Zero Interest Loans for ghg mitigation

NOTE: The following is the text to go with the Prezi presentation at http://prezi.com/buub6mwoimj5/

The video of the presentation with voice can be found at

Part 1 – http://www.youtube.com/watch?v=EaY5X6bSK7o
Part 2 – http://www.youtube.com/watch?v=epJt8OxoQPI

*************
Leave zero interest loan graphic up before the start of the presentation

(slide)

In this presentation I will show how we can reduce the level of greenhouse gas emissions while becoming wealthier.

(slide)

It is possible to make profitable investments in renewable energy without increasing the price of Energy. To show you how let us first look at the cost elements when we produce energy.

(Trip diagram)

Energy production is a capital intensive industry. The costs components of all forms of energy are Taxation, Repayments, Interest and Profits – or TRIP costs followed by running or production costs.

(show graph of proportion of cost of energy)

This diagram shows us the ratio of repayments (green), interest (red) and running costs (blue) to produce energy under today’s financial system.

For renewable energy almost all the costs are financial charges of interest and repayments. Running costs of burning fossil fuel are relatively higher because we have to pay for the fuel to burn.

(show graph of actual costs)

In this graph the vertical axis is cents per kwh. Unless we address the interest and repayment costs it is going to be very difficult to encourage investments in most renewables.

As finance costs are “man made” they can also be “man unmade” and we will now examine what effect reducing finance costs has on the profitability of renewables.

(slide of assumptions)

The following graphs are calculated with the following assumptions. To normalise variable output we calculate the capital cost for the equivalent continuous production of energy. An interest rate on loans of 6%. A one cent per kwh to cover maintenance and administrative costs and we assume we can sell the energy at the factory gate for 6 cents per kwh.

(show graph of zero interest for renewables)

This graph shows that if we eliminate interest costs and repay our loans over the life of the asset, renewables can be as profitable as fossil fuel energy. Once you have built a renewable energy plant it becomes a money making machine. If you reinvest your repayments it becomes a compounding money making machine – because the sources of renewable energy are large, the demand for high quality energy has no limit and the value of energy will never reduce. We will use as much as we can produce and we can keep the cost well above the cost of production and people will still buy.

(show graph comparing carbon tax)

The other way or increasing investment in renewables is to increase the price of energy by imposing a charge on the burning of fossil fuels. This can be done in many ways, It can be done with a carbon tax, with carbon credits or with emissions permits. Whatever way it is done it increases the price of all energy. These extra charges are included to cover the finance costs. The price of energy will have to at least double, (and probably triple) to encourage investors to develop large scale renewable energy sources.

To achieve a low cost, low carbon future ALL we have to do is to give zero interest loans to our citizens and require them to invest those funds to build new renewable energy plants and invest in ways to save energy. To find out how to do this we have to understand how we create money.

(graphic showing the creation of money. This will be headed “how we create money”. It will show banks monetising an existing asset. It will show part ownership of asset going to bank which charges interest on the use of the asset)

When we give a loan we create money by issuing credit.

(slide)
Governments do it by issuing bonds to themselves and then selling those bonds. Banks do it by giving loans backed by monetisable assets.

(slide)
When we monetise an existing asset, in effect, we sell part of the asset and the new owner, the bank, expects to get paid for the use of the asset.

(slide)
This is done through interest on money. In Islamic countries it is done through rent on the asset.

(slide)
If a bank creates money by monetising an asset it also destroys the money when the loan is repaid. Banks do not have to create money to lend. They can – if they wish lend money in accounts and not destroy the money when it is repaid.

(slide)
We rarely create money by monetising future assets but there is no accounting reason for not monetising a future asset.

(graphic showing the creation of money by monetising a future asset. It will show banks monetising a future asset (which at the moment is worth zero so there should be no interest charge).

We can monetise future assets.

(slide)
However, if we monetise future assets we cannot justify charging interest on the loan because the asset does not yet exist. Part ownership of the future asset goes to the bank. The bank issues money but the money should not earn interest on the money because the future asset is not yet earning and so cannot pay the interest.

