This is not an alternative to the existing system to be fought against: it is complementary to the existing system.

The Swiss WIR credit clearing system is a great example. When times were hard (as in 1934 when it was introduced) businesses used it. When it was more convenient to use bank credit, then they use that – at the moment businesses are, I understand, swinging back to the WIR.

I am simply proposing to extend the WIR business to business credit clearing model to include individuals as well. The software exists: all it needs is an agreement between consenting Businesses and Adults….

Because the model is based upon consensual “two way” protocols there is nothing whatever to stop consenting adults just going ahead and doing it.

In my view, this revolution has already started and there is nothing “they” could do even if it were in their interests to stop it. In fact, it is in their interests to adapt their business model to it, because their capital requirement tends to zero if they do.

This revolution began with online music sharing – which continues to revolutionise the music industry – and in my view it is about to revolutionise the finance industry through online risk sharing and revenue sharing.

And we will shortly find, as the productive sector falls down the chasm opening up before it, that in fact, as Maggie Thatcher said….. “There Is No Alternative”

Best Regards

Chris Cook

——————————————————————————–
Date: Thu, 5 Feb 2009 13:55:28 +0100

Chris,

Thanks.

I entirely agree that we might well be in “a once in a thousand years transition” and that we will almost certainly never return to the apparently “benign” if actually treacherous conditions as they were pre-crash. I am therefore intrigued and sceptically encouraged by what you write but find it hard to get my head around it. It is hard to imagine such a transformation. Even harder to see the existing political and financial systems accepting it without a giant and damaging death struggle.

This is revolution! A complete “game-changer”. Quite seriously, how does one actually go about it at a personal level? In simple words please.

best regards,

Hugh

At 10:59 AM 2/5/2009 +0000, chris cook wrote:

Hugh

I think you underestimate what is going on. We are going through a once in a thousand years transition, not a cyclical blip.

The Hilton group did not create a >£1bn “Capital Partnership” because Chris Cook said so: they did it because it works. The City of Glasgow did not implement three municipal partnerships (LLP’s) (albeit conventionally financed) because Chris Cook suggested it either – they did it because it works.

We are seeing the emergence of collaborative working and business models simply because they work better than others. LLP’s and LLC’s (for instance) are becoming pervasive in use, and moreover are being used for purposes never intended.

More importantly, however, is the way that partnership frameworks enable the direct connections of the Internet. What I advocate is in fact a business model for the Internet Age, and that indeed is how I stumbled across it in the aftermath of a “Dot Com” I set up some 10 years ago – unfortunately for me and my fellow shareholders – 10 years too early (albeit the architecture I proposed then will be used in the global gas market project, if that goes ahead).

It was here

http://www.exchange-handbook.co.uk/index.cfm?section=articles&action=detail&id=38754

8 years ago, that I wrote down the lessons I had learned, and it is only now that these ideas are being picked up and becoming “mainstream” in the tech world at least (in fact the FT just gave away a £10k prize to someone who convinced the judges that “Peer to Peer finance” is the “Next Big Thing”).

I believe that “Peer to Peer Finance” will be introduced virally in the next few years (one to three) – as with Napster and Hotmail – because the proposition is a “killer” application.
Interest-free unsecured credit (aka “time to pay”) – which is unobtainable from Banks – to finance yourself and your business (albeit not cost-free…) ; and
Interest-free investment in productive assets (but carrying a return in production or revenues) to replace secured debt and conventional equity at a fraction of the cost.

I am proposing practical solutions to practical problems. The Banks have nothing to fear, and everything to gain: in a service provider model they no longer need to put their capital at risk by creating credit based upon it….which is just as well in the current climate…

The fact is that this “collaborative “Open” capital model is emerging because it is SUPERIOR to the existing model, and those enterprises which do not use it will be at a disadvantage to those who do. Conventional capitalism will eat itself because to pay returns to rentiers (people who make money from money) – whether shareholders in Corporations, or bank manufacturers of credit – is simply inefficient, when you can fund yourself simply by selling production forward (unitisation) or by mutually sharing the risks of credit with the rest of the market (credit clearing).

Finally, Hugh, there simply is no alternative. The deficit-based system is finished: brought down by a terminal shortage of capital.

Within a few years you’ll be wondering – like the rest of us – why we were taken in for so long.

The attached is about to be published by a pretty influential US think tank btw.

Best Regards

Chris Cook

——————————————————————————–
Date: Thu, 5 Feb 2009 10:03:55 +0100
RE: State nationalisation, state large-scale investment in pet projects like wind, and so on : a personal response : equitable carbon pricing is all that’s needed, and a bit of a general “ramble”

Chris,

Thank you for copying me. This is intriguing stuff. And very convincing if humanity were starting from scratch, which we may well be doing after this crash. But you are taking on the whole political and financial establishment. And ordinary folk like me find it hard to get our heads around it. So I hope the Iranians are paying you well in MUNNY.

