Credit and loans

[Prairie Fire]

I need a good, thorough, Marxist/socialist criticism of credit, and I left my volumes of Kapital at home.

Any good links, or good explanations?

[Q]

Credit (http://marxists.org/glossary/terms/c/r.htm#credit) :)

[Guerrilla22]

This isn't necessarily from a Marxist point of view, but it was a good report done on how businesses such as credit card companies and pay day loans, ect. are profiting from people being impoverished.

http://www.pbs.org/moyers/journal/08082008/profile.html

[Invariance]

The credit system, which has its focal point in the allegedly national banks and the big money-lenders and usurers that surround them, is one enormous centralization and gives this class of parasites a fabulous power not only to decimate the industrial capitalists periodically but also to interfere in actual production in the most dangerous manner— and this crew know nothing of production and have nothing at all to do with it.
--- Marx, Capital, Volume 3.

[JJM 777]

My personal opinion, without referring to any "ism", is that loans should be possible in Socialism, and they should have an interest rate. I will explain this carefully.

One important thing what would be absent in Socialism, is the situation that the economical wealth of the world ends up in the hands of few, either through inheritance or "a success story in business life" or whatever. And then these few, who have more than they need, give loans with high interest rate to the middle class, and poorest people never receive any loans because they are unreliable payers. In Socialism there would be no such wealthy elite, which gives loans to others because they themselves have more money than they ever need.

Anyway, even in Socialism we can imagine a situation where equally wealthy persons want to borrow something to each other for a long time. Let us say that two families have a car. They agree that for a certain period of time family X uses both cars, and then family Z uses both cars for the next similar period. Sounds fair, right?

If we look at these transactions, we actually see "interest rate 100%" in this loan: family X borrows one car, and then after the loan period, they give two cars to family Z. In the end both families would again have one car, of course. But not if the loan period is longer than 25 years: then the people would soon start dying after 2 x 25 years of loaning stuff to each other.

From this example we can derive a logical and just interest rate for loans: 100% in "half the adult lifetime", let me use 25 years for the sake of simplicity. You borrow something when you are 20 years old, you pay it back with 100% interest when you are 45 years old, and at 70 years age both these persons die, having enjoyed exactly the same average wealth during their lifetimes.

If we accept "100% in 25 years" as a logical and just interest rate, it makes a yearly interest rate 2.9% (interest upon interest) when inflation is zero, or interest rate 5.5% when inflation is 2.5%, etc.

If somebody offers you a loan with interest rate less than 5.5%, you should take as much as he will loan to you: you are mathematically the benefiting party in the deal, if inflation will be 2.5% or more. But the bourgeois will more typically ask 10% interest than 5%, to ensure that they will be the benefiting party in the loan deal.