Published on 9/29/2022
Let’s Be Honest!
After much prayer, contemplation, and research I have come to two conclusions that I would have thought impossible just a year ago. These conclusions are as follows.
- It is always wrong to charge interest on a loan.
- The stock market is immoral.
You may be thinking that if we follow these two ideas to their logical ends, we will forfeit all economic prosperity that has been achieved thus far and any economic prosperity that will be achieved in the future. And my answer to that is…maybe. HOWEVER, before you dismiss me as a lunatic, I beg you to please read the rest of this short post.
First, let’s ask ourselves some tough questions…
What is the goal of this life? Economic prosperity or Heaven? This is the question that must be in the forefront of your mind while you prayerfully discern what this post has to say.
Is it ever morally acceptable to take profits without producing a good or service (i.e., doing actual work)?
We are greedy creatures, but does that mean we should set up devices based on greed? Or should we attempt to repent and correct our nature?
Please try to keep the above questions in mind while you read the rest of this post.
TOPIC 1 – Charging Interest on Loans is always wrong.
What is Usury, what does the church say about it, and do we practice it?
Usury (A modern definition from Oxford Languages via Google) – The illegal action or practice of lending money at unreasonably high rates of interest.
The Church & The Bible
The Bible on usury:
- “If you lend money to the poor of my people who live among you, you shall not coerce them like a collector, nor oppress them with usury.” ~ Exodus 22:25
- “When one of your kindred is reduced to poverty and becomes indebted to you, you shall support that person like a resident alien; let your kindred live with you. Do not exact interest in advance or accrued interest, but out of fear of God let your kindred live with you. Do not give your money at interest or your food at a profit.” ~ Leviticus 25:35-37
- “You shall not charge interest to your countrymen: interest on money, food, or anything that may be loaned at interest. You may charge interest to a foreigner, but to your countryman, you shall not charge interest, so that the Lord your God may bless you in all that you undertake in the land which you are about to enter to possess.” ~ Deuteronomy 23:19–21
- “And if you lend to those from whom you expect to receive, what credit is that to you? Even sinners lend to sinners, in order to receive back the same amount. But love your enemies, and do good, and lend, expecting nothing in return; and your reward will be great, and you will be sons of the Most High; for he himself is kind to ungrateful and evil men” ~ Luke 6:34
The Church on Usury:
Canon 13 of the Second Lateran Council (1139) says: “Furthermore, we condemn that practice accounted despicable and blameworthy by divine and human laws, denounced by Scripture in the Old and New Testaments, namely, the ferocious greed of usurers; and we sever them from every comfort of the Church, forbidding any archbishop or bishop, or an abbot of any order whatever or anyone in clerical orders, to dare to receive usurers, unless they do so with extreme caution; but let them be held infamous throughout their whole lives and, unless they repent, be deprived of a Christian burial.”
Canon 29 of the Council of Vienne (1311) says, “If indeed someone has fallen into the error of presuming to affirm pertinaciously that the practice of usury is not sinful, we decree that he is to be punished as a heretic.”
Session X of the Fifth Lateran Council (1514) says “For that is the real meaning of usury: when, from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk.”
Vix Pervenit Papal Encyclical by Pope Benedict XIV (1745) says “One cannot condone the sin of usury by arguing that the gain is not great or excessive, but rather moderate or small; neither can it be condoned by arguing that the borrower is rich; nor even by arguing that the money borrowed is not left idle, but is spent usefully, either to increase one’s fortune, to purchase new estates, or to engage in business transactions.”
Okay, that was a lot and it can be tough to process, there are of course a lot of nuances that go into each bible passage and council excerpt. But, before you continue reading stop and try to discern what the Lord is trying to communicate here. What do you think? Is all interest on loans usurious? Is only extreme interest usurious? If so, what classifies as extreme? Should we only charge interest to non-family members? Aren’t we all called to be family in Christ Jesus? Is there ever a circumstance where charging interest is acceptable?
