buying and consuming way beyond their means, then find it difficult to pay back their debt, become slaves to the banks (they have us by our balls), excessive exploitation of the environment(due to the over consumption), inflation, recessions, unemployment etc etc..

Overall I think it is immoral, perpetuates greed, consumerism & is ultimately destructive for our society & environment.

 

[JosephKnecht]

You have to incentivize people to give out loans. If there was no interest, nobody will be interested in giving out loans. 

In the current economic environment, interest rates are lower than the inflation rate. This is practically free money. 

[blueplasma]

1 hour ago, JosephKnecht said:

You have to incentivize people to give out loans. If there was no interest, nobody will be interested in giving out loans. 

In the current economic environment, interest rates are lower than the inflation rate. This is practically free money. 

There is alternative which is called as profit and loss sharing in Islamic banking.. you should look into it.

[BipolarGrowth]

I think your view on this is too idealistic. If the next major innovator comes to me wanting $250k cash to start his own business instead of buy a house, why can I not charge interest on that? It’s literally the same value as the house. I have no desire to give $250k away for free with no real guarantee of getting it back. Under your system, a lot of economic growth would be stopped. 

[blueplasma]

1 hour ago, BipolarGrowth said:

I think your view on this is too idealistic. If the next major innovator comes to me wanting $250k cash to start his own business instead of buy a house, why can I not charge interest on that? It’s literally the same value as the house. I have no desire to give $250k away for free with no real guarantee of getting it back.

Well you could give him money in exchange of equity.. that is what the VC's do. I am not against that. But when you lend money and charge interest there is no work done by you.. basically you are earning free money and you are pushing all the risk on to the debtor especially when you also ask for collateral which is mostly the case.

But when you invest and own equity you share losses and profits if any...whatever the case maybe.

You should learn about islamic finance where banks don't give interest based loans but rather invest in the clients project...whether its an individual trying to buy a house or a business needing capital.. this way banks don't push all the risk on the debtor and rather share risk.