(slide)
In our present economic system monetizing future assets is achieved through equity. People save money and supply it to a company to build the asset. What this means is that new assets are financed from savings and not from loans. Finance equity is much much more expensive that finance from loans because there are fewer savings than there are potential loans, and because equity is a double charge – one for the interest on loan money and one to compensate the saver for not spending the money on consumption. Equity finance is 20%+ for most new projects. This means it is more expensive to build an asset than it is to buy exactly the same existing asset – not because of the risk – but because of the way we organise our monetary system.

(slide)
We do not give equity loans let alone zero interest equity loans – but we could if we can solve the issues of trust, distribution and compliance.

(slide)

For Zero Interest Loans to work – money must not earn interest until it is spent and loans must be repaid. For loans to be repaid they must return a profit.

There is no accounting or economic reason not to give zero interest loans to create new assets. The reasons we don’t are historical and because creating loans (and with it money) for non existent assets is easily abused.

Under the existing system the bank creates a loan and money at the same time and charges interest on the money immediately. With zero interest loans for equity the bank still creates a loan but the money is a special sort of money. The money is restricted while it is in the borrowers account and earns no interest. When the money is invested in ways to reduce greenhouse gas levels in the atmosphere it can then earn interest if the receiver of the money can find a bank to accept the money.

It is easy to set up a system where money does not earn interest. Investing the money appropriately is much much more difficult. To do this we need to create a system that will guarantee that most loans will be profitable and that borrowers will comply with the rules and restrictions on the money. Our existing banking system is complex and is highly regulated in an attempt to stop the creation of too much money. It has failed miserably as evidenced by the Global Financial Crisis. Any system to replace some of the creation of money through zero interest loans is going to be complex.

(show the diagram showing government, bank, market place)

This diagram outlines how we can safely and reliably create a system that enables us to build new assets and to give the public direct equity ownership of those assets.

(slide)
On the left we decide the politically interesting question of who gets the zero interest loans. Banks could issue zero interest loans but it is better done by government as the issue is a distributional political one. For energy we suggest the rights to loans be distributed to the whole population in inverse proportion to their household consumption of mains electricity. Doing this rewards people for consuming less. We distribute the money as a right rather than as a loan because we can have a market in rights. This is important as it provides a way to see if we have created too many rights. If we give too many rights then the price of a right will go down because there will be few good investment opportunities. The price of rights gives the government a way of measuring and hence controlling the issue of rights.

(slide)

The middle section shows the mechanics of issuing the loan money. It is important that money does not earn interest until it is invested. Transaction fees can be charged to cover operating costs plus a small profit. It is more convenient to use banks as they already have the right to issue loans – but other institutions could distribute loans.

(slide)
The right hand section is the part that makes it efficient. It is a market place for investments. In the market place will be companies selling their own new shares, manufacturers of renewable energy selling systems like windmills and solar panels, research and development organisations selling their ideas that will lead to later commercialisation, insulation companies selling insulation, biochar companies selling biochar systems or training. All the products and ideas at this conference will be eligible to be sold through this market place. Note we do not sell energy in the market place.

(diagram giving what a supplier will show)

Each seller will have to specify how much ghg will be saved or removed from the atmosphere per dollar spent and the financial return on investment. They will specify how the buyer will pay back the loan and how much of the loan has to be paid back. (for example the government may allow basic research to be funded with zero interest loans that are paid back in small part). Each seller will specify how the buyers will report ghg saved. Against each seller will be their promises and their past results. This information will be public and transparent and will be continually monitored by buyers.

If a seller repeatedly misses their targets or does not save ghg then they will be banned from the market place. If a buyer colludes with a seller the buyer will never receive any more zero interest loans.

(slide about compliance)

Compliance through exclusion from access to the loans system will ensure the system will work.

(diagram showing that zero interest loans for new productive assets will not cause inflation)

A question that is often asked is – won’t the creation of money for zero interest loans cause inflation?

The answer is yes and no. Inflation is caused when there is too much money available to purchase too few goods. Governments in the past have printed money for particular purposes. Historically one reason has been to finance wars. Printing money to finance a war will almost certainly cause inflation.

Creating money to build new productive assets that generate more value than the money invested cannot cause inflation but will keep the currency stable as there is always more to buy than money available and so we will have to continue to create more money or increase the velocity of money so that we can purchase the goods.

