The Time Value of Money — an Idea past its Use by Date

Putting a time value on money distorts the financial system and increases costs.

Money in a Bank increases in value with the passing of time. It happens because of the way we repay loans. When we repay a loan we pay back interest plus the loan money. It means that loan money increases in value with the passing of time. The increase in value is what we mean by money has a time value.

Unfortunately, it leads to massive distortions in the financial system which in turn leads to increased costs.

By changing the way we repay loans, we can remove the time value of money and eliminate the cost of the time value of money (interest) and give lenders of money a higher return on investment.

What we do is to stop renting money. Instead of renting money we invest loans for a particular purpose and we repay the money by giving discounts on the goods and services produced by the investment.

Making the Marginal Cost of Capital Zero

capital — wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing. — Google Search

Interest is the marginal cost of capital when it is in the form of money. We remove the time value of money by changing the way we repay loans with goods and services. We stop renting money for investment.

Zero marginal cost occurs when investors are also customers. When investors are customers price setting is a collaboration between the customers who invest and the sellers of goods and services.

Making the marginal cost of capital zero means “the commons” will take over the ownership of community infrastructure and reverse the last 50 years of privatisation of community assets. It will happen, not because it is right, but because it costs less.

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Kevin Cox

Kevin works on giving individuals control over their online information - particularly their financial information with local communities.