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mathematically perfected economy™ (MPE™)    1  :   the singular integral solution of  1) inflation and deflation,  2) systemic manipulation of the cost or value of money or property, and  3) inherent, artificial multiplication of debt into terminal systemic failure;    2  :  every prospective debtor's right to issue legitimate promises to pay, free of extrinsic manipulation, adulteration, or exploitation of those promises, or the natural opportunity to make good on them;    3  :  our right to certify, to enforce, and to monetize industry and commerce by this one sustaining and truly economic process.

MORPHALLAXIS, January 14, 1979.

Mathematically Perfected Economy™ FORUMS, DISCUSSION

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 Post subject: MPE questions about Loans & Leasing
PostPosted: 24 Dec 2008, 9:17 am 
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Mathematically Perfected Economy™ questions about Loans & Leasing

I have several questions regarding Loans and Leases and the Mathematically Perfected Economy™. I hope I am placing these questions in the appropriate topic category:

1. Secured (Collateralized) Loans
Most business and many personal loans are secured with an adequate amount of equity (asset pledged to the amount of the loan). The equity is seized in the event of a default making these loans fairly safe which guards everyone in the system.

1a. Mortgages
Traditional mortgages required that the appraised value of the real estate should meet or exceed the balance of the loan. There will always be fluctuations the price of real estate (even in a MPE stable economy) that may be “buffered” by a down-payment. Would a down-payment be advised, and if so, what percentage?

1b. Home Equity Loans
Mortgage payments would be greatly decreased with the MPE which allows the people to keep more of their money. Still, emergencies and unusual expenses come up in life that requires extra cash (e.g. - unemployment, temporary disability, college tuition, real estate upgrades). Would people be able to tap their home equity?

2. Unsecured Loans
Many consumer loans are unsecured in that in the event of a default, there are no clear assets pledged. Unsecured loans are usually secured against future earnings. Unsecured loans hold more risk than secured loans.

2a. Credit Cards
Unfortunately credit cards have become a way of life with many. The MPE allows people to keep more of their money and earnings which should reduce the need for loans through credit cards but they do offer convenience and a certain amount of safety (you don’t have to carry as much cash). How would you handle credit cards?

2b. Automobiles

Automobiles are partially secured loans but through-out the life of the loan, especially in the early stages, more is typically owed than the car is worth. For example, as soon as you drive that shiny new car off the showroom floor it typically depreciates by as much as 40%. Dealer’s call this phenomenon being “upside down.” How would auto loans be handled?

2c. College & Skill Training
Colleges and trade schools can be very expensive. The system we have now is terrible; interest rates are usually low but the legal contract is onerous. They are not handled like other loans in that if the holder defaults, they are able to take future wages. How would money be provided for educational needs?

3. Leasing
Leasing works well for some businesses and private automobiles. The interest charged could be redefined as the service provided in requiring a periodic payment that exceeds the principle amount.

3a. Automobile Leasing
Leasing makes sense for some depending on how many miles they drive in a year (usually 12,000-15,000 Miles/Year is the maximum without being subjected to over mile-age penalties) and how well they maintain the vehicle (damage penalties may make a working pick-up truck a bad choice to lease). I’m not suggesting that MPE get into the leasing business but many car manufacturers provide them as a service. How would car leasing be handled?

3b. Equipment Leasing

Businesses will often lease equipment to save cash-flow. In a number of cases we are seeing individuals lease equipment for the same benefit. Would leasing be able to be accommodated through MPE?

Larry




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 Post subject: Re: MPE questions about Loans & Leasing - Add 1
PostPosted: 26 Dec 2008, 4:09 pm 
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1a. Mortgages (added questions)

In your example, you used a mortgage duration of 100 years to calculate the monthly payment. Is the 100 year duration based on the deprecation rate of the home? If so, this is too long as most homes will become obsolete before that time period and many of the components are not designed to last that long. For example, while concrete and brick may be have a 100 year service life - shingles (20 years), HVAC equipment (10-20 years), windows (aluminum 15-20 years, wood 30+ years) and other components will not last as long.