(how much money is needed)

In Australia we can have net zero emissions within 10 years if we allocate $30 billion a year in zero interest loans. To put this in perspective each year Australia creates $200+ billion in interest bearing loans to buy second hand houses.

(emergent properties)

This approach to funding infrastructure and in particular renewable energy and energy saving technologies could be called Community Equity Loans.

(slide)

The resulting system will stabilise the monetary system, reduce taxation, eliminate inflation, cause no government debt, make our finite resources sustainable, increase our wealth and give ownership of community infrastructure to the community it serves.

(slide)
It will stabilise the monetary system. There will be no inflation because governments will increase the money supply in a controlled manner through the use of zero interest loans. Market based interest rates on existing money will regulate the flow of money.
(slide)
There will be lower taxation. The distribution of rights to zero interest loans can be used to give more wealth to the disadvantaged and could replace some or perhaps all taxes.
(slide)
There will be no government debt. The loans are given to the citizens – not the banks, nor the government nor any corporations.
(slide)
The system will lead to sustainability of finite resources. Sustainability is doing more with less and finite resources can be developed by Rewarding those who consume less while requiring the Rewards to be spent increasing the resource.
(side)
Community wealth will increase. Wealth increases by investing so that the cost of investment is less than the wealth produced. A well run system of zero interest loans will do this.
(slide)
There will be a change of ownership of infrastructure away from governments and external corporate entities towards community owned entities and individuals serviced by the infrastructure.
(slide)
Please direct any questions to Kevin Cox at cscoxk@gmail.com
(slide)

I will leave you with this graphic on the comparison between zero interest loans and pricing carbon as alternative ways of encouraging investment in renewable energy projects.

Text of presentation to Identity Verification Conference 16th Feb 2010

This is the text of a presentation given to the Electronic Identity Verification conference on the 16th Feb in Sydney and the 18th Feb in Melbourne.

The presentation can be viewed at http://prezi.com/wmvwdpic1wot/

A YouTube version is at http://www.youtube.com/watch?v=jpSE80EfDVo part 1 and

http://www.youtube.com/watch?v=MeUZMmBUcp0 part 2

Text of presentation

Before we talk about Electronic Identity Verification we need to understand what it means to verify an identity.

(a slide with Electronic Identity Verification heading and with a stylised diagram of people where one person is highlit)

A person’s identity becomes relevant in the context of a group. For the purposes of EV, identity is how each person is known to a group to which they belong, have belonged or to which they wish to belong. A person’s identity is not an abstract notion but is a social construct that enables us to distinguish between different members of a social grouping. Identity verification involves establishing whether a person is entitled to be part of a group. For most groups a person needs only to be identified once to the group.

(a slide with several different groups of stylised people. One labelled customers, one employees, one suppliers, one shareholders. A person may be in different groups but the person may have different identities in the different groups)

Most people in this audience represent organisations and your organisation has relationships with its customers, its employees, its shareholders and its suppliers. Your organisation defines different groups to which people may belong. It defines the requirements for joining the group, and specifies the rules for how individuals are to identify themselves as a legitimate member of the group.

Each person here is a current or past member of thousands of different groups. This is what we as a species do. We cluster together for purposes of sharing because we each draw strength from our interactions with others. Most of our interactions with others require us to know with whom we are interacting and for each group there is a process of identification.

(show a slide of my cards, show a slide of the number organisations where I have a user code password)

The number of groups we can join has exploded with the introduction of the Internet. We now have a major problem of keeping track of all our memberships. My wallet contains 23 membership cards. My list of user codes and passwords contains 100+ entries. Keeping track of all these different forms of identification is a major logistics task. Luckily the Internet which has caused the explosion of groups also gives us the way to control and organise our interactions.

(show a slide with silos of information. Privacy breaches occur when information from one silo leaks to another without the permission of the person)

Issues of privacy arise when our activities as a member of one group become known to others both within the group and more particularly to others outside the group. This becomes an issue if our membership of one group means that our activities in all other groups is visible. So privacy involves keeping our activities within groups hidden from the eyes of others who have no legitimate reason for knowing what it is we are doing elsewhere. My employer has the right to know that I am ill and cannot come to work but there is no need for them to know all of the details of the illness or how I contracted it.

