Debt

Essence of Debt

Debt in a fractional reserve banking system (whether loans, business loans, credit card debt) works in quite an insidius way - and is a perfect example of We Are All in It Together.

Money lent is created from thin air, and is backed up by future productivity. Money created from thin air (banks, Federal Reserve) are the cause of inflation. This is favorable for the lender - as they get to create money from the thin air - with limited accountability for substantiating the value of that fiction on the part of the lender.

However, the debtor is quite complicit in this. Because by getting a loan (not a loan based on existing money, but a loan where money is created from the thin air) - solves their immediate need - but at the same time allows the debtor to be completely complicit in the creation of money from the thin air. It is not the lender who creates the money from the thin air - it is both the lender and the receiver. The receiver is on the line for creating value that justifies that loan. Both contribute to inflation - as the money supply grows.

Here is the insidious part: the lender is Scot-free. They just externalize costs to future generatations in the form of inflation. Thus, this constitutes a perverse incentive - an incentive to deflate currency. This can blow up from time to time - as it does historically. But this insidiousness requires the recipient. Yet the recipient is more than happy to participate - they get the color of money in their pocket. The result is inflation, which actually helps the recipient - because the higher the inflation rate, the less they have to pay back. Note, this applies to fixed rate mortgages only - thus a fixed rate mortgage being the praticular insidious way to go about inflation. So both the usurer and the used walk happily down the road. The higher the inflation - the banker doesn't care, as they are making a killing anyway. The higher the inflation - the more happy the fixed-rate mortgage recipient. So this is a perfect example of a 2-party, mutually beneficial relationship that is, societally, a perverse incentive in the money system. This is yet another contribution to Artificial Scarcity, where the devaluing of currency punishes everyone through less ability to buy things, even though productivity is the same or better. It's just that somebody in the system is scooping up the shekels unfairly, while most suffer. This is socialized cost, with the upside being privatized.

Next Steps

This kind of funnymoney scheme should definitely be abolished if we want a better world. So how do people get funding for their undertakings? This would have to come from non-fractional reserve banking loans, or opportunities to generate revenue in a more collaborative way. In the future economy of abundance, the primary goal would be to create unbridled opportunity for everyone, which is technologically easy, but socially unacceptable because of outdated and pathocratic governance systems. See, for example, what a backed currency could look like - more at OSE Bank. Another way is simply to provide owner financing, with an ethical eviction mechanism.

OSE Financing

For the Seed Eco-Home 4, we aim to address this in several ways:

• Incremental Housing - facilitating additional, pay as you go investment in one's house. Without the bank.
• Renewable Electricity, solar-hested house - yes, this is a standard feature already (6kW PV baseline), 12 kW for 100% heated/cooled on a heat pump - all for an additional investment of $12k which OSE includes in the price of a house while remaining at or under market cost for housing without these features.
• Solar Hydrogen Filling Station - first, full off grid capacity with ~14kW solar with hydrogen fuel, then to pumping your car with hydrogen by 2028 and about $50M in funding. OSE Proposal.