Another problem is that most people won't live that long, meaning they are signing a contract that they most likely will never be able to honor. What happens when they die, must their house be taken over? I would think 30-40 years would be a more reasonable time period




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 26 Dec 2008, 9:48 pm 
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Each answer responds to your qualifying remarks/explanations:

Quote:
Would a down-payment be advised, and if so, what percentage?

Down payments are little more than traditional. All that really should be required in my opinion is credit-worthiness. Debtors who can meet whatever standards the populace altogether requires should be able to acquire financing.

If a down payment is required, and we are to meet our requisites for solving inflation and deflation, and if we are to make it possible to pay for our consumption of production/wealth as we consume of it, then requirement of a down payment undermines our achievement of these goals. It also prevents us from delivering homes for instance, immediately, to people who can afford them. By forestalling the transaction until a down payment can be saved, we also deprive the producers of the subject property of prospering to the degree they are capable.

Because, under mathematically perfected economy™, we are paying for our consumption as we consume of it, I see no advantage in imposing requirements for downpayments; and, as we see, this imposes disadvantages.

Quote:
Would people be able to tap their home equity?

All equity can and must always be able to be tapped. This is a vital characteristic of an effective volume of circulation which is capable at any time of transferring/trading all wealth at once.

Quote:
How would you handle credit cards?

As you note, the need to borrow in the pattern of current "credit cards" is dramatically reduced. Individual liquidity may increase so much as 12 fold or even more, merely for eliminating the costs of interest across the whole of production.

To a substantial (if not whole) degree, the only attribute of present conditions which requires unsecured borrowing however is interest. If we supported unsecured borrowing furthermore, we would be abusing a vital principle of perpetual redeemability of the currency in the very wealth it is intended to represent. If we fail to sustain this principle, we destroy the intended value of the circulation, because in effect, some subset of the circulation is irredeemable.

The question is, whether it would ever be necessary to do so in mathematically perfected economy™; and I see no reason/instance whatever where it would be. After all, except for servicing interest under usury, why is it ever necessary to finance unsecured further debt?

The need for unsecured borrowing itself is eliminated by mathematically perfected economy™.

Quote:
How would auto loans be handled?

The idea behind mathematically perfected economy™, or the vital goal, is to pay for our consumption as we consume of it — and therefore, the determined rate of depreciation determines the appropriate rate of payment, all of which in turn render a remaining circulation which is at all times equivalent to the *perceived* remaining value of all related property.

The question therefore asks how to implement a proper rate of depreciation; and the only trick to that is to agree as a public, what our perceptions of remaining value are. It is right/"normal" for us to perceive faster depreciation of real value in the initial stages of the lifespan of property. We may want to determine different applicable rates of depreciation for different classes of property as well. But generally, the perception follows a basic pattern with the steepest rates of depreciation at the beginning of the lifespan, and the flattest at the end of the lifespan. These may fall along curves, segmented linear rates — whatever fits the public's perception of remaining value across the whole lifespan.

Whatever the public agrees fits its perception of the applicable pattern, that's the rate of payment.

Quote:
How would money be provided for educational needs?

An education may not appear to represent an actual physical asset; but it is a tangible property, even as there is no physical asset which can serve to secure a resultant debt.

Because there is no physical asset, I believe that education should be paid for differently than it is now. We can readily understand how mathematically perfected economy™ sustains unlimited prosperity regarding physically represented volumes of wealth; but what about non-physical assets, which may not in many possible cases, not even manifest in an opportunity to redeem the ostensible asset in any further currency, circulated perhaps to represent such intangible assets?

The the seemingly intangible asset is an education then makes no difference. What we are concerned with is how to fund such intangible, irredeemable assets.

An education isn't necessarily worth anything, particularly in terms of justifying value which can be redeemed from an economy. If we teach usury for instance, we actually produce a society which, no matter what further, bona fide and useful things we might teach them, the resultant society may not benefit from the real disciplines they might become skilled in. What then is the value of what we have taught?

In the end nonetheless, whatever the perceived value of the body of teachings (or other service), the market (student) estimates the value somehow, taking into account somehow, how the service is going to enable them to pay for the service. If the anticipated conditions do not hold, obviously, they may make a bad wager.