I hope you can make some headway in “reinventing government from the ground up”!! You might get some traction in Iceland right now!! I fear it is only a matter time before the UK goes the same way!

Best wishes and keep me copied in please.

Hugh

At 04:42 PM 2/4/2009 +0000, you wrote:
Interesting post, Paul.

> I take the rather old-fashioned view that “the best government, is less
> government”. I believe that spending vast sums of taxpayers’ money on
> almost anything, is a grave error.

I see the future in reinventing government from the ground up.

As currently configured, neither the “Private” sector – read “owned by a Limited Liability Company” – nor the Public Sector – read “owned by the State” – are fit for purpose. We need something else – a new, non-hierarchical and networked synthesis which operates “Not for Loss”, and I believe not only that new partnership-based legal frameworks will enable this, but that the process of transition to them has already begun.

>The government does not seem to
> understand that money is not free, there is interest to be paid, and is
> putting our nation in debt with all these bailouts to banks that don’t
> even then lend on to small businesses (as a cousin has just discovered
> in a nasty way – they lent him money on a 2 year term, he spent it on
> the agreed project, a lease on a new shop [the rent to be paid up-front
> - a common condition now], a week later they said they’d reviewed their
> lending policy and wanted it back at once, nearly crashing his perfectly
> successful business where he runs a chain of high class furniture
> shops).

You are basing your thinking on the conventional assumption that Money must necessarily be interest-bearing credit issued by Banks. This is a fallacy.

Money has no cost.

Credit has a cost, consisting of the cost of system operation (including obscene salaries); the cost of defaults; and (usually) excessive profits.

Capital (ie property in productive assets, such as land, machinery, and now IP) has a market price, which has declined over the centuries from 25% pa in Babylonian times; through 10% pa in medieval times; 5% pa at the dawn of the industrial revolution, and it is now probably between 0.5% and 1.0% – all of these in real terms.

See Gregory Clarke’s book in respect of this ….

http://books.global-investor.com/books/258486/G.-Clark/A-Farewell-to-Alms/

A good book, albeit he draws a couple of wrong conclusions from his research IMHO.

I digress.

While credit is implicit in a monetary relationship, it need not actually be money. You only have to look at the Swiss WIR credit clearing system, where billions of Swiss Francs’ worth of goods and services change hands each year by reference to Swiss Francs – as opposed to in exchange for Swiss Francs – to see that there are perfectly workable and complementary solutions available which could involve Banks as service providers, as opposed to credit middlemen.

That is what my presentation in Teheran last week was about – and I met several ministers, and their OPEC rep while there.

http://www.slideshare.net/ChrisJCook/petro-clearing-january-2009-farsi-4-presentation

This follows my earlier presentation re “Unitisation” of energy last October.

http://www.slideshare.net/ChrisJCook/introducing-the-petrotrust-presentation

> Enough about wasting money in the broader picture : now to energy. The
> best way to encourage low-carbon generation is just to price carbon
> equitably in my opinion, over the longest possible time frame, and the
> market will provide. How else can anything be rationed, other than on
> price, in a free society ??

I agree with this. I am proposing a “Petro” energy “Value Standard” by reference to which Units redeemable in energy will circulate in an “International Energy Clearing Union” . Not only is this feasible, but I believe the first steps towards doing so have already been made, through a proposal for a global market in “unitised” natural gas.

Once energy is “unitised” in this way it may be and used as the basis for transactions, then it turns the conventional assumptions of our deficit-based economy on their heads. Investment in energy efficiency (Negawatts) – which is the cheapest energy there is – and in renewable energy (where fuel costs are zero, and operating and decommissioning costs known) may be financed simply by selling Units redeemable in energy to investors and using the proceeds for investment in energy savings and renewables.

We may apply a carbon levy to fund a “Pool” and then use this pool to invest in “Unitised” renewables and energy savings, and in infrastructure such as Supergrids to transcend any local anticylonic difficulties. Taxpayers may then be allocated an “Energy Dividend” in Units, which they may use, or exchange for something else.

Nuclear energy may well stack up using this variant of energy accounting as well, but I think that it is much more problematic than renewables and energy savings which are a no-brainer, since we are exchanging for value now something that will cost us nothing to redeem in the future.

As for your other opinions, I think that drugs should be legalised and use regulated. Prohibition is the biggest problem, and one would have thought the Yanks had learned this. As for crime and punishment, I don’t agree with violence in any form, state sponsored or otherwise, but that’s just my view.

Best Regards

Chris Cook