I had a lot of trouble answering these questions and working them out. But the one question that leads me to my answers is, “is it ever okay to take profits when you do not work?” I believe the answer to this question is a resounding NO! When we lend money, we do not produce anything, we do not work, and we provide no service, yet we expect a healthy ROI. Whether or not the Church has explicitly condemned receiving interest on a loan should not matter because it seems to be common sense to the well-formed Christian conscience that earning interest on money loaned is reaping where you have not sown and therefore immoral. Your rebuttal to all this may be “the service I am providing is the lending of money.” To which I would reply, what is a service? The technical definition of that word is the action of helping or doing work for someone. Maybe lending money is a sufficient action to satisfy the requirement of providing a service and that service deserves compensation. But this argument seems weak. Does anyone truly believe that handing over money is the same as cutting someone’s hair, doing the books for a business, making a table and chairs, or fixing an engine? Even if you do think lending money is work just like repairing a roof is work and deserves compensation, the question must be asked…how much compensation? You say charging interest is just business but is reaping where you have not sown business? In the Christian sense, it is certainly not!
The real issue here is simply the question of whether lending money is a service that deserves compensation. The answer according to Counsels of the Catholic Church, Papal Encyclicals, and the Bible is lending money is NOT a service that deserves compensation. This teaching from the Church is not because money is still viewed as a barren asset like it was in antiquity, but because of the goal of this life and our duty to the Body of Christ. The goal of this life is to become a saint and help as many others as possible to become saints as well. Of course, every man is due his just wage for just work but is lending out what you have in excess and expecting someone to provide you with an ROI the Christian thing to do. No Pope, passage in the Bible, or honest theologian has ever or would ever condemn the baker for charging a fair amount for her bread but lending money and expecting more in return is not producing anything and therefore does not deserve compensation above what was lent. Of course, if you can gift money and expect nothing in return this is the most Christian thing you could do with your money but the prudence of providing for your family and taking care of your debts and responsibilities are fair reasons why you would expect what you lent out to be given back in full.
Maybe you still have some reservations about this teaching. If so, I would urge you to think about the call to obedience we all must adhere to as practicing Catholics. If the Bible, official counsels, and the successors of St. Peter have all agreed on something then we should probably not think we know best. Humility is a virtue! However, I would like to detail some common objections to this idea of all interest on money lent being usurious and the appropriate responses below.
Objection: I am not lending out of my excess and need the money I would make on interest to support my family. Answer: All Loans are made out of excess because you would not loan the money today if you would starve tomorrow. Plus, all loans by their nature are paid back at a later date. Why would you need the interest that would be paid in addition to the loan amount at a later date to cover the expenses you have today? This objection is nonsense.
Objection: I could be making money by investing in other things, but I am losing out on those profits by loaning the money out. Therefore, whomever I loan the money to should at least cover my potential profits. Answer: Do you think it is just to charge someone interest because you chose to do one thing over another? You are making someone pay you for something you chose not to do. If you care about profits that much, then do not loan the money and invest it into the other thing.
Objection: But I want someone to give me a loan and am okay with them charging me interest on it. Answer: Just because the woman wants an abortion does not mean the abortionist should give it to her. Just because someone is a willing participant in pornography does not mean it is okay to produce.
Objection: If we stop charging interest on loans then many of the world’s lenders would simply stop lending and the everyday person would no longer be able to afford cars, homes, and college. Plus, economic prosperity would be halted. Answer: Yes, it is sad that many people only lend money based on greed and not for the common good of society. However, propping up greedy humanity with greedy mechanisms is not a Christian solution. The ends never justify the means. Keep in mind that this change in thinking on loans may cause the population as a whole to become more family oriented and less independent which would be a good thing. Plus, the materials and resources have always existed for cars, houses, and college educations, it is just human greed that presents barriers to such things. Also, we are not saying you cannot pay for things over a long period, we are just saying that charging interest on lent money is not moral.
Objection: what about Inflation and Late fees? Can I charge interest that is equal to the rate of inflation, so I at least get back what I gave out? And can I charge late fees if the person I lent money to does not return my money by the agreed-upon due date? Answer: Both of these things are okay to do because neither is interest. The inflation rate issue is not getting back more than what you lent so that is permissible and seems only fair (This could even work in the opposite direction if the value of money is increased during the period of lending). The late fee is also not interest and is permissible but only if the late fee is tied to some reality and not arbitrary. For example, if I give you $100 today and I say I need that $100 to buy groceries next month, and you do not give it back to me within the month and I am forced to borrow money to pay for groceries, then I would be in my moral right to charge you what you owe me plus the additional amount I had to borrow to feed my family.
