(3) banking on ourselves - transition

Transition

Banking on Ourselves

Chris Cook Schumacher College

15 November 2012

Conventional Banking

Seller

IOU

Buyer

Bank

Value

IOU

Financing – Clearing Union Peer to Peer trade credit - banks as service

providers not lendersBank capital requirement is only for operating

costsGoods and services change hands by reference to

$, not necessarily in exchange for $ currencyCredit risk shared by sellers and buyers

collectively No 'interest' (money for the use of money)Default costs and operating costs shared

Clearing Union - Seller accepts Buyer's IOU

Seller Buyer

IOU

Value

IOU is guaranteed by Clearing Union of Sellers & Buyers collectively

Seller Buyer

IOU

Value

Pool

GuaranteeGuarantee

Seller & Buyer pay guarantee charge into Pool held by Custodian

Seller Buyer

IOU

Value

Pool GuaranteeGuarantee

Fee Fee

1/ Buyer settles credit in money or 'money's worth' eg energy stock

Seller Buyer

Value

Pool GuaranteeGuarantee

Fee Fee

2/System identifies a 'chain' of IOUs A<B<C<D<E<A and 'nets' them out

Seller A Buyer B

PoolGuaranteeGuarantee

Fee Fee

Buyer C

Buyer D

Buyer E

IOU

IOU

IOU IOU

IOU

3/ Buyer defaults: system pays sellers and collects from buyer if possible

Seller A BuyerDefault

Pool

Collects

Pays

Seller B

Default

Pays

Service provider sets guarantee limits, handles defaults & manages system

Seller Buyer

IOU

Value

Pool GuaranteeGuarantee

Fee Fee

ServiceProvider

FeeService

Financing – Capital Partnership Investment to a common purpose in people

businessesProduction and/or revenue sharing between

investor and user of investment for as long as the investment is used

No 'interest' (money for the use of money)Sharing of risk and reward – no default

Capital Partnership

CustodianCustodian

Investors

Payment

% %

Use

Managers

Users

Capital Partnership reinvents Equity

Equity Shares - % age shares in flows of revenue or production

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Stock – returnable in payment for use value eg rentals, Kilowatt Hours

Example: “The Art of Flirting” – a film incorporated as an LLP

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The actors received nth’s of gross revenues

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I got 5%...and the producer the rest

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But we needed lights, cameras, pizza, coffee

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Capital Partners invested £ for 20% of the revenues....

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...if there are any

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Art of Flirting Partnership

CustodianCustodian

Financial Capital(Investors)

Financial Capital(Investors)

ViewersViewers

Human Capital(Actors, Producer, Me)

% %

£

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Capital Partnerships are not Organisations

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They do not own anything, do anything, employ anyone, or contract with anyone...

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Associative agreements require no legislation

Custodians(National)

Custodians(National)

Financial Capital(Money, IP etc)

Financial Capital(Money, IP etc)

UsersUsers

Human Capital(Developers, Operators)

% %

Payment

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Transition

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Energy subsidies in the Middle East alone cost trillions of dollars

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Investment in the global transition to renewable energy needs trillions of dollars

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How do we make the connection?

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Energy Stock

CustodianCustodian

InvestorInvestor

UserUser

Energy Energy

Energy

ManagerManager

Stock - returnable in payment for energy

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Mega Watts: renewables funded by unitising Energy Pool of production.

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Nega Watt energy savings - the cheapest energy - funded by an Energy Loan in Units

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Energy Loans made to properties & repaid via utility bills out of energy saved

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Funded by investors who invest through buying Units in Energy Pools

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Energy Loan of £5,00050 Units of 1 Megawatt Hour @ £100 per Unit

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5,000 Units of 10 Kilowatt Hours @ £1.00 per Unit...and so on

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Reduced energy bill for energy consumed

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Energy Loan repaid through buying Units from the Pool at the market price

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The UK 'Green Deal' – Compound interest and Jevon's Paradox

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Stock: saving energy is saving money

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But how do we transition from a carbon economy?

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Transition through Gas

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Carbon Levy - initially on gas - funds Energy Pool investment in renewable Mega Watts

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…and Green Deal investment in Nega Watts

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An Energy Dividend is paid in Stock

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The outcome is that those with above average carbon fuel use ...

….make a net transfer to those with below average use of carbon fuel

“If you want to keep a cow healthy, you don’t regulate what comes out of it……”

“……you regulate what goes in….”

Energy Pools enable Carbon currency based upon the intrinsic value of energy…

..rather than a market in value-less Units of CO2 emissions, imposed by governments

No dollars change hands but transactions are priced against the dollar

The $ may come to be fixed against a unit of energy – an Energy Standard

This brings us to Energy Economics

Thank You

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