It is this leakage of information between groups that is at the heart of privacy.

(put up words describing the methods of tackling the problem)

There are various ways of tackling this problem. One way is not to store any historic information about transactions and interactions. For most interactions this is appropriate although in the electronic era we tend to be storing more and more of our interactions for extended periods. We do something and it becomes a permanent record. Another way is to keep our interactions within tightly controlled silos, taking precautions to prevent leakage of information from one silo to another without our express permission. A third way is for us to know exactly what is held in all silos and to be kept informed who has accessed any of the information and the reason for the access.

To keep separate silos of information it is necessary for individuals to agree to join each group and to prove who they are to the group.

(show a slide with greenID )

Edentiti EV is building enabling technologies for identification purposes.

Our first product in identity verification is greenID. greenID is specifically designed to assist organisations comply with anti money laundering and counter terrorism obligations applicable to low risk transactions.

greenID works as follows – (show short verification set of screens).

This demonstration shows how a customer verifies themselves with greenID.

(slide)

This screen would be on a clients screen and typically this information would have been collected as part of a registration process.

(slide)

The user would be given a set of sources from which to choose. The user knows which organisation they have a relationship with and so they will choose the ones that suit them and with which they are comfortable.

(slide)

Let us assume they have a qld driver’s license. They enter the driver license number, the other fields are already filled out, agree to the terms and conditions, then press submit details.

(slide)

Let us assume they do this for the Australian Electoral Roll and Passport as well as the Queensland Licence. They will then be verified.

(slide showing how a person identifies themselves by proving they have a relationship with others)

Some important points with this demonstration are:

1. The organisation requesting identification sets the rules for identification depending on the risk associated with an incorrect identification.

2. The individual provides information that is difficult for anyone else to know. If they provide false information then they are almost certainly stealing someone else’s identity rather than creating a new identity.

3. Information that is needed for proving identity is discarded as soon as it is no longer needed and it is only “seen” by the individual being identified.

4. The approach complies with privacy guidelines because individuals have a choice in what they use, and any information not required is discarded in order to protected the integrity of silos of information.

With greenID the individual has shown they are known to other organisations and they have a relationship with those organisations. This verifies their identity.

(photo id screen – where the photo is on the screen and on a card and on a mobile)

Edentiti is extending the identification service in various ways – for example, through the introduction of biometric forms of identification. Biometrics will be introduced in a privacy friendly reusable way. The approach is for a trusted party to take a photograph of a person and send it to Edentiti with the name of the person. The person accesses the photograph online and asserts it is their photograph and they ask two other previously-verified people to agree that the photograph is of them. The identity of the person is also verified against three other organisations by demonstrating that the other organisations have a record about them. Once the photograph is identified then a person can use it for any other organisation who requires a photoid for the person. Such organisations are the passport office, driver’s licence, club cards.

Photoid can be attached to any verified identity. It does not have to be printed on a card but can be shown on a mobile phone or on a teller or check out screen. We see it as a very useful identification device for door to door people such as census checkers where (for example) a person could dial a number and get a photograph of the person delivered to their mobile phone.

(diagram of Federated Identification)

The Edentiti approach to identification fits well with the concept of Federated Identification. Federated Identification is where one organisation agrees to accept identification established with another organisation. Some people call this “single signon” but it is broader than single signon. Federation can be made to work very easily if a group of federated organisations agree to use an identity provider to include the end user as part of the Federation.

(slide)

The following set of screens show how Edentiti itself can use the association with a bank to simplify and reduce the costs of collecting money from customers. The organisations independently identify the person and agree to allow the person to divert and perform actions on the other organisation’s website while on the first organisations website.

(show screens of making payment)

The end customer already has an account with a federated bank. They are first going to identify themselves to Edentiti because they wish to be a customer of Edentiti. One of the sources that Edentiti uses for identification is the Bank, because Edentiti the company is federated with the Bank for the purposes of payment.

(slide) (slide)(slide)

At some later stage while at the Edentiti website they wish to make a payment, The default will be to transfer money from the Bank account used previously for verification. Other payment options will be available.

