I read this article and was struck by this data:
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Compound interest has allowed a private global banking cartel to control most of the resources of the world. The debt trap was set in 1974, when OPEC was induced to trade its oil only in U.S. dollars. The price of oil then suddenly quadrupled, and countries with insufficient dollars for their oil needs had to borrow them. In 1980, international interest rates shot up to 20 percent. At 20 percent interest compounded annually, $100 doubles in under 4 years; and in 20 years, it becomes a breathtaking $3,834. The impact on Third World debtors was devastating. President Obasanjo of Nigeria complained in 2000:
“All that we had borrowed up to 1985 was around $5 billion, and we have paid about $16 billion; yet we are still being told that we owe about $28 billion. That $28 billion came about because of the injustice in the foreign creditors’ interest rates. If you ask me what is the worst thing in the world, I will say it is compound interest.”
[background: Islamic and Christian holy texts decry the practice of usury, in this context the charging of any interest, calling it immoral and destructive]. Islamic scholars have been seeking to devise a global banking system that would serve as an alternative to the interest-based scheme that is in control of the world economy, and Iran has led the way in devising that model. Iran was able to escape the debt trap that captured other developing countries because it had its own oil. Few Islamic banks existed before Iran became an Islamic Republic in 1979, but the concept is now spreading globally. With the fall of the Iron Curtain in 1989, the viable economic model that threatens the global dominance of the Western banking clique may no longer be Communism. It may be the specter of an Islamic banking system that would strip a private banking cartel of the compound interest scheme that is its most powerful economic weapon.
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Just for fun, I indulged the concept of a non-usury world. I’m not talking about any religious beliefs, changes, or enforcements– just a clean slate non-usury world. What would that be like? Let’s say your 30-year mortgage is at $600,000. Right now, in our usurious world, the monthly payment on that is around $4500. That also means that at the end of that 30 years you’d pay a total of nearly $1.8 million. Ouch! Now our non-usury payment, over the same 30 year period, would be $1666.67. If only a 15 year repayment period, $3333.34/mo. If only 10 years, $5000/mo. OK, we know administration isn’t free. Let’s round that up to $2000/mo for 30 years. $720,000 total paid out. The lender collects $120,000 for keeping up your paperwork for 30 years (720,000 - 600,000). $4000/year for admin fees is not bad when one considers how little effort is expended for one account. And that maintenance fee is not compounding on top of the existing balance. This also means you have $2500 per month extra cash. If you save that money for a year ($30,000) you have enough to buy a new car with no further encumbrances. Or help someone else in need. Or donate to charity. Boy, this gets better and better. This, of course, assumes that you have the willpower to actually save for a goal and not fritter it away on 1,000 Starbucks mochas in the ensuing 365 days.
Ah, another point: does your own income need to go up? If none of us are forced to deal with inflation created from the pyre of interest payments, then perhaps not. At least not so much. If you don’t want to acquire vastly more than you have, and your basic needs for life are in, you’re good to go. Remember, you’re saving $30,000 per year not sacrificing at the altar of usury. You can handle emergencies or unanticipated needs.
Before any closet economists write in to tell me how crazy this is, fine, I will admit it is hypothetical. In a globalized finance world, there would be obstacles to implementing such a system, especially with cheating and manipulation by those who aren’t so keen to help their fellow man. But, it is worth it to indulge in postulating a more ideal scene. I would encourage all of you to do the same, and to that degree, we will have a new agreed upon reality– one with less slavery to the almighty dollar, yen, pound or dinar.
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