How Debt Works

As far back as 8,000 B.C., the inhabitants of Mesopotamia used small clay tokens to keep track of loans of sheep and wheat. The marks on the tokens evolved into the cuneiform writing system, the earliest in the world. The Sumerians invented the concept of interest around 3,000 B.C. The Hebrew Bible and Hammurabi's code include prohibitions against certain kinds of money lending and punishments for failure to repay debts, including indentured servitude. Debtor's prisons, another historical punishment for chronic debtors, date back to mid-16th century England. These filthy, overcrowded prisons were brought over to the American colonies and continued to exist well after United States independence. The terms of a loan include the amount of time the debtor has to repay the full amount and the interest he will be charg­ed over that... [read full story]