Peer to Peer People-Based Credit Through Guarantee Society Agreements
Discussion
A proposal by Chris Cook:
"Private credit creation got out of hand and created monstrous bubbles in property prices, and left a legacy of unsustainable debt; imbalance of wealth; general shortage of purchasing power and systemic shortage of bank capital, which has indefinitely crippled the 21st century system of public and private credit upon which rely.
The solution is to create a system of 'guarantee society' agreements whereby businesses and individuals may extend credit directly (or 'Peer to Peer') and this credit will be backed by a mutual guarantee agreement.
It was Stalin who said: 'Trust, but Validate' , and validation for such a mutual guarantee would come from a combination of user subscription (to cover costs) and a charge to both sellers and buyers for the use of the the guarantee.
This is close to how the present VISA system operates. There are no deposits in this credit clearing system: and substantial transaction charges are made upon sellers, while buyers pay interest on outstanding balances.
Peer to Peer credit would essentially be a community VISA system owned in common and operating 'not for loss'
As for 'Guarantee Societies', these have quietly existed in the City for almost 140 years, where P & I Clubs share pooled risk – such as the risk of shipping losses – in a system which has been managed by the same service provider for 135 years.
Any asset owner may – and many do - extend undated credit redeemable in payment for the use value of production of his asset, but this tends to be restricted to private businesses.
The innovation proposed is for owners of land & buildings, to issue undated credits redeemable in payment for rental value: eg a £1.00 Rent Credit. These would be sold or exchanged for value at a suitable discount, so that a £1.00 credit sold for 80p would give a 25% return. But the rate of that return would depend upon whether there is a complete building; the actual rental charged; whether there is an occupier; and whether he he is willing and able to pay the rental.
This is direct 'Peer to Asset Credit, and while there is a return, which comes from the use of the land and the capital invested in it, there is no payment of money for the use of money (compound interest). Such credit will out-compete conventional credit, because exchanging value for nothing is simply inefficient."