Money, Credit & Investment     A Partnership Approach            Chris Cook    Partnerships Consulting LLP
What is Money?• Money = Barter Network + Credit + Value Unit• Barter = Exchange of Value• Credit = Time to Pay allows “Spl...
What is Value?•   Value can be defined only in relative terms•   Value is the “Relativity of Desire”•   Value is “Money’s ...
Creating Value• Assets or “Property” produce a stream of  Value available for Exchange eg land,  power plant, intellectual...
Investment - “Asset-Based”            Finance• Ownership through “Property” in assets and  their revenue streams• Legal “w...
Companies– Statutory basis – Companies Acts– Types   • Limited by Guarantee - “Not-For-Profit”   • Limited by Shares – “Fo...
Trusts– Common Law basis– judge made– Examples   • Canadian Income/ Royalty Trusts   • Macquarie Bank business model– Issu...
Limited Liability Partnerships• Q. When is a partnership not a partnership?• A. When it’s a UK Limited Liability  Partners...
Why an “Open” Corporate?• Open to any “stakeholder” to be a Member,  as long as they subscribe to the “Member  Agreement”•...
The “Capital Partnership”• “Capital User” Member• “Capital Provider” Investor Member• Jointly acquire a productive asset
Return on Capital• “Capital Rental”• User pays Investor a revenue share in  Money (or “Money’s Worth”) for as long as  Cap...
Return of Capital• Capital may be returned over time in the  form of output (eg energy)• Capital Provider/ Investor purcha...
Community Partnership              Community     Capital Rental                      LLP                      Trustee     ...
Community Partnership•   Trustee Member•   Investor Member•   Developer/ Manager Member•   Occupier Member
Community Land Partnership          (“CLP”)• Land freehold held in trust – like a  Community Land Trust• But no lease, no ...
CLP Example - £4m Investment• Community asset - £200k inflation-linked rental• Capital Repayment   – £4m Capital cost, rep...
Community Energy Partnership          (“CEP”)• Asset held in trust• Investors pay now for future energy  production• Devel...
CEP – 1 MegaWatt Wind             TurbineCost £1m = 20k Mw/hrs at £50.00 Mw/hr  – 2,500 Mw/hr per year = 50k Mw/hrs over 2...
Credit - “ Deficit-based” Finance• Interest-bearing (from Credit Institutions)  – “Asset-backed”/ Secured by a claim on as...
Mutual Credit – the “Guarantee Society” or “Clearing Union”• “Common Bond” -geographic or functional• Sellers   – extend t...
Guarantee Society                Buyers                          Subscription/                                            ...
How it Works•   A sells item to B for $1000 - 60 days credit•   B pays 1% per month provision into Pool•   B pays only $50...
The Community Pool• Pool is not “invested” in bank deposits• Pool invests in future revenues of  community owned assets eg...
Conclusion• Community Assets give rise to streams of Debt-  free “Money’s Worth” available for Exchange• Individuals’ Time...
Consequences• Money has no “cost” when issued• Public does not need to borrow to invest• A “National Equity” as well as a ...
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Smallisbeautiful