So what's the right way to do this? The education never produces any financial wealth until it does; and at that time, the education may or may not prove to comprise some justifiable extent of costs. The object then is to determine the justifiable extent of costs, and to pay that as it can be paid. The costs can't reasonably be paid before that.

In other cases, the costs and ostensible value of "an education" might be artificially inflated by restricting accepted students. The real value of an education then is something less than might be imposed, if the resultant discipline might be served by the number of practitioners it could and would be served by, otherwise.

So we have many issues to contend with, and perhaps at first at least, we don't come up with a perfect answer. Perhaps we decide in part or in full that parents pay for the educations of their children; or, perhaps we decide that the value of an education must justify itself financially, and that we must fund the education after the proven fact of value, from future earnings. Perhaps we might do that from the first so many years of work. Perhaps instead, the society at large may decide in whole to pay for educations via some sort of taxation.

I believe however that to a considerable extent, the value of "an education" is dependent on each student; and that unless the onus of payment is put on the student, lax attitude toward costs, vacillating goals and so forth, may substantially, redundantly inflate the costs of inflation, while even reducing value. A student is the most effective monitor of a course, even if they are substantially unaware how a course may or may not manifest in eventual, real worth. Is time being wasted? Are we learning valuable things? Or are we mastering dogma or trivia? If the onus is on the student furthermore, the teacher is obliged to give the student an idea and interest in how the value of a course manifests in ultimate value.

My general feeling is that the costs of education must be paid by the student and/or the parent, and/or perhaps by the eventual field, requiring the discipline. Delivery of a general education is an obligation. Professional training is a separate matter.

As there is no tangible immediate value, the funding cannot come from new money, loaned into a circulation which by rule must represent tangible wealth. The risk takers take the intangible initial value into consideration, and dedicate themselves to making those efforts worthwhile.

The effect of mathematically perfected economy™ is simply to eliminate all the costs of interest involved in the costs of the education. The costs of education therefore are reducible to justifiable wages for producing the education; and, being as the wages serve many at once, the costs of good educations can certainly be negligible. Moreover, I see substantial opportunities to more efficiently deliver quality educations which can reduce the costs far more.

Now, suppose on the other hand that we eventually come to a point where we can somehow sufficiently determine the value and lifespan of such things as maintains the value of money by some form of redeemability, and a schedule of payment equivalent at least to the rate of consumption. Then, we can finance such things under mathematically perfected economy™, of course, providing we recognize the eternal caveat that it is incumbent upon us to determine those requisites with certainty.

I do not anticipate a need to do so, because a tremendous further circulation will be sustained (above the drastically deflated volumes of recent history) under mathematically perfected economy™, making it possible to readily afford *many* things which are out of reach under circulatory deflation, the most of which, even so, is presently devoted to servicing debt and artificially inflating the costs of all industry, versus sustaining industry and prosperity.

Quote:
How would car leasing be handled?

I'll just consider this question to refer to leasing in general, versus a specific arena.

Obviously, the leasing specialist is going to have to pay for the lifespan of the financed wealth. Whatever operational costs are involved have to be justified by whatever they provide to the lessee. All that is really, is relief from having to find a buyer for a commitment to pay for the full lifespan of the subject property. The equation is simple then: property value = financed value, and leased value = property value + operational costs, however these need to be distributed across the lifespan of the lease or property. Leasing will cost more therefore than ownership; and the difference likewise must be justified by the limited span of ownership, and relief of the longer term obligation of ownership.

Given the scope of costs reduced by eradication of interest, likewise the prospects are more plausible under mathematically perfected economy™ than otherwise.

Quote:
Would leasing be able to be accommodated through MPE?

Generally then, moreso than now. The operators of such leasing endeavors of course are simply responsible to pay for the property they lease, at the rate of consumption which is incumbent upon mathematically perfected economy™.

Quote:
Is the 100 year duration based on the deprecation rate of the home? If so, this is too long as most homes will become obsolete before that time period and many of the components are not designed to last that long. For example, while concrete and brick may be have a 100 year service life - shingles (20 years), HVAC equipment (10-20 years), windows (aluminum 15-20 years, wood 30+ years) and other components will not last as long.

I use the 100-year figure because it is plausible (particularly given the further considerations you raise), and because from it, it is easy to understand the math.

