Originally Posted by Out of the Box
I guess you never heard of Islamic banking
. Just like it used to be in Western Christian countries (Jews became so succesful in banking precisely because it was considered immoral by gentiles), loaning money in exchange for interest is illegal in Islam. Nevertheless, Muslems found a way to keep their economy going without interest.
Still, a better way to manage an economy is to abolish loans for profit altogether and have the population buy something only when they actually have the money for it (like most people outside of the US still do --> I never loaned any money and don't even own a credit card). Exceptions can be made for large expenses like starting up your own business or buying your own house and here the government could serve as an agency that provides loans without interest according to pre-determined rules and principles.
No I don't. You do, because you only seem to understand how the capitalist economy works and you seem to lack any understanding of economic principles beyond capitalism.
LOL, right, you know exactly my economic education. Listen, I have read Smith and Keynes, Friedman and Marx, and I do have a broad understanding of economic theories, though admittedly limited in scope since I am an engineer, not an economist. However, I am not convinced by your assertion that eliminating usury will have a beneficial effect on the economy. What is even more ludicrous is to hold up the Muslims (note the correct spelling) as the paragon of economic thought. Just how wealthy are Muslim economies when you factor out their luck for sitting on a big pool of oil? Not very. So I wouldn't exactly hold them up as the final arbiters of economic wisdom.
Look at the effect that abolishing loans for profit, as you say, would have on capital creation. Most modern manufacturing requires significant purchases of equipment. Without loans to purchase this material, companies could never get off the ground. This also mean that they cant hire more employees or expand when they see an opportunity to capitalize on a trend in the market. All of this would have a drastic negative impact on innovation and production, and hurt the economy as a whole.