Description
The paper compares Adam Smith’s philosophy of Usury to the modern theory of usury and critiques the theory Adam Smith presents. After the comparison, there is discussion about how Adam Smith wanted to regulate usury or interest rates. I then present how asymmetric information played a role the 2008 financial crisis and give a brief overview on some of the causes of the “Great Recession” based on published literature. I then take Adam Smith’s theory on usury and describe how Adam Smith would have reacted to the 2008 crisis and the causes leading up to it. Adam Smith would have argued against the deregulation because Smith believed in only lending to the “sober people”, people who have proven themselves in business already.