What people need to understand is that prices have been driven upward by multiplication of indebtedness, at the perpetual cost and compromise of quality which, under mathematically perfected economy™ is not only affordable, but potentially more economical.

For instance, if a small measure of compromised quality might reduce costs 5%, and reduce the lifespan 50%, then that 5% of costs which we can afford under mathematically perfected economy™ dictates the right way to do the job. What costs more under mathematically perfected economy™; a $100,000 home with a 50-year lifespan ($2,000 per year or $167 per month), or a $105,000 home with a 100-year lifespan ($1,050 per year, or $85.50 per month)?

Under mathematically perfected economy™ therefore, not only can we afford to do the job right, it is *more* affordable to do the job right.

You mentioned elsewhere that you are an engineer; and of course, engineers understand that anything is only so good as its weakest link. Many seemingly small details dramatically impact the expectable lifespans of our production. For instance, a framed house looks the same to the end user if one nail is driven into the end of each stud, versus two; and many people will claim that materials put on the walls then hold the studs from twisting. But of course, because they can twist around a single fastening point, and because usual materials such as drywall provide little resistance on the inside, while drying cycles, stress, etc., make it possible for the outside wall to loosen as well, the end product does not have the durability it would if two nails are driven into each stud.

Say, just for rough figuring, that driving only one nail in each stud end diminishes the lifespan of the house 20 years. Is it worthwhile to pay a carpenter say even $500 to put two in every stud, if this extends the lifespan of most of the rest of the components, 20 years?

Of course.

But you can only afford to do business that way if you can afford to build homes the right way; and you can only afford to both therefore if you eradicate inherent multiplication of indebtedness by interest.

What happens when you *can* afford to do the job right is, you tend to find whatever components of the end product represent a practical, expectable lifespan; and then, the standards of your work are tailored to target sustaining that, so that the whole end product tends to expire together (if it has to expire, or is practical to expire, versus require perpetual maintenance).

After all, we're regularly paying 2 or 3 houses for every one we attempt to buy under usury; and so, there is far more we can afford as well. A relatively substantial investment might be required for solar heating and/or power for instance, which we can not only afford under mathematically perfected economy™, but are even compelled to do right (*most* economically).

Quote:
Another problem is that most people won't live that long, meaning they are signing a contract that they most likely will never be able to honor. What happens when they die, must their house be taken over? I would think 30-40 years would be a more reasonable time period.

Yes, and if they aren't financing something that someone else is going to *want* to take over (such as strange architecture, whatever...), it is right then to consider the *effective* lifespan of the subject property to be *the effective, remaining lifespan of the debtor*!

In fact, even so, you can hardly at any time consider the subject property redeemable either. So, using our guiding objects/principles to determine solution, what do we do? We impose standards which make it possible to abide by the objects/principles; and, if we intend to accommodate some kind or extent of exceptions to those standards, then we account for the case in such a way that we still ensure redeemability. We might force the owner of a strange custom house they've contracted to build to find an eventual buyer; or, otherwise, to guarantee payment from savings, or finance the construction over a contracted lifespan, which, with perhaps some specialized insurance or other such provision, guarantees payment and perpetual redeemability of the currency.


Good questions. As you see, I only answer them by abiding by the original principles. I personally expect that given that, because you're good enough to foresee these issues and ask of them, you wouldn't have any real difficulty applying those principles, either. I only mention that, because that's the same pattern I impose upon myself, and because you're probably thinking along these lines, because that's the pattern of any bona fide engineering — to foresee possible exceptions or deviations from a standard case, which of course we want to account for.

Actually, they're great questions; and I anticipate you'd do great in answering them.

Let me ask you to think this one through out loud:

What impact would you expect mathematically perfected economy™ to have on public transportation; and how would you expect that impact to manifest?

(Just a test. I bet you can answer that as well as I can.)




mike


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"When the freedom they wished for most was the freedom from responsibility, then Athens ceased to be free, and never was free again."



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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 27 Dec 2008, 6:57 pm 
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Mike,

I can't tell you how much I appreciate you taking the time to carefully respond to so many questions. One thing I would like to do is to compile a category specific list of FAQs to make the information readily available to others. I'll start with a "Loans & Leasing" category and submit it for your review.

