Increase Finance Productivity and Lower Home Prices
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Finance plays a crucial role in the economy by facilitating money transfers for investment rather than consumption. It enables profits generated in one business to transfer to other ventures. This article explains why finance is currently economically inefficient and outlines how to make it the world’s most efficient industry. Economic efficiency is the least amount of money needed to create an investment. An investment will generate goods and services while leaving its value the same. Over time, an investment may generate more money than its value but will not generate value if unused. For example, banks enable investments by lending government money to individuals and organisations, and the service is paid by borrowers paying interest. The interest covers a bank’s operational costs plus a profit to cover the capital investment and regulated requirements. For example, the bank has to have reserves of liquid securities that the bank can sell to cover withdrawals. However, the same reserves can be used repeatedly for consecutive loans. The bank claims these extra profits while doing nothing more to earn them.
Increase Finance Productivity and Lower Home Prices
Increase Finance Productivity and Lower Home…
Increase Finance Productivity and Lower Home Prices
Finance plays a crucial role in the economy by facilitating money transfers for investment rather than consumption. It enables profits generated in one business to transfer to other ventures. This article explains why finance is currently economically inefficient and outlines how to make it the world’s most efficient industry. Economic efficiency is the least amount of money needed to create an investment. An investment will generate goods and services while leaving its value the same. Over time, an investment may generate more money than its value but will not generate value if unused. For example, banks enable investments by lending government money to individuals and organisations, and the service is paid by borrowers paying interest. The interest covers a bank’s operational costs plus a profit to cover the capital investment and regulated requirements. For example, the bank has to have reserves of liquid securities that the bank can sell to cover withdrawals. However, the same reserves can be used repeatedly for consecutive loans. The bank claims these extra profits while doing nothing more to earn them.