(slide)

The payment is authorised by the user entering a two factor verification method that is done by the bank or authorised by the bank. This is typically getting a code by SMS then entering the code into the screen.

(slide)

If the person does not have an account with the bank then they cannot use the bank as a data source but they can be asked to create an account and then come back and pay with that account.

(slide)(slide)(slide)

(slide)

We will be creating a SuperID which will identify people for superannuation purposes. Any superannuation website will be able to allow the user to perform actions on another website. This is particularly important for transfers of superannuation benefits. It will be useful for finding lost superannuation. Organisations using SuperID will reduce cases of lost super because a person’s lost super can be checked whenever they make a deposit to a super fund.

(show screens of passport federation with banks and ATO)

The passport office can use the photo id but it could also agree to allow people to verify their photo id with their passport photo. More importantly it could allow banks to use passport photoids in return for the banks allowing access (if the person consents) to bank histories.

(show screen of AAF)

The approach allows organisations to federate their identifications. We are a member of the Universities and Research Organisations Australian Access Federation (AAF) and we look forward to offering federated services to the AAF.

(slide showing the question and the answer and that is all that is needed to get federated ids)

Individuals have certain rights to information that his held about them, and organisations holding information on a person are legally obliged to answer yes or no for no cost to the question “Do you hold any information on me”. They are further required to give the individual that information if they request it, though a reasonable charge can be levied for supplying the information.

Many government departments do not welcome such requests because they believe something might go wrong. For example, they believe if they supply direct electronic access to an individual’s data they may have to meet service level obligations. The tax office believes that a person accessing their own tax information via a service like Edentiti might somehow compromise the integrity of the Tax File Number. These difficulties can be easily addressed but the common reaction of most organisations is that if there is chance of something going wrong then they should not do it. This ignores the positive benefits that the organisation can obtain form allowing electronic access.

(slide showing advantages for other organisations)

To give an example: We find that 25% of all addresses in the Electoral Office are incorrect. Most commonly the person has moved and not bothered to change their address. It is critical for the working of representative democracy that the enrolment address be correct when an election is held. greenID could inform the electoral office – with the person’s consent – that their address had changed and put in place a process for the electoral roll to be corrected.

The same idea can be used by any organisation that wishes to keep information about their customers up to date. In the future we see address and contact detail changes being automatically updated over the Internet when the customer changes their personal details in any of their different identities.

What of the future?

(slide showing lots of groups of people with lots of interactions and with the individual controlling the flow of information)

Rather than less identification we see more. We see data continuing to be kept in tight silos but we also see an evolving process of the individual gaining electronic access to their own information. We see Edentiti providing tools to the individual to help them access their own information and control its release to other parties. We see many other organisations like Edentiti providing competition in this identification space. We see identification becoming “standardised” and we see a wholesale introduction of federated identity organisations using identity providers to give individuals access to their information.

Zero Interest in Zero Emissions

NOTE: The following is the text to go with the Prezi presentation at http://prezi.com/buub6mwoimj5/

The video of the presentation with voice can be found at

http://www.youtube.com/watch?v=q0y2fK5nLXI

and

http://www.youtube.com/watch?v=YRwgvHGbxpk

*************

In this presentation I will show how we can reduce the level of greenhouse gas emissions while becoming wealthier.

It is possible to make profitable investments in renewable energy without increasing the price of Energy. To show you how let us first look at the cost elements when we produce energy.

(Trip diagram)

Energy production is a capital intensive industry. The costs components of all forms of energy are Taxation, Repayments, Interest and Profits – or TRIP costs followed by running or production costs.

(show graph of proportion of cost of energy)

This diagram shows us the ratio of repayments (green), interest (red) and running costs (blue) to produce energy under today’s financial system.

For renewable energy almost all the costs are financial charges of interest and repayments. Running costs of burning fossil fuel are relatively higher because we have to pay for the fuel to burn.

(show graph of actual costs)

In this graph the vertical axis is cents per kwh. Unless we address the interest and repayment costs it is going to be very difficult to encourage investments in most renewables.

As finance costs are “man made” they can also be “man unmade” and we will now examine what effect reducing finance costs has on the profitability of renewables.

