Front Page Titles (by Subject) Useless Usury Laws - Literature of Liberty, January/March 1978, vol. 1, No. 1
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Useless Usury Laws - Leonard P. Liggio, Literature of Liberty, January/March 1978, vol. 1, No. 1 
Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.
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Useless Usury Laws
“Usury: Utilitarian or Useless.” Florida State University Law Review (USA), 3 (1975): 169–235.
Debtors pay the direct and indirect costs for complex usury statutes. To determine this, we can survey the current system of credit regulations, including the historical development of modern credit transactions, the escalated use of credit cards, and the contemporary hodgepodge of legislative and judicial exceptions to the usury laws. We can also examine the methods used to avoid usury laws.
Current usury laws constrict certain types of credit. Supporters of these regulations have often based their arguments on myopic views of society and its needs. They have devised hypothetical arguments to justify a system of ad hoc regulations detrimental to the financial and social structure. Neither the educationally and economically deprived (the supposed beneficiaries of protective or low-rate usury laws) nor those sophisticated enough to avoid the pitfalls, benefit from the present arrangements.
One can develop five models of a credit system: (1) organized inaction (a stopgap arrangement that ideally would unify all rate ceilings, rates, exceptions, and complexities into a single comprehensive statute); (2) loan sharking plus (a system that traditional usury laws have stimulated rather than restricted); (3) public utility (increased regulation would be a drastic error because of the constant tug of war between consumer groups for lower rates and industry for higher rates); (4) free market system (which opts for maximum competition); and (5) compromise (which would allow parties to agree but would give courts retentive power to declare contracts usurious if excessively harsh).
The free market model would best fit the needs of the general population. The goal should be to stimulate competition among lenders. All institutions should be free to enter and compete in the lending area with little government intervention. The present system should be revamped in the direction of the free market model.