I still have a few questions and concerns, please bare with me:

1a. Mortgages - Would a down-payment be advised, and if so, what percentage?

Quote:
Down payments are little more than traditional. All that really should be required in my opinion is credit-worthiness. Debtors who can meet whatever standards the populace altogether requires should be able to acquire financing.

If a down payment is required, and we are to meet our requisites for solving inflation and deflation, and if we are to make it possible to pay for our consumption of production/wealth as we consume of it, then requirement of a down payment undermines our achievement of these goals. It also prevents us from delivering homes for instance, immediately, to people who can afford them. By forestalling the transaction until a down payment can be saved, we also deprive the producers of the subject property of prospering to the degree they are capable.

Because, under mathematically perfected economy™, we are paying for our consumption as we consume of it, I see no advantage in imposing requirements for downpayments; and, as we see, this imposes disadvantages.


Question - I agree people should be able to freely borrow whatever they can afford, but, I contend that often times, a house may not fetch it's appraised value. To a degree, value is subjective and we have no assurance that a property will be properly maintained. A down payment, or a minimum amount of equity, may help protect the system from default losses by building in a buffer that would serve as an insurance policy.

You mentioned one time before that it would be fine for people to "prepay" their mortgage and that it would be a "savings" built in the equity of the home. A down payment would effectively be a savings, or reserve, through equity.

1b. Home Equity Loans - Would people be able to tap their home equity?

Quote:
All equity can and must always be able to be tapped. This is a vital characteristic of an effective volume of circulation which is capable at any time of transferring/trading all wealth at once.


When you subtract interest from the loan equation, you are supercharging the money (comparatively). This is a very powerful in motivating people to save in energy costs because the return on investment is quickly realized, and from that day on its pure savings.

For example, a geothermal heat pump system may be designed to deliver 400% efficiency (retrofit old forced air systems typically limited to around 250% unless further work is done to the system) - imagine for every unit of energy in, we reap 4 units out (and, geothermal heat pumps create -zero- on site carbon emissions!). Conservatively, the service life of a geothermal heat pump is 15 years, and the cost of a retrofit installation would be roughly $15,000 (average varies greatly upon geographic location) - from this we can see that if one's average monthly heating and cooling bills are equal to *$104/month, then the cost of the heat pumps system would be virtually free:

formula: (upgraded energy costs + installation financing) - Base energy costs = 0

Things get a lot more exciting when you consider that many installations would save the owner from day one. If the average energy bill is higher, then a savings would be realized from day one! This is very powerful stuff:

formula: (upgraded energy costs + installation financing) - Base energy costs = $ Savings!


* Installation costs $15,000/180 Monthly payments = $83/Month,
assuming a 400% operating efficency, then the new energy costs would be 25% of the base,
$83/Month financing x 1.25 = $104

Note: These are general rule of thumb numbers, each application would need to be carefully reviewed


Suggestion - Programs currently exist whereby the energy verifiable savings that is derived from energy saving systems is not added against the credit worthiness ratios of the loan applicant. For example, if an individual (or group) qualifies for a $100,000 mortgage; then the energy saving upgrade (verified system performance) may exceed the qualified amount. So, if you qualify for a $100,000 mortgage, and an energy savings system (over base) costs $15,000, than the borrower qualifies for the resulting $115,00. My suggestion is to allow a similar arrangement in the MPEtm to eliminate the need for homer owners to decide between that super kitchen and real economical and environmental benefits.

2a. Credit Cards - How would you handle credit cards?

Quote:
As you note, the need to borrow in the pattern of current "credit cards" is dramatically reduced. Individual liquidity may increase so much as 12 fold or even more, merely for eliminating the costs of interest across the whole of production.

To a substantial (if not whole) degree, the only attribute of present conditions which requires unsecured borrowing however is interest. If we supported unsecured borrowing furthermore, we would be abusing a vital principle of perpetual redeemability of the currency in the very wealth it is intended to represent. If we fail to sustain this principle, we destroy the intended value of the circulation, because in effect, some subset of the circulation is irredeemable.

The question is, whether it would ever be necessary to do so in mathematically perfected economy™; and I see no reason/instance whatever where it would be. After all, except for servicing interest under usury, why is it ever necessary to finance unsecured further debt?

