Ho ho ... uh oh

We all know what "interest" means: it's the price paid for using credit or money. But why does Interest exist in the first place?

Here's some theories:

1. The Time-Preference Theory explains interest "as an inducement to "engage in time-consuming but more productive activities"
2. Liquidity-Preference Theory explains interest as "an inducement to sacrifice a portion of liquidity for a nonliquid contractual obligation"
3. According to Marxist theory, interest is "a portion of labor expropriated by the capitalist class by virtue of its political power"

Here's a word we don't hear often enough: Usury

usu·ry \'yü-zhə-rē, 'yüzh-rē\ n, pl -ries [ME usurie, fr. AF, fr. ML usuria, alter. of L usura, fr. usus, pp. of uti to use] (14c)
1 archaic: interest
2 : the lending of money with an interest charge for its use ; esp: the lending of money at exorbitant interest rates
3 : an unconscionable or exorbitant rate or amount of interest ; specif: interest in excess of a legal rate charged to a borrower for the use of money

"In Old English law, the taking of any compensation whatsoever was termed usury [emphasis added]. With the expansion of trade in the 13th century, however, the demand for credit increased, necessitating a modification in the definition of the term."

"The total amount of consumer debt in the United States stands at nearly $2.5 trillion dollars - and based on the latest Census statistics, that works out to be nearly $8,200 in debt for every man, woman and child that lives here in the US."

Sources:
-Merriam Webster's Dictionary and Thesaurus
-"interest." Encyclopædia Britannica. Ultimate Reference Suite. Chicago: Encyclopædia Britannica, 2007.)
-Money-zine.com