(show graph of zero interest for renewables)

This graph shows that if we eliminate interest costs and repay our loans over the life of the asset, renewables can be as profitable as fossil fuel energy. This graph assumes we can produce 1kw continuously for a capital cost of $6,000.  Once you have built a renewable energy plant it becomes a money making machine. If you reinvest your repayments it becomes a compounding money making machine – because the sources of renewable energy are large, the demand for high quality energy has no limit and the value of energy will never reduce. We will use as much as we can produce and we can keep the cost well above the cost of production and people will still buy.  

(show graph of comparing carbon tax)

The other way or increasing investment in renewables is to increase the price of energy  by imposing a charge on the burning of fossil fuels. This can be done in many ways, It can be done with a carbon tax, with carbon credits or with emissions permits.  Whatever way it is done it increases the price of all energy. These extra charges are included to cover the finance costs. The price of energy will have to at least double, (and probably triple) to encourage investors to develop large scale renewable energy sources.

To achieve a low cost, low carbon future ALL we have to do is to give zero interest loans to our citizens and require them to invest those funds to build new renewable energy plants and invest in ways to save energy.  To find out how to do this we have to understand how we create money.

(graphic showing the creation of money. This will be headed “how we create money”. It will show banks monetising an existing asset. It will show part ownership of asset going to bank which charges interest on the use of the asset)

When we give a loan we create money by issuing credit. Governments do it by issuing bonds to themselves and then selling those bonds. Banks do it by giving loans backed by monetisable assets. When we monetise an existing asset, in effect, we sell part of the asset and the new owner, the bank, expects to get paid for the use of the asset. This is done through interest on money. In Islamic countries it is done through rent on the asset. If a bank creates money by monetising an asset it also destroys the money when the loan is repaid.  Banks do not have to create money to lend. They can – if they wish lend money in accounts and not destroy the money when it is repaid.

We rarely create money by monetising future assets but there is no accounting reason for not monetising a future asset. 

(graphic showing the creation of money by monetising a future asset.  It will show banks monetising a future asset (which at the moment is worth zero so there should be no interest charge).

We can monetise future assets. However, if we monetise future assets we cannot justify charging interest on the loan because the asset does not yet exist. Part ownership of the future asset goes to the bank. The bank issues money but the money should not earn interest on the money because the future asset is not yet earning and so cannot pay the interest.

In our present economic system monetizing future assets is achieved through equity. People save money and supply it to a company to build the asset.  What this means is that new assets are financed from savings and not from loans. Finance equity is much much more expensive that finance from loans because there are fewer savings than there are potential loans, and because equity is a double charge – one for the interest on loan money and one to compensate the saver for not spending the money on consumption. Equity finance is 20%+ for most new projects. This means it is more expensive to build an asset than it is to buy exactly the same existing asset – not because of the risk – but because of the way we organise our monetary system.

We do not give equity loans let alone zero interest equity loans – but we could if we can solve the issues of trust, distribution and compliance.

(slide)

For Zero Interest Loans to work – money must not earn interest until it is spent and loans must be repaid. For loans to be repaid they must return a profit.

The important point is that there is no accounting or economic reason not to give zero interest loans to create new assets. The reasons we don’t are historical and because creating loans (and with it money) for non existent assets is easily abused.

Under the existing system the bank creates a loan and money at the same time and charges interest on the money immediately. With zero interest loans for equity the bank still creates a loan but the money is a special sort of money. The money is restricted while it is in the borrowers account and earns no interest. When the money is invested in ways to reduce greenhouse gas levels in the atmosphere it can then earn interest if the receiver of the money can find a bank to accept the money.

It is easy to set up a system where money does not earn interest. Investing the money appropriately is much much more difficult. To do this we need to create a system that will guarantee that most loans will be profitable and that borrowers will comply with the rules and restrictions on the money.  Our existing banking system is complex and is highly regulated in an attempt to stop the creation of too much money. It has failed miserably as evidenced by the Global Financial Crisis.  Any system to replace some of the creation of money through zero interest loans is going to be complex.

(show the diagram showing government, bank, market place)

This diagram outlines how we can safely and reliably create a system that enables us to build new assets and to give the public direct equity ownership of those assets.