The need for unsecured borrowing itself is eliminated by mathematically perfected economy™.


IMHO, credit card should be replaced with debit cards - I agree with everything you're saying. This is the most heinous of all usury in that I read reports oft credit card companies charging upwards of 25%. This is an outrage akin to snatching an old ladies purse; it is a stick in the eye of our society that we allow such things to persist.

2c. College & Skill Training - How would money be provided for educational needs?

Excerpts:
An education may not appear to represent an actual physical asset; but it is a tangible property, even as there is no physical asset which can serve to secure a resultant debt.
Quote:
Because there is no physical asset, I believe that education should be paid for differently than it is now. We can readily understand how mathematically perfected economy™ sustains unlimited prosperity regarding physically represented volumes of wealth; but what about non-physical assets, which may not in many possible cases, not even manifest in an opportunity to redeem the ostensible asset in any further currency, circulated perhaps to represent such intangible assets?

The the seemingly intangible asset is an education then makes no difference. What we are concerned with is how to fund such intangible, irredeemable assets.

An education isn't necessarily worth anything, particularly in terms of justifying value which can be redeemed from an economy. If we teach usury for instance, we actually produce a society which, no matter what further, bona fide and useful things we might teach them, the resultant society may not benefit from the real disciplines they might become skilled in. What then is the value of what we have taught?

In the end nonetheless, whatever the perceived value of the body of teachings (or other service), the market (student) estimates the value somehow, taking into account somehow, how the service is going to enable them to pay for the service. If the anticipated conditions do not hold, obviously, they may make a bad wager.

So what's the right way to do this? The education never produces any financial wealth until it does; and at that time, the education may or may not prove to comprise some justifiable extent of costs. The object then is to determine the justifiable extent of costs, and to pay that as it can be paid. The costs can't reasonably be paid before that.

In other cases, the costs and ostensible value of "an education" might be artificially inflated by restricting accepted students. The real value of an education then is something less than might be imposed, if the resultant discipline might be served by the number of practitioners it could and would be served by, otherwise.

So we have many issues to contend with, and perhaps at first at least, we don't come up with a perfect answer. Perhaps we decide in part or in full that parents pay for the educations of their children; or, perhaps we decide that the value of an education must justify itself financially, and that we must fund the education after the proven fact of value, from future earnings. Perhaps we might do that from the first so many years of work. Perhaps instead, the society at large may decide in whole to pay for educations via some sort of taxation.


Educational loans are very difficult to evaluate in terms of debt/risk/duration. One thing is for certain, a society that is more affluent (through MPE) is more likely to be more wise and benevolent in seeking the solutions. Until another solution comes along, guardians or advocates should continue to collateralize (co-sign) the required loans. I don't see how the MPE solves this problem but the benefits make it much easier to resolve.

Quote:
engineers understand that anything is only so good as its weakest link


That is part of the "dependability-reliability" equation and I might add that the efficiency equation requires us to reduce/eliminate all parasitic loads. In this case the parasitic load (usury interest) outweighs the potential for savings which in a way, makes it much easier to solve.

Quote:
What impact would you expect mathematically perfected economy™ to have on public transportation; and how would you expect that impact to manifest?


You are touching the very root of the transformation to an interest free society - the people will no longer be constrained by the "scarcity" of money. By licensing banks to have a monopoly on the creation of our money, we are relinquishing the ability to do any central planning. Your example, public transportation, is an exciting case of the power to cost-return analyze instead of catering to a banks whims.




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 28 Dec 2008, 12:06 pm 
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DrKrbyLuv wrote:
I can't tell you how much I appreciate you taking the time to carefully respond to so many questions. One thing I would like to do is to compile a category specific list of FAQs to make the information readily available to others. I'll start with a "Loans & Leasing" category and submit it for your review.