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Smallisbeautiful

  1. 1. Money, Credit & Investment A Partnership Approach Chris Cook Partnerships Consulting LLP
  2. 2. What is Money?• Money = Barter Network + Credit + Value Unit• Barter = Exchange of Value• Credit = Time to Pay allows “Split Barter” – Transaction 1 – (now) Buyer receives Value receiving Credit – Transaction 2 – (later) Buyer gives Value settles Credit• Transactions require a “Value Unit”
  3. 3. What is Value?• Value can be defined only in relative terms• Value is the “Relativity of Desire”• Value is “Money’s Worth”• Value may be Static or Dynamic – Capital is Static Value – Money is Dynamic Value, existing only in the instant of exchange• Economics is the Physics of Value
  4. 4. Creating Value• Assets or “Property” produce a stream of Value available for Exchange eg land, power plant, intellectual property• Individuals’ time = stream of Value as labour or services• Credit is not Value but a claim over Value• “Asset-based” Finance is Investment• “Deficit-based” Finance is Credit/Debt
  5. 5. Investment - “Asset-Based” Finance• Ownership through “Property” in assets and their revenue streams• Legal “wrapper” around assets and revenues – Limited Liability Company – Trust – Limited Liability Partnership -“Open Corporate”
  6. 6. Companies– Statutory basis – Companies Acts– Types • Limited by Guarantee - “Not-For-Profit” • Limited by Shares – “For Profit” – Private – Public – GM eg IPS, CIC– Issues • Conflicts – “shareholder value” and CSR • Management – the Principal/Agency problem
  7. 7. Trusts– Common Law basis– judge made– Examples • Canadian Income/ Royalty Trusts • Macquarie Bank business model– Issues • Risk Aversion • Management • Taxation • Legal complexity and cost
  8. 8. Limited Liability Partnerships• Q. When is a partnership not a partnership?• A. When it’s a UK Limited Liability Partnership (“LLP”)• Q. What is it if it’s not a partnership?• A. A corporate body: with limited liability: and………er, that’s it!• Not to be confused with a US LLP• Nearest relation US LLC
  9. 9. Why an “Open” Corporate?• Open to any “stakeholder” to be a Member, as long as they subscribe to the “Member Agreement”• A legal “wrapper” – like a “trust”, but without the drawbacks - for any assets or revenues anywhere in the world• Tax transparent
  10. 10. The “Capital Partnership”• “Capital User” Member• “Capital Provider” Investor Member• Jointly acquire a productive asset
  11. 11. Return on Capital• “Capital Rental”• User pays Investor a revenue share in Money (or “Money’s Worth”) for as long as Capital is used• Rental paid before due date is Investment• Outcome “Co-ownership”
  12. 12. Return of Capital• Capital may be returned over time in the form of output (eg energy)• Capital Provider/ Investor purchases production forward at today’s price• Capital User gets interest-free loan
  13. 13. Community Partnership Community Capital Rental LLP Trustee Ownership % % Investors Managers
  14. 14. Community Partnership• Trustee Member• Investor Member• Developer/ Manager Member• Occupier Member
  15. 15. Community Land Partnership (“CLP”)• Land freehold held in trust – like a Community Land Trust• But no lease, no tenancy and no borrowing to develop and maintain property• Co-ownership between “Occupier” and “Investor”
  16. 16. CLP Example - £4m Investment• Community asset - £200k inflation-linked rental• Capital Repayment – £4m Capital cost, repaid over 50 years – £80k initial Capital repayment = 40% of revenues – so of 40% revenues (instead of £80k) repaid each year• Capital Rental – 2% initially = £80k or 40% of Revenues – Reduces with Capital: after 25 years = 20% of revenues• Community retains balance of 20% (increasing)• If Community has a bad year so do Investors
  17. 17. Community Energy Partnership (“CEP”)• Asset held in trust• Investors pay now for future energy production• Developer/Operator commits no capital and shares production, thereby aligning interests• Community receives interest-free loan from Investors and balance of energy production
  18. 18. CEP – 1 MegaWatt Wind TurbineCost £1m = 20k Mw/hrs at £50.00 Mw/hr – 2,500 Mw/hr per year = 50k Mw/hrs over 20 years – ie 40% of production sold to InvestorsCommunity “Co-owner” – sells 40% of production at today’s price for 25 years – allocates 10% of production to Developer/Operator – receives Balance of 50% as energy dividendInvestor “Co-owners” – buy energy at today’s price valid 20 years: beats gold!
  19. 19. Credit - “ Deficit-based” Finance• Interest-bearing (from Credit Institutions) – “Asset-backed”/ Secured by a claim on assets (mortgage or “charge”) – unsecured• Non interest-bearing (“Trade Credit” from suppliers or staff)
  20. 20. Mutual Credit – the “Guarantee Society” or “Clearing Union”• “Common Bond” -geographic or functional• Sellers – extend trade credit subject to a Guarantee• Buyers – have “Guarantee Limit” – pay agreed provision into “Default Fund”• Service Provider – operates network and sets guarantee limits – receives subscription/service charge from all members
  21. 21. Guarantee Society Buyers Subscription/ Service Charge $ $ ProvisionTrading and Pool $ ManagerClearing in $ Default Rebateand $’s worth $ Repayment $ Subscription/ Service Charge Sellers
  22. 22. How it Works• A sells item to B for $1000 - 60 days credit• B pays 1% per month provision into Pool• B pays only $500 on due date• Alternatives – A gives more time to pay – A accepts barter payment of “$500 worth” – A receives $500 from Pool and either • Pool gives extension to B, collecting $500 over agreed period • B pays “Debt to Society” in hours at agreed rate; or • Pool writes debt off – Combination of the above
  23. 23. The Community Pool• Pool is not “invested” in bank deposits• Pool invests in future revenues of community owned assets eg future property rentals and/or energy production• Dividend from pool to community members unable to pay, in fuel poverty etc etc
  24. 24. Conclusion• Community Assets give rise to streams of Debt- free “Money’s Worth” available for Exchange• Individuals’ Time constitutes “Money’s Worth” available for Exchange• Money’s Worth circulates on a Barter Network• A mutual guarantee results in a “Clearing Union” where “Time to Pay” is interest-free but with shared costs and shared defaults.
  25. 25. Consequences• Money has no “cost” when issued• Public does not need to borrow to invest• A “National Equity” as well as a National Debt• Community Dividends from “Commons” assets in Community Ownership• A Society consisting of a Partnership of Partnerships ie neither Hierarchy nor Anarchy but “Synarchy”

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