On the left we decide the politically interesting question of who gets the zero interest loans. Banks could issue zero interest loans but it is better done by government as the issue is a distributional political one. For energy we suggest the rights to loans be distributed to the whole population in inverse proportion to their household consumption of mains electricity. Doing this rewards people for consuming less.  We distribute the money as a right rather than as a loan because we can have a market in rights.  This is important as it provides a way to see if we have created too many rights.  If we give too many rights then the price of a right will go down because there will be few good investment opportunities. The price of rights gives the government a way of measuring and hence controlling the issue of rights. 

The middle section shows the mechanics of issuing the loan money. It is important that money does not earn interest until it is invested. Transaction fees can be charged to cover operating costs plus a small profit. It is more convenient to use banks as they already have the right to issue loans – but other institutions could distribute loans. 

The right hand section is the part that makes it efficient. It is a market place for investments. In the market place will be companies selling their own new shares, manufacturers of renewable energy selling systems like windmills and solar panels, research and development organisations selling their ideas that will lead to later commercialisation, insulation companies selling insulation, biochar companies selling biochar systems or training. All the products and ideas at this conference will be eligible to be sold through this market place. Note we do not sell energy in the market place.

(diagram giving what a supplier will show)

Each seller will have to specify how much ghg will be saved or removed from the atmosphere per dollar spent and the financial return on investment.  They will specify how the buyer will pay back the loan and how much of the loan has to be paid back. (for example the government may allow basic research to be funded with zero interest loans that are paid back in small part). Each seller will specify how the buyers will report ghg saved. Against each seller will be their promises and their past results. This information will be public and transparent and will be continually monitored by buyers.

If a seller repeatedly misses their targets or does not save ghg then they will be banned from the market place.  If a buyer colludes with a seller the buyer will never receive any more zero interest loans.

(slide about compliance)

Compliance through exclusion from access to the loans system will ensure the system will work.

(diagram showing that zero interest loans for new productive assets will not cause inflation)

A question that is often asked is – won’t the creation of money for zero interest loans cause inflation?

The answer is yes and no.  Inflation is caused when there is too much money available to purchase too few goods. Governments in the past have printed money for particular purposes. Historically one reason has been to finance wars. Printing money to finance a war will almost certainly cause inflation.

Creating money to build new productive assets that generate more value than the money invested cannot cause inflation but will keep the currency stable as there is always more to buy than money available and so we will have to continue to create more money or increase the velocity of money so that we can purchase the goods.

(how much money is needed)

In Australia we can have net zero emissions within 10 years if we allocate $30 billion a year in zero interest loans. To put this in perspective each year Australia creates $200+ billion in interest bearing loans to buy second hand houses.  

(emergent properties)

This approach to funding infrastructure and in particular renewable energy and energy saving technologies could be called Community Equity Loans.

(slide)

The resulting system will stabilise the monetary system, reduce taxation, eliminate inflation, cause no government debt, make our finite resources sustainable, increase our wealth and give ownership of community infrastructure to the community it serves.

(slide) 

It will stabilise the monetary system. There will be no inflation because governments will increase the money supply in a controlled manner through the use of zero interest loans.  Market based interest rates on existing money will regulate the flow of money.

(slide)

There will be lower taxation.  The distribution of rights to zero interest loans can be used to give more wealth to the disadvantaged and could replace some or perhaps all taxes.

(slide)
There will be no government debt.  The loans are given to the citizens – not the banks, nor the government nor any corporations.
(slide)

The system will lead to sustainability of finite resources. Sustainability is doing more with less and finite resources can be developed by Rewarding those who consume less while requiring the Rewards to be spent increasing the resource.

(side)
Community wealth will increase.  Wealth increases by investing so that the cost of investment is less than the wealth produced. A well run system of zero interest loans will do this.
(slide)

There will be a change of ownership of infrastructure away from governments and external corporate entities towards community owned entities and individuals serviced by the infrastructure.

(slide)
Please direct any questions to Kevin Cox at cscoxk@gmail.com

(slide)

I will leave you with this graphic on the comparison between zero interest loans and pricing carbon as alternative ways of encouraging investment in renewable energy projects.