"peer to peer" credit--I give you credit directly, no bank hierarchy? e-bay/paypall...but that is to buy assets--asset transferance? "Investing"...for what reason? For everyone's benefit? For the benefit of both investor and the productive asset? If the asset is productive, why does it need an investor? And why does the investor invest--to what end? Those are probably the wrong questions, but your sentence isn't creating an image for me--not yet.
Firstly, there is the cost of credit: I reckon that is probably of the order of 2%, consisting of a combination of system costs and a "natural" level of "defaults" ie the guarantee cost.
Yeah, 1.5% is what I understood: the difference between Nationwide's mortgage rate and their saving's rate. So, the banking cost--the cost of "looking after the money and the transactions" is @ 2% of the cost of any money-business?
I reckon the actual "market price" of "risk free" capital (eg land/location rentals) is probably around 0.5% to 1.0% in real terms. The other aspect of Capital "cost" is entropy ie depreciation/ maintenance. Maybe 1 to 2%pa ?
Okay, I don't understand this. Capital--e.g. land. I want some land to grow some vegetables. It is in a prime site, centre of town, south facing, excellent soil. Someone else owns it. How does me using that land cost me only 0.5-1.0%? And 0.5-1.0% of what? Or rated against what? Maintenance costs--some items have unlimited life (if maintained), such as a brick structure. Some have short lives--certain fabrics (a pair of jeans)...but okay, average maintenance costs might be 2%--that sounds low to me, though. 10%? To maintain my bike costs over a tenth--per year--of its original value (cost of bike £180; yearly service including parts--brake pads, tyres, cables, spokes, labour costs--all for say £30)...
I don't see how the phone example...I had a look at the site, but...heh...this bear has an even smaller brain...how does Grameen demonstrate 1.5% admin costs, 1.0% asset costs, 2% maintenance costs...and then the profit--it was the profit that I thought was historically 4-6%--the profit as natural growth (not necessarily growth in resource usage--can also be growth in things we can do with the same resources)...Telenor you say hoovers out too much. I thought "the right amount" was somewhere between 4-6%--didn't HiD once say that no investor would consider 4-6% a worthwhile rate--and that was the problem with the LLP model? (And you pointed out that certainly some businesses--some organisations rather--are happy with 4-6% plus there are the benefits of membership--profit is "take away", but mucho busy-ness--much invention can happen "on the inside"--"for free!"--but everyone has to use money to obtain what they can't get on the inside--or even to get things on the inside, so productive asset = work = money (credit) = value over subsistence (slaves aren't paid--they are fed and housed but have no spare "profit"...ach okay...either there's some sense in what I've asked or not...and an appy crerse moose to you and Solveig! Don't fight forces, use them R. Buckminster Fuller.
the widespread adoption of mutualised "peer to peer" credit and new means of investing in productive assets.
I have succeeded in confusing you again as between Credit and Capital! Credit is "time to pay": Capital is investment in productive assets.
By "Peer to peer credit" I mean a seller of something giving a buyer "time to pay" by accepting his IOU - as opposed to a Bank's IOU.
The "Guarantee Society" facilitates this by applying a collective Guarantee which both buyer and seller contribute towards. The Bank no longer acts as middleman - taking his cut from between deposit rate and loan rate - but as a "service provider" who manages the creation of IOU's by the members.
Members do not pay "interest" but they do pay for the use of the system, and for the use of the collective guarantee. The result is essentially mutualised Banking "at cost" or on a "Not for Loss" basis.
Investment is totally different from credit, because in an investment there is no obligation to repay (although there is the possibility of "buying back" investment)
By "new means of investing in productive assets" I mean that an investor may (for instance) invest directly ("peer to peer" again) in a new wind turbine by buying (say) 50 Mega Watt/ Hours from its future production at an agreed price of (say) £50.00 per Mega/Watt Hour.
Or he may put up £10,000 and in return receive 20% of the gross revenues from a short film - if there are any revenues. The former is a new form of "Energy Debt": the latter is a new form of "Equity Share".
Re Capital etc the rate of return ON Capital and/or return OF capital (ie accumulated money or money's worth) should be commensurate with risk.
I have no problem with investors getting massive rates of return on investment, provided they are taking a risk. As with the example of a film, above, there is no reason why the investor who puts in £10,000 shouldn't rake in £100,000 or £1 million in the unlikely event of the film being a big commercial success.
But investing in a building rented by the government is a very different thing. The return is much more certain, and therefore the reward commensurately less.
My point is that people's expectations of risk-free returns have become divorced from the reality of oceans of money chasing limited investment opportunities, and the reason for this has been inflation - itself directly caused by a deficit-based economy.
The market in land - and the economies built upon it - is an incipient disaster zone in the US and UK. We need an entirely new approach to land and property finance IMHO.
