The Usury Based System. Worldwide Financial Disaster?

by Jonas E. Alexis and Richard C. Cook

Richard C. Cook is a retired federal government analyst. In his 32-year career he worked for five civilian agencies and the Carter White House. While with NASA he documented the flaws with the space shuttle solid rocket booster and testified before the Presidential Commission on the Space Shuttle Challenger Accident. Unable to return to NASA after his testimony, he spent the rest of his career with the U.S. Treasury Department.

On retirement in 2007, Cook published a book on monetary policy entitled We Hold These Truths: The Hope of Monetary Reform.

Jonas E. Alexis: The issue of money scandals on a massive scale is always interesting because it brings out the inexorable relationship between capitalism and usury. For example, the illustration is used that “if Judas Iscariot had invested his thirty pieces of silver at just a few percentage points compound, repayable in silver as of today, the amount of silver required would be equivalent to the weight of the Earth.”[1] There isn’t enough gold and silver in the universe to meet that challenge. In other words, the idea behind usury is an arithmetic impossibility.

But the oligarchs always try to come up with superficial and crazy ways to bypass that mathematical impossibility. Why? Well, they always attempt to come up with sophisticated ways to cheat the oppress, the poor, and the needy.[2]

For example, during the Roman Empire, after the death of Augustus, the rich started employing usury to increase their wealth.[3] In the process, they largely “controlled any financial movements in the economy.”[4] Eventually, during the decline of the Roman Empire, “the tenant-farmers were reduced to serfdom by their creditors.”[5]

Usury was eventually condemned by all religious institutions, including Islam, Hinduism, and Buddhism, because it was viewed as a practice that oppressed the poor and needy and had the potential to bring about the collapse of economic progress. In Islam, for example, trade or fee is permitted, but usury is not.

Philosophers such as Plato, Aristotle, Cicero, Seneca, and Plutarch also condemned usury as unnatural (contra natura) and immoral. This discussion became so important in Plato’s Law that he ultimately not only advises that “no money should be lent at interest” but that “the borrower should be under no obligation to repay either capital or interest.”[6]

Plato says in The Republic that the oligarchs gather their wealth through usury and by ruining the life of others, namely the poor.[7] Aristotle called usury “the most hated” form of “getting wealth.”[8] Marcus Porcius Cato, a Roman statesman who lived between 234 and 149 B.C., indirectly equates usury with murder.

As George Santayana put it, those who don’t know their history are doomed to repeat it. Over the centuries, usury has destroyed economic progress. And we are just repeating history here because compound interest is taking a huge toll on almost all the strata of the U.S. economy, especially among college students and home owners.[9]

In early 2012, student loan debt reached $1 trillion,[10] with the average graduate owing at least $25,000.[11] During the same season, student debt rose by 8% and college tuition skyrocketed.313 Fifty-one-year-old Doug Wallace, who graduated from Eastern Kentucky University with a debt of $89,000, declared, “It’s like you’re not of much worth in society.”[12] Courts are now finding that “debt collectors misled borrowers” with regard to student loans.[13]

Kelsey Griffith, a student from Ohio, graduated with a debt of $120,000. Chelsea Grove, a Bowling Green State University drop-out, is now paying off a $70,000 debt, even though she has no intention of going back to school. Christina Hagan will have to pay off a $65,000 debt when she graduates from Malone University (an evangelical school).

Although she makes $60,000 a year as a state representative, “she plans to begin waiting tables in the next few weeks…to help pay down her student loans and credit cards.”[14] Hagan has a message for the younger generation, “I placed a priority on a Christian education and I didn’t think about the debt,” she said. “I need my generation to understand that nothing is free.”[15]

Capitalism makes usury not only sophistically alluring for the rich and powerful, but makes it legitimate, and for this purpose it has received widespread criticism.[16] Capitalism is not just “wealth” or economic exchange in the free market. Soon or later usury is going to sneak in—the exclusion of ethical values in the pursuit of usurious contracts.