A lot of people simply don't realize it, but when you write software code to replicate the vital underlying cycles independent of human decision (the famous Austrian non-extant objection), you are forced to do the diligence a self determined society will be forced to walk through and perceive as *the* solution, if it is to adopt what is in fact a singular solution. I've been walking through these things in detail for four decades in the very terms Congress or a presidential candidate would be compelled to, *if* they took responsibility for ascertaining a valid process of development. Congress isn't doing that. Nor are any of the presidential candidates. Nor are our Supreme Court Justices walking through the illegitimate consequences of the obfuscated relationship of creditor/debtor which has been imposed upon us. I've seen over this while, that *some* Justices of the past have been most equipped in terms of caliber to address the consequences; but their job/role is not to adopt solution. These questions had to asked and answered many years ago, when I first set out to explain what was wrong and what we had to do about it.

So it's not only an honor, but the greatest kind of encouragement that American *citizens* are first to ask the right questions. Will McPhee asked all the right questions in the early and mid 1970s. I've tried to write every word accountable to those questions ever since.

What people do need to realize is this isn't a go-by-feel competition; that the recent eleventh hour entries who have never even modeled their purported solutions, much less qualified them in any even reasonably accountable terms, are injecting confusion and distraction, instead of asking the right questions, which they need to answer, in the first place. After all, if they asked and answered the questions, they'd realize the solution had already been proposed.

Last night I answered to someone who meant to inform me that the Zeitgeist Addendum advocates mathematically perfected economy™! Now then, how is it possible that the author of mathematically perfected economy™ could watch the Zeitgeist Addendum and have no idea either that it advocated mathematically perfected economy™, or even proposed such an indisputable thing as a singular possible solution to inflation and deflation? Because I had used the term, and because this person understood nothing of the kind, nonetheless, because they wanted to assert their feeling that the Zeitgeist Addendum established a prevailing role (with no meat whatever) in the race for monetary solution, they asserted the mere nomenclature as an argument to the author of the solution. Wow. How backward can the people be?

But so, these are the questions we need to ask and answer; and so I'll be pleased to host a FAQ. You can do that in text form. I think a single page would be fine unless it grows really large. I have tools to format content... so I can take care of that end in a few minutes.

DrKrbyLuv wrote:
I agree people should be able to freely borrow whatever they can afford, but, I contend that often times, a house may not fetch it's appraised value.

As you probably do in your fields of engineering, once I identify and ideal of design, I make it incumbent/obligatory upon myself to abide by it without exception. I am adamant (and I assume you agree) that we abide for instance of paying for what we consume [at no less rate than] as we consume of it. This satisfies not only this object of the desirable, mere "representational" character of "money"; it further solves inflation and deflation in such a concrete way, that as we accommodate equity as an equivalent of currency (by making equity immediately convertible into equity), we at all times are supporting the greatest possible transactional stress, which is to exchange all wealth at once. We thus have minimized cost; eliminated all extrinsic/redundant cost; made money strictly a token of value; preserved the value of the tokens across their lifespan; provided for all payment of debt in magnitudes of payment which are equivalent to what we take possession of; we have provided for illimitable and perpetual sustainability without detriment... etc.. Nothing but mathematically perfected economy™ supports all these objects of a veritable economy.

Your issue of potential non-payment for the home is not only a valid concern; it is a predictable one, for which a monetary system must be accountable, if it is to maintain the necessary balances/relationships which sustain all the goals of mathematically perfected economy™. So our question is, how do we conceive of this potential aberration to an expected/usual norm, so as we can best account for it.

Your idea of a deposit would work; but my objection to it as an ideal, is that it forces the consumer to pay for consumption far ahead of time, and thus in such a way as precludes affordability which we can provide for immediately. The objection then, guides my analysis of the circumstances to attempt to refine this fault to an ideal solution.

What happens if a person pays too much for a home? Nothing negative or irregular whatever. They have agreed to pay a value they have agreed to; and mathematically perfected economy™ has sustained the transaction as necessary and intended throughout the lifespan of the subject property and debt.

The problem you raise comes into play only if they are unable for some reason to pay for the home.

There are many potential creative ways however that we can fit this failure to make payment into the vital scheme of mathematically perfected economy™. Because there are so many potential ways, I prefer to give the overall rules (mathematically perfected economy™), and leave implementation up to the subject society. But in thinking about these things so far ahead of that implementation, of course some such guidance can be extremely valuable.

So how do we fit this aberrant circumstance of inability to pay into the scheme of mathematically perfected economy™? All we're required to do is to pay out of circulation, so much as if the home *were* paid for, by a party *able* to pay.

