Insuring without Usury

In general, an insurance contract is an exchange between parties whereby the insured pays a premium in order to receive some guaranteed return in the case of some event. This event may be death, property damage, illness etc. The insurer is on the hook in the case that the event occurs.

In the case where the insurer is a person and the guarantee is backed by some assets and his promise, then the contract is usurious on the part of the insured. The insured is expecting more than he received and the insurer is on the hook for it. The insured attempts to make a property claim against a person rather than some property.

On the other hand if the contract is backed solely by a pool of assets then the contract is not usurious. The expectation of a greater return is grounded solely in real assets. If the insurer does not have sufficient assets to pay a claim, then the insured cannot pursue a person but only the property pool against which he has a claim under certain conditions.

In order to effectively manage the risk of insuring, generally, a large pool of assets is needed which is accumulated into a company that bears the property claims. In practice, insurance contracts are generally not usurious.

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Usury: Sodomizing Art

In the prior post, I noted how usury relates to a lack of security in a contract. Let’s draw this out a bit or back. Dante puts usurers and sodomites in the same circle of hell, in fact usurers are in a low sub-circle. Let’s consider why this is the case.

Sodomy is a violence against nature, because a sexual act is naturally productive but this is made sterile in sodomy. It is an attempt to draw fruit from a barren act. It is further an assault on God who established the right order of sexual acts as being essentially order to procreation.

Usury is a violence against art, because the industry of art is productive but in a mutuum contract there is nothing to produce with. As we saw, in the contract, the owner has property over which has ownership and can draw forth fruit through art and industry. It is an attempt to draw fruit from something barren, a nothing, without labor, risk or expense in the term of the Fifth Lateran Council. It is further, an assault on God who rightly order justice between men and fruit of labor.

In this way, a mutuum contract does not seem to be an economic act. It is an act of charity between friends. Certainly, this is still bound by justice and borrower is bound to repay the lender, but it is not a contract that is productive of any economic value in itself.

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Usury and Security or Why You’re a Slave

Part of my comment here:

As Zippy has pointed out and St. Francis Xaiver has said, the issue of usury revolves around “the whole matter of security for contracts.” It is helpful then to consider something that has security. So, let’s consider a corporate bond.

To help with clarity on the problem of usury, consider different contract, namely a corporate bond and a mutuum contract.

A corporate bond in general is a contract of exchange whereby the lender exchanges some property, typically money in the form of currency, to the borrower for a claim against the property of the company. The property of the company is represented on the balance sheet. The claim against said property appears on the liability side of the balance sheet. So, the bond represents a real exchange of property, such that if the company defaults the lender can receive the return of his claim by the liquidation of the property. Therefore, there is some real property that securitizes the bond against which the lender has a claim and charges some agreed rate.

In a mutuum contract, the lender exchanges some property, typically money in the form of currency, under the pretext that is will be used up in some manner, that is alienated from the borrower in such a way that a return in kind is expected, for the promise from the borrower of a return in kind. In this case, the lender has no real property claim, for the ownership of the property has been transferred to the borrower and there is no other property in the exchange. What securitizes the mutuum is the promise of the borrower, which is not property. Therefore, there is no property against which the lender has the authority to charge anything.

The charging of interest on a mutuum contract can be viewed from a few perspectives. If it is taken that there is really no property claim, then the lender has no authority to demand a return and his demand is an act of robbery. If on the other hand, we consider wrongly that the promise is property then the lender is making a property claim against a person, which is a claim of enslavement. Hence, the reason usury is a heinous act deserving of perdition.


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Modeling Notes

This is from my limited experience with statistical modelling. 

  • Monte Carlo simulations provide a perspective of the state space given a certain set of parameters for some function.
  • These simulations are typically designed from my experience so that each return value has a similar probability. So it attempts to provide a probability distribution of the state space. 
  • Sensitivity testing typically gives additional information about the state space. Given some shock what does the distribution across the state space look like.
  • From a mathematical perspective, the state space is entirely determined given a set of parameters. The problem is then to determine the probability of this set of parameters which produces this state.
  • In financial modeling this becomes very complex because this is typically calculated by a time series of rates, returns, etc. Effectively each rate and each time point is a parameter of the formula. The difficulty is determining the probility of the time series.
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Not the Real Danger

Fr Longenecker writes:

The danger in freedom of religion is not that people might follow a false religion. That has always been a danger, and even when Christianity was not only the official religion, but was the enforced religion, one could not force belief or faith on anyone. They might be forced to behave as Christians but they could not be forced to believe as Christians.

No, the real danger of freedom of religion is that it becomes the freedom from religion and that rulers will rule with no regard to the laws of God and that eventually the state–while professing to have no religion–will eventually lapse into atheism, and if that should become an ideology (even unconsciously–or especially unconsciously) then that ideology will inevitably be enforced and Christians (and those of other faiths) will eventually be persecuted.

The danger without freedom of religion is that authority may be abused and some abandoning the clear laws will try to coerce others into belief.

The real danger of freedom of religion is that authorities will coerce belief of some faith and definitely the wrong one. Freedom from religion follows necessarily freedom of religion. Freedom of religion fosters and ensures indifferentism and agnosticism effectively supports atheism as the truth. 

The freedom from religion crowd is not an aberration of freedom of religion. It is the product. The difference between them and liberal believers is they really believe their faith is true after decades of state empowerment. That is why they have no issue coercing believer out of the community, before they insist on their forced conversion.

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Pact with Uruk-hai

Discussing usury over at Acton and Grima McKinney still has the same old nonsense to say.

Moreover, he offers to join forces agreeing to infinitely malleable and arbitrary “essentials” of salvation like robbery, murder and enslavement and the other concommitents of liberalism. Tomorrow suppression of Catholicism will join as it has in the past.

Moreover missing the point of my original comment, he offers a quote from an article that makes all the same old excuses. Things are different now. Usury is nonexistent because money is now productive in itself. Ignore the sodomizing coming up from behind. 

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Faith as Proximate Means

St John of the Cross teaches that faith is the proximate means of union with God. This tells us a few things.

  • It is impossible for men. Faith is a supernatural gift.
  • Union with God is in itself the easiest thing for it requires nothing on our part but trust in God.
  • Cooperation with God’s grace requires but that we don’t resist Him, that is we trust Him.
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