One anthropologist and historian who has studied this issue from the early centuries likened modern capitalism to “a structure designed to eliminate all moral imperatives but profit.”[17] Over the centuries—most specifically during the twentieth century—Jewish intellectuals have refined usury in such a way that the masses are completely oblivious of what is actually going on. And their definition only works for the rich and powerful, not for the poor and the needy. William Deresiewicz of the New York Times, summarizing the avarice and usurious activity of the rich over the past few decades, tells us unapologetically:

“Enron, BP, Goldman, Philip Morris, G.E., Merck, etc., etc. Accounting fraud, tax evasion, toxic dumping, product safety violations, bid rigging, overbilling, perjury. The Walmart bribery scandal, the News Corp. hacking scandal—just open up the business section on an average day. Shafting your workers, hurting your customers, destroying the land. Leaving the public to pick up the tab. These aren’t anomalies; this is how the system works: you get away with what you can and try to weasel out when you get caught.”[18]

In short, the oligarchs always use capitalism to suppress the poor and the needy. They always use ambiguous phrases such as “economic freedom” or “economic exchange” in order to sneak in usurious contracts into the economic equation. And if you are against “economic exchange,” they argue, then you must be a socialist or communist or something equally weird.

Those who don’t think that capitalism is a sophisticated way of cheating the masses probably don’t know what capitalism really is. That is why we are inviting Richard C. Cook to tell us a little bit about this because he spent years working in Washington.

Richard C. Cook: Since I retired in 2007, I have published several books and dozens of articles on public policy matters. My next book was on monetary policy and titled, We Hold These Truths: The Hope of Monetary Reform. This book consisted of a history of the U.S. monetary system and an explanation of why that system should be changed radically to avert further disasters.

In the book I predicted the financial collapse of 2008. Of course the changes I prescribed have not been made, and in the nine years since then the situation has become much worse. In fact, we likely have passed the point of no return.

Very few people understand how the Western banking system really works and how it differs from that which operates in such countries as Russia, China, and a few others, with partly controlled systems that still derive from their formerly communistic economies. Those who do understand are based in the world’s financial centers such as London, New York, Paris, Frankfurt, Milan, Basle, etc.

These are the owners and operators of the largest banks. Representatives of these privately-owned banks are assigned to manage national central banks, like the Bank of England and the Federal Reserve, and international quasi-public institutions like the International Monetary Fund.

One of my projects at the U.S. Treasury Department was to develop and teach training courses on the history of U.S. government finance. My research showed that in American history, the type of financial system based on central banking controlled by private interests used to be known as the “Jewish system.” I did not employ this term in teaching my classes because of the sensitivities involved. But to use it would not have been “anti-Semitic” as much as a statement of historical fact.

The Western financial system based on bank-issued debt as the dominant means of introducing money into circulation was created by medieval money-changers in Europe. By the time of the Renaissance, modern banking had begun to take form. There was also the assumption that if lending were backed by gold and silver held in the vaults of banking institutions that real value could always be counted on if promissory notes were called in.

But there are deeper structural problems. The inevitable consequence of any economy based on usury, depending of course on whether interest is simple or compound and also on the prevailing rate of interest, is that the wealth of that economy will gradually pass into the hands of the financial controllers. This fact has been known and understood since the system first appeared in ancient Babylon, as documented by Dr. Michael Hudson. Dr. Hudson even cites an ancient legend that the system was invented by the Devil to enslave human beings.

A usury-based system sucks the purchasing power out of the producing economy. This places every institution and individual within that economy under pressure to constantly generate an ever-increasing level of economic activity to stave off bankruptcy, ruin, and even starvation.

Historically, the system took a major step toward chaos when banks were allowed, by law, to lend more than they had on reserve. “Fractional reserve banking” was a natural outgrowth of the practice banks were permitted to engage in under the assumption that not everyone would want to redeem their paper notes with gold and silver at the same time.

Unfortunately, the more mature an economy becomes, the more the economic growth rate slows and the greater the stress involved in the simple act of living. Many cannot keep pace as the ranks of the poor grow. The ancient Hebrews recognized the peril of the system by mandating a periodic “Jubilee” when debts were forgiven.

