However, let's look at the bigger picture to see if we can spot any unintended consequences of the policy you hint at.
Interest is the price of money. Quite literally, it is the price that a person pays for buying access to a commodity called money now, rather than some time in the future. It is the price that another person is paid for selling access to their commodity called money.
What you're essentially advocating is price intervention in a market. You're essentially advocating that the supplier of this commodity should give their commodity away at a lower price than the natural price arrived at by the market.
The control of prices in just about any commodity is generally a precursor to a complete disappearance of that commodity on the market. Price controls on food are the best way to ensure food will stop being produced, leading to empty supermarket shelves, famines, riots, etc. Soviet Russia had a tight hand on prices during the 20s and 30s, which resulted in mass famines killing millions of people. A similar story is now unfolding itself in Venezuela. Whether you approve of the moral outlook or not isn't the point, it is a mistake to let a moral outlook, any moral outlook, dictate the price of a commodity.
Price isn't just what you pay for something, it is a signal to the market of the relative scarcity of that product, and the necessity for the producers in the market to make more of it. That signal is essential for efficient markets, i.e. for markets to supply what we all demand. Think of the aggregate of all prices in the markets for all commodities as the neural signals that are fired off through your brain to enable it to function. Of course, that information is spread out over millions of market participants, but it is in aggregate much more accurate than any small committee dictating prices could ever model, whether they have the right moral reasons to do so or not.
You know, a lot of people genuinely believe in simply reducing the reach of finance. Usury laws are only a means. The ends are to make it possible to carry out economic life without debt for most of society, and to reduce the ability of the financial industry to generate virtual/paper debts that the real economy cannot pay.
Price control of commodities is not the same thing as controlling the interest rate on loans. No one is going to starve if they can't buy a car that is out of their budget. They will simply end up having to do something more practical, like getting a used car, riding a bike, or taking public transportation.
Errors in determining the price of money do have fatal consequences.
When interest rates jump from, say, 2% to 4%, in terms of cashflow this means a doubling of expenditure on a regular basis. If your mortgage was X per month, it'll now be 2X per month, which will immediately affect the expenses you have for other goods, such as food, utility bills, etc. If your business loan repayment was Y per month, it'll now mean 2Y per month, meaning you may not be profitable anymore and go out of business.
The mistake you're making is thinking money is a thing that exists separately from real things, a unit of account and medium of exchange.
Money is a product in itself, that enables humans to go forward and back in time (through loans and savings) in order to plan the storage and use of the wealth they've created or are yet to create. Without this function, no wealth is created but the tiniest subsistence-level kind.
So, determining its price makes all the difference between an economy that operates at subsistence-level, or one that actually functions.
However, let's look at the bigger picture to see if we can spot any unintended consequences of the policy you hint at.
Interest is the price of money. Quite literally, it is the price that a person pays for buying access to a commodity called money now, rather than some time in the future. It is the price that another person is paid for selling access to their commodity called money.
What you're essentially advocating is price intervention in a market. You're essentially advocating that the supplier of this commodity should give their commodity away at a lower price than the natural price arrived at by the market.
The control of prices in just about any commodity is generally a precursor to a complete disappearance of that commodity on the market. Price controls on food are the best way to ensure food will stop being produced, leading to empty supermarket shelves, famines, riots, etc. Soviet Russia had a tight hand on prices during the 20s and 30s, which resulted in mass famines killing millions of people. A similar story is now unfolding itself in Venezuela. Whether you approve of the moral outlook or not isn't the point, it is a mistake to let a moral outlook, any moral outlook, dictate the price of a commodity.
Price isn't just what you pay for something, it is a signal to the market of the relative scarcity of that product, and the necessity for the producers in the market to make more of it. That signal is essential for efficient markets, i.e. for markets to supply what we all demand. Think of the aggregate of all prices in the markets for all commodities as the neural signals that are fired off through your brain to enable it to function. Of course, that information is spread out over millions of market participants, but it is in aggregate much more accurate than any small committee dictating prices could ever model, whether they have the right moral reasons to do so or not.