Objection: You say that charging interest does not produce anything, but this is untrue. Charging interest has produced a lot of economic prosperity. Answer: What is the difference between the words produced and facilitated? Produce = Cause to happen or come into existence. Facilitate = Make easier. I would say that lending money facilitates production but is not itself production. But I do admit that it is a reasonable argument to say charging interest on loans has enabled more lending to happen and this has helped in some way produce more businesses to start and has led to more goods and services ultimately being produced. Yet, even if we could agree that charging interest has in some way produced economic prosperity, would that make charging interest morally acceptable? Charging interest on loans is still reaping where you have not sown and we know that the ends can never justify the means, right? Also, are we so sure economic prosperity as we see it today is a good thing? And if it is, is there really no other way to come by it?
Objection: So, you think banks and money lenders should all go out of business, and everyone should just rely on friends and family if they want to buy a house or start a business?!?! Answer: In short, yes! If lenders are willing to not charge interest and just receive what they lent out, then the church has no problem with that nor does anyone who contributed to this article. Plus, banks could easily still function by providing credit cards and payment gateways and a whole bunch of necessary services. But why would relying on your friends and family for major purchases be a bad thing? We know that the family unit is crucial to the flourishing of the Kingdom of God, and it is always under attack by the enemy, and lending at interest has made us more independent and prideful, and less family-oriented, changing this dynamic should be a goal of Christians. What cost are we willing to pay for so-called economic prosperity?
Objection: The church has not condemned charging interest on a loan it has only said that usury is a sin and the definition of usury according to the catechism is kind of unclear. Answer: This is partially true. The Catechism of the Catholic Church has not condemned taking interest on money lent. However, authorities from the church, like the ones listed above, have stated in plain English that taking interest is usurious. The Church in some ways is conflicted on this issue and the lack of clear teaching is concerning, but this does not mean that taking interest on loans should be blindly accepted! Rather, it means that more thought and prayer need to be given to this subject to discern the truth!
Remember that we are not put on this earth to grow our bank accounts, buy homes, and start fortune 500 companies. We are put on this earth with the sole purpose of becoming saints and reaching Heaven. We are petrified of being poor and we cling to things like lending money at interest because of some lie we have been sold that if the current economic system is not allowed to continue as it pleases, we will all become destitute. But encouraging moral people to operate within a free market will undoubtedly produce the opposite of destitution. Not to mention we should not be so fearful of being poor in the first place for our Lord loves the poor and humble (Luke 6:20-21).
Please keep in mind that business partnerships are not what is being discussed here. If you partner with your buddy to open up a food truck and he does the majority of the manual labor and you do some of it and put in capital, then getting something out of the business based on its productivity seems perfectly just. What we are talking about is just giving money to someone and then going about your business expecting a return on that money at a later date without taking any risk or doing any actual work. Wait, isn’t it risky to lend money? Usually, people lend out of their excess, so no real risk of hunger or poverty exists. But regardless of the risk, the issue of not doing work is still present. Plus, if you have a legal contract in place, as is the case with most modern lender relationships, then the risk is virtually non-existent. Non-existent risk and payouts for very little, if any, work seems to be problematic for the Christian.
Maybe after all that you are still convinced that lending money is a service and deserves some sort of compensation and you do not care what the church or C3 has to say on the matter. The question would remain as to why you are an advocate for charging interest on loans. Is it because you want the ability to buy cars? Is it because that is how you make a living, and you don’t want to change professions? Is it because you love the perceived economic prosperity that it has played a role in facilitating? Even if these are the reasons you want to keep up the practice of usury, they do not answer the most important question. Is it moral to charge interest on loans? Is it moral to give in your abundance, do no real work, and demand a return from someone who was in need?
TOPIC 2 – The stock market is immoral.
Is speculation wrong? Does that make the Stock Market Immoral?
Speculation (from Oxford Languages via Google) – investment in stocks, property, or other ventures in the hope of gain but with the risk of loss.
The Catechism of the Catholic Church on Speculation (Paragraph 2409) says “The following are also morally illicit: speculation in which one contrives to manipulate the price of goods artificially in order to gain an advantage to the detriment of others;…”
Catholic Encyclopedia on Speculation says “A term used with reference to business transactions to signify the investing of money at a risk of loss on the chance of unusual gain. The word is commonly used only when the risk of loss is greater than ordinary business methods and prudence warrant.”
The Stock Market (Investopedia.com) – A venue where buyers and sellers meet to exchange equity shares of a public corporation.