In today’s economy, there is never a Jubilee. So in order to pay off debt, the economy must constantly grow. In order to make it grow, everything else must be sacrificed. When human values conflict, they must be pushed aside to serve growth. Ask any politician—economic growth must be constant; non-growth is disastrous.

Further, without regulation, companies are motivated to cut costs by wanton pollution, reducing wages, and overusing public infrastructure like highways without paying their fair share of taxes.

This is where Western society has arrived today. People and firms must constantly increase the rate of economic activity just to pay their debts, leading to increased resource consumption, brutal competition among individuals and nations, price inflation, war, crime, and breakdowns in health and social order. The idol of Mammon is voracious in demanding its blood tribute.

Because machines are increasingly better able to produce goods and services than people, technological unemployment is soaring even as human beings lose the income needed to purchase what must be produced. Vast numbers are increasingly left out of the economy, leading to human exploitation that in some parts of the world even includes a resurgence of human slavery.

Thus an economy that is incredibly productive on the one hand creates increasing misery on the other. Such an economy is unsustainable. The fault lies chiefly with the usury-based financial system. It is not that alternatives are not available. Different methods have been used at various times in history to introduce money into circulation apart from debt-based private banking.

The “Reagan Revolution” Killed the Economy

When I worked at the Carter White House in 1980, I convened a small group of experts to study alternative financial systems. In November 1980, however, President Jimmy Carter was voted out of office, and the “Reagan Revolution” began. This was actually a right-wing coup aided by the Federal Reserve’s crashing of the U.S. economy through radically increasing interest rates and the manipulation by Reagan’s supporters of the Iranian hostage crisis.

The “Reagan Revolution” consisted chiefly of completing the long-planned turnover of the U.S. producing economy to the banks and Wall Street, with factory jobs being outsourced to third-world countries. Privatization of public enterprises such as municipal water systems accelerated.

The changes were planned by academics from Harvard, the University of Chicago, and other elite universities. Attempts were made to apply the same logic around the world, including Russia during the 1990s, after the collapse of the Soviet Union. This trend in Russia has since been modified or even reversed.

But within the U.S., the process was completed under President Bill Clinton with NAFTA and the repeal of Glass-Steagall, a law that had prevented the merger of investment and commercial banking. Hence the rise to power of predatory firms like Goldman Sachs and the Carlyle Group.

These firms specialize in methods based on usury that are used to buy up whole companies, fire the employees, sell the domestic assets, and ship the remaining jobs overseas. It was all done by design under presidents who were mouthpieces for behind-the-scenes power.

Without sufficient domestic jobs combined with production that no one can afford to buy the bankers have kept the system afloat through bubbles and government bailouts. There was the dot.com bubble, the housing bubble, and, under President Obama, the Treasury bond bubble, along with what became known in Federal Reserve jargon as “Quantitative Easing” (QE); i.e., a stab at a zero-interest rate economy.

Today there is scarcely a single major figure in public life, including the so-called “progressives” and reformers, who is actively promoting the use of other methods besides usury for money-creation. An exception is Rep. Dennis Kucinich, who was maneuvered out of his seat in the U.S. House of Representatives by gerrymandering. Kucinich promoted a plan developed by the American Monetary Institute of creating money by federal spending for infrastructure.

It is amazing how locked-in people are to their habitual ways of thinking about life’s problems and how fearful they are of “thinking outside the box.” People love their chains because they are used to them. They kiss the whip that scourges them. Through the “Stockholm Syndrome” they suck up to their captors to curry favor.

So it is with trying to help people see how simple it would be in concept to get rid of the debt-based financial system. But they can’t. They won’t.

Meanwhile bank CEOs become multimillionaires by dealing in hollow currency. They could just as easily be put on trial for counterfeiting and fraud.

People would rather destroy the planet and themselves through support of endless wars based on “regime change”, gobbling up other nations, man-made climate change, chemical pollution, alcohol and drug addiction, criminalization of government and law enforcement, resource depletion, etc., than confront the controllers of the financial system who rule society and say, “Enough is enough.”

