The evils of usury, and the immense urge that usurers feel to practice it, can all be summed up into one phrase: the risk-profit differential.
Whatever reasons usurers bring up to defend usury can be defeated by mentioning this phrase. The risk-profit differential is the core of usury, the reason why usurers prefer usury over productive investment, as was recognized by Jesus in his Parable of the Talents.
The risk-profit differential refers to the fact that, at its core, every usurious contract is about passing off more risk to the borrower than to the lender, and passing off more profit to the lender than to the borrower. This differential, this unbalanced arrangement that constantly pushes risk away from the usurer while also constantly pushing profit toward him, is where the attraction of usury lies.
It is the desire of every human to want to increase profits while also wanting to decrease risks. A usurer is simply someone selfish enough to create an arrangement that puts this unchecked, selfish animal desire into law through a contract that ensures him more profit and less risk, while also ensuring less profit and more risk to the borrower.
Usury is about enforcing a contract that enslaves the borrower to the usurer’s interests. The usurer class ensures itself a constant rate of profit (the class as a whole always profits, never loses), while the borrower class profits and loses randomly, so that as a whole no profit or loss is made. The usurer class gets guaranteed profits. The borrower class is forced to share its profits with the usurers, while also being made to keep its losses to itself.
Through this unbalanced arrangement, the wealth of the usurer class balloons. They build skyscrapers to house their banks and insurance companies. The rest of society’s prosperity grows fast at first, then stagnates, and then starts to decline as the debt load grows.
Regardless of how poor society continually becomes, regardless of how much it suffers, the wealth of the usurer class continues to increase. With their immense wealth they end up controlling our entire economy, our media, our politicians, ensuring that things will always stay in their favor. This is not new. The Knights Templar, through their practice of usury, were powerful enough to ignore the commands of popes and kings.
Casinos make vast profits by having machines that win very slightly more than they lose. Perhaps winning 52% of the time and losing 48% of the time. Usury, through the risk-profit differential, turns the entire economy into a casino where the usurers win 80% of the time, and lose 20% of the time (through defaults and bankruptcies). While a large casino makes a few billion a year for its owners through its rigged nature, the economy, due to the rigged nature of usury, makes trillions every year for the usurer class.
Usury is an unbalanced arrangement, otherwise it wouldn’t be usury. There is no way to make usury fair, to make it harmless, to make it add positive value to society. The only solution to usury is to ban it, as the Catholic King Edward I and the Protestant King Edward VI did.
Remember this phrase, the risk-profit differential. No matter how many clever arguments the usurers and their economists come up with in defense of their usury, they can never make this fact go away, as this is the only reason a usurer practices usury: he wants nearly all profits to come to himself, and nearly all losses to go to his borrowers.
[For ideas on non-usurious lending and insurance, please see the chapter on Socratic Finance in my book How to Really Occupy Wall Street.]