The Workings of the Stock Market:
The stock market is not directly condemned by the church but speculation in some regard is. The definitions of both the stock market and speculation are somewhat ambiguous according to the Church and even secular society to some extent. These unclear definitions and unspecific teachings leave us to our own reasoning ability to decide whether or not the stock market is immoral. So, let’s try to discern the morality of the stock market by understanding what happens on a stock exchange step by step. 1.) A company decides to IPO (Initial Public Offering) which means go public and sell shares of its company to willing parties. 2.) Wealthy investors, institutional investors, well-connected persons, and hedge funds buy up the shares of the newly listed public company. The average everyday investor with a Robinhood account will most likely never be able to buy these initial share offerings unless they are very well connected. 3.) The company receives funds from the people who buy the IPO shares and use that money to grow. This is the first and last time that a publicly traded company receives any capital from the purchase of its stock. 4.) The wealthy investors who own the IPO shares of a company want to make the price go up on these shares. They do this by pressuring the company to grow for appearance purposes and manipulating the supply and demand of the shares in various ways. 5.) Once an initial investor in an IPO sells their stock of a company the buyer of that stock is not directly supporting the company in any real monetary way. Rather the buyer is supporting the seller in a direct monetary way. The company does receive some indirect benefits from the constant purchasing and selling of its stock on the market (Think: Publicity).
Shareholders of a company do get voting rights at corporate board meetings, but you must own a LOT of shares to get your voice heard at any of these meetings. Institutional investors own on average about 71% of shares in any given company and everyday retail investors only own about 29% of shares of any given company. Institutional investors are good at voting in company meetings utilizing almost 90% of the voting rights they have while retail investors only use about 25% of the voting rights they possess. Retail investors are only using a quarter of their voting power and they only own a quarter of the shares, to begin with. Long story short, retail investors do not have a voice in company board meetings (Data by Proxy Pulse).
A quick summary of the workings of the stock market. A company only benefits financially from initial wealthy shareholders and everyone else is just lining the pockets of the person whom they bought shares from. Shareholders do get voting rights at certain company meetings, but the average retail investor does not have a real voice in these meetings. The shareholders of a company care little about the company itself, rather they care about the perception of the company and the price of the stock. If you read this article by Investopedia explaining how the price of a stock is determined, you will notice that it has nothing to do with the performance of that company and everything to do with demand for its stock. My friends over at newpolity.com recently made a comment in one of their podcasts about Apple that showcases how detached stock prices are from the companies they supposedly represent (Apple stock 4X’d during a time when their business operations remained stagnant). If you need more convincing on this point, then please read the GameStop story from a year ago.
All this means that the stock market as we typically interact with it is not tied in any real way to the production of goods and services and is therefore speculation which is a sin. If you buy a stock, you are doing so because you speculate that the price of that stock will go up and you can sell it for a profit. You are also reaping where you have not sown just like the practice of usury. You may defend the stock market by saying I am investing only in stocks of companies that I believe are doing good. To which the appropriate response would be, why don’t you support that company directly by sending them money or volunteering? Your response may be, like mine was for so long, that this is imprudent which is just a way of saying I don’t care about supporting this company I just want to get an ROI on my speculation. If you wanted to support a morally good company, then send them a financial gift or go work for them if they will have you but buying their stock on the secondary market is not supporting them in any direct way. They are not receiving any of the money you just spent. You would support the company better by making a positive social media post or putting a bumper sticker on your car advocating for their product or service. You are of course helping major shareholders of a company when you buy the stock of that company and you are, as previously mentioned, helping the company in some way with brand recognition. But all this leaves us with the conclusion that the only practical reason to buy a stock is to wait for its price to increase so we can sell and receive a profit (i.e., reaping where you have not sown via speculation).
The Best-Case Scenario:
The best-case scenario is you have something like a publicly traded Christian book company and you want to invest in their stock because they do some truly Good things. You buy their stock, and you attend all the meetings and you vote every chance you get, and you let your voice be heard while also promoting this company to all your family and friends. Would this situation be morally acceptable? Keep in mind that you have not given this company a penny, you only gave the person who sold it to you some money. Also, keep in mind that all that voting, and meeting attendance does not mean anything because the institutional investors are the ones with all the say. Plus, all the promoting you’re doing to your friends and family could have been done without purchasing the company’s stock. So, why did you buy the stock in the first place? The only conceivable reason is that you expect an ROI on your investment. But why should you receive an ROI? You have not written any of the books, done the publishing work, or manage the company. You just gave some random person some money and hope to get more money in return at a later date. Putting it bluntly, this concept seems to be lazy and certainly not spiritually fruitful. If this spiritually fruitful comment seems out of place to you, please remember the questions asked at the beginning of this post.