These controllers are in charge of all Western governments and of the military-industrial-intelligence-media complex, and they have shown themselves capable of killing anyone who gets out of line, as they did to JFK, perpetrating false flag events to stampede the populace into obedience, as they did with 9-11, or destroying whole nations as they did with Yugoslavia, Iraq, Libya, and now Syria.

They can take away your job, spy on your computer, audit your taxes, throw you in prison, murder you, or send you off to fight their wars. All to keep a corrupt system in place.

When I worked at the U.S. Treasury Department, as part of post-9/11 security, they designated the entire U.S. financial system as “critical infrastructure.” No one questioned what the implications were. What it meant in practice was that the police power and military might of the nation were committed to defending what ethically is indefensible.

Thus the U.S. military, acting as global enforcer, has forces stationed in a majority of nations and on all the seven seas to ensure that money keeps flowing in to feed the debt monster. If any other nation wishes to even think about challenging this hegemony, that nation and its leaders are castigated and demonized and threatened with nuclear annihilation. The senior civilian and military leadership are adept at assuring such “adversaries” that “no options are off the table” in order to protect the blessings of “freedom” and “democracy” for one and all.

But I do know that every human being on earth is being profoundly challenged by world conditions and their extreme potential for chaos. On an individual level, even if we can’t escape the common human fate, we can certainly pray for insight into something more benign right now for our neighbor and ourselves. We are not alone in the universe, and we can seek the inner help we need to resist the temptations to respond negatively. Then we can commit ourselves to making whatever improvements we are able.

[1] See Wayne A. M. Visser and Alastair McIntosh, “A Short Review of the Historical Critique of Usury” (http://www.alastairmcintosh.com/Articles/1998_usury.htm.)

[2] Ibid.

[3] Constantina Katsari, The Roman Monetary System (New York: Cambridge University Press, 2011), 203.

[4] Young, “Christian Attitudes to Finance,” Epworth Review, 80

[5] Ibid., 81.

[6] Plato, The Laws (Timeless Classics Books, 2010), 190.

[7] Plato, The Republic (New York: Dover, 2000), 215.

[8] Aristotle, The Politics (Chicago: University of Chicago Press, 2006), 23.

[9] See Andrew Martin and Andrew W. Lehren, “A Generation Hobbled by College Debt,” NY Times, May 12, 2012; Shaila Dewan, “Needy States Use Housing Aid Cash to Plug Budgets,” NY Times, May 15, 2012.

[10] Andrew Martin, “Slowly, as Student Debt Rises, Colleges Confront Costs,” NY Times, May 14, 2012; Gloria Goodale, “Student Loans: Is Petition to Forgive Debt Completely a Good Idea?,” Christian Science Monitor, April 20, 2012.

[11] Kimberly Hefling and Kristi Eaton, “Student Loans: What Will You Owe?,” Christian

Science Monitor, April 16, 2012; Larry Gordon, “Graduating Collegians Cope with Student Debt in a Weak Economy,” LA Times, May 20, 2012.

[12] Josh Mitchell, “Student Debt Rises by 8% as College Tuitions Climb,” Wall Street Journal, May 31, 2012.

[13] Andrew Martin, “Debt Collector Misled Borrowers, Court Says,” NY Times, August 31, 2012.

[14] Martin and Lehren, “A Generation Hobbled,” NY Times, May 12, 2012.

[15] Ibid.

[16] See David Graeber, Debt: The First 5,000 (New York and London: Melville House, 2011 and 2014), chapter 11.

[17] Ibid., 320.

[18] William Deresiewicz, “Capitalists and Other Psychopaths,” NY Times, May 12, 2012.

Jonas E. Alexis, Senior Editor

Jonas E. Alexis has degrees in mathematics and philosophy. He studied education at the graduate level. His main interests include U.S. foreign policy, the history of the Israel/Palestine conflict, and the history of ideas. He is the author of the book, Kevin MacDonald’s Metaphysical Failure: A Philosophical, Historical, and Moral Critique of Evolutionary Psychology, Sociobiology, and Identity Politics. He teaches mathematics in South Korea.

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