Wait, what if you are one of these institutional investors with millions at your disposal and you buy up the majority of shares offered when a company IPOs? You do not sell your shares and you participate in board meetings and help direct the company towards the common good. Is this, okay? I suppose it would be, but if you have that kind of power and you care about the company and not about gaining profits from your shares you probably could have approached the company directly to partner with them and helped keep this theoretical great company from going public and selling their soul to the demon of constant economic growth.
But the Church owns Stocks!!!
Yes, the Church does own stocks and sadly enough there are financial firms, indexes, and advisors that claim to be Christian. But if the argument you are trying to make is that if the church does it then it is good is an awful argument. The Church has committed some very heinous acts in its history. The worth of the Church has always been in the Sacraments and its moral teachings, not in what it does outside of those purviews.
But why would the Church not just come right out and say that the stock market is immoral? Greed, ignorance, misplaced fear of crippling the world economy, or any number of reasons. The Church is corrupt and does many awful things, but again, we must repeat that the worth of the Church is in the Sacraments and its moral teachings as far as they are in alignment with our Heavenly Father’s will. The Church should never be thought of as a pristine organization without blemishes because it is obviously not. Plus, we must keep in mind that the modern economy is fairly new, and the vast majority of the world has no clue how the stock market even works. The Church is primarily concerned with saving souls, and it must be forgiven if the complex workings of secular finance are not at the forefront of the Church’s mind.
How should we invest?
Perhaps you take issue with all this because you know that money is no longer a barren asset like it was in the Middle Ages and we should invest our money and be prudent with it. I have to say I would somewhat agree with you. The nature of money has certainly changed over the last 600 years. Investing is something that everyone should do. But what kind of investing should we do? Should we just buy things like stocks, gold, and cryptocurrencies and wait on them to increase in value so we can sell them for a profit? This speculative and lazy behavior cannot be the best way for the body of Christ to behave with our God-given capital. Perhaps the right way is to start businesses, create goods and services, and buy property and work on it. Investing is prudent but we should be investing in things that contribute to society and produce things that society needs.
My dad would tell me all the time as a kid that the bad way is easy, and the good way is hard. This was wise advice because it goes against modern thinking that the words “good” and “easy” are synonyms. These words are certainly not synonyms. Our world might be getting easier because of all the economic prosperity, but it is not increasing in moral goodness! Can anyone honestly say that the society that sacrifices their children to the god of convenience, cuts off the healthy genitalia of children, promotes vanity over modesty at every turn, condemns the nuclear family, covets wealth and power above all else, and vehemently denies Christ on the public stage is a “Good” society? Of course not. We know that we are living in a depraved society and our greed and sloth have certainly played a role in our depravity. Investing is prudent and should be practiced but all investing is not moral. The investments that come with more hard work and more risk are more often than not going to be the more moral investments. Should we as Christians expect anything less? After all, the goal of this life is not ease, it is Heaven. Our Lord’s burden is light but we still must pick up our cross and follow him.
The stock market and charging interest on loans (usury) are both immoral because they reap where they do not sow, and the former is clearly the sin of speculation as defined by the Church. These things have facilitated some economic prosperity, but they have also created economic collapse, caused inflation, separated families, and promoted greed as a virtue. Remember, economic prosperity is not the Christian Goal, Heaven is! What good does an abundance of food, homes, cars, and college educations do for us if we have lost sight of Eternity? And it is worth repeating the question, are we confident that all the economic prosperity we have experienced in the last few centuries could not be achieved through morally just people operating within a free market? It is conceivable that we could still have houses, cars, and any other good if people were okay with selling their products and accepting over-time payments and companies just grew steadily and appropriately by making good products and services. Does anyone think that we would all become destitute if money lenders could not charge interest on a loan and companies could only expand based on how many products or services they sold? Come on, let’s be honest!
Moving forward C3 will still be discussing all sorts of investments including stocks but our rating system will no longer apply to stocks because C3 believes the market itself is immoral