So for instance, we could treat this potential irregularity as an insurance issue, where home owners for instance of certain classes might divide amongst themselves the costs of paying for others' unpayable mortgages. What would the cost of this be?

Well, if every other home were subject to non-performable payment, then instead of a $100,000 home with a 100-year lifespan costing us $1,000 per year or $83.33 per month, we might also pay $1,000 per year or $83.33 per month home-owners' insurance on top of that. If every tenth home were subject to non-performable payment, the cost of the insurance would be $8.33 per month. If we chose to live in a hurricane-affected area and not build our homes strong enough to withstand potential hurricane forces; and say on average, everyone had one such home blow away during their lifetime (necessitating two to render the service of one), then home owner's insurance might cost the $83.33 per month. We always "somehow" end up paying for the costs we do in fact incur. The question is, how to do so most "economically" and justifiably; and so, to do so within the framework of mathematically perfected economy™ is our best answer.

Suppose further now that we have a class of potentially undesirable home which a certain eventual owner wants to build nonetheless, which may have a lifespan beyond their own lifespan, and which therefore, we might not be able to expect/anticipate finding an eventual buyer for, to pay the remainder of the value of the property, after the lifespan of the original builder/owner?

Do we deny them a right to build and finance it? Or do we force financial costs on them in such a potentially untimely way, that they cannot afford to build or use it, when we could accommodate their intention as would otherwise be affordable?

If we sustain this building and financing of the home as we must if we are to abide by our principles of mathematically perfected economy™, we open the way to aberrant failure to abide by those principles however if we do not account for the risk of violation you raise. Mathematicians will readily field the problem however as to eliminate the risk.

We have so much lifespan of the subject property which exceeds the debtor's. So our first option is to finance the property over an expectable remaining lifespan of the debtor: after all, they have chosen to engage in an endeavor which no one else may want or need to pay for, the obligation of which is assumed and committed by the original debtor.

On another hand, should they be able to find a party willing to assume the remainder of the debt, we can accommodate financing the property over the combined expected (serial) lifespans of the debtors.

On another hand yet, we may accommodate a subject class of property, all of which is to be handled in a consistent manner for which it is classified, by applying the previous "insurance" principle, but in this case, where, across the lifespan of the debtor, the costs of failures are paid equally by all debtors choosing to impose the risks upon the subject economy.

All we're really doing in all of these cases however, is finding an agreeable and most just way to abide by the necessary rules of the economy. No one gets anything for nothing; everyone pays for what they get with an equal measure of their own production, with the imposed risks of failure to abide by the rules distributed justly among classes of chosen, imposed risk.

So, we also justly accommodate the thrifty individual, who may for instance build much of their home perhaps with free materials existing on the land. We don't force them to suffer a class of risks assumed by others. A log cabin in the woods is still a log cabin in the woods; and if it was built at almost no cost whatever by an owner willing to re-construct it if a tree falls on the ridge beam, well... we accommodate that owner too.

But by distributing the costs and risks (whatever they are on a case by case or class by class basis) over the lifespan of the property, we allow the debtor to procure the property at a moment when it best serves them (over a longer lifespan), whereas requiring a down payment delays ownership and benefit.

We need to apply the rules in this accommodating fashion to best serve every prospective individual.

Say for instance, we have some whiz kid who graduates from a trade school with straight As, and phenomenally mature skills. Today they might work half their lifespan for a pittance, hoping eventually to save enough to buy one Bridgeport Mill, a lathe, and a little other shop equipment. All the while they are attempting to save, the costs of equipment and an eventual building out-pace what they earn; and so, ultimately they never achieve their dream.

Under mathematically perfected economy™, what can we do instead for this potentially extremely valuable person?

Well, they might get by with a single Bridgeport, the lathe, and so forth; and maybe that might be the usual approach to starting them out. But suppose a contractor secures their skills to perform several contracts which, to perform the work most economically, might justify involving several mills, versus one — for instance to eliminate repetitive setups? Say that 5 mills can be dedicated to certain operations, which even this single operator/person can keep occupied? Just to save the setup time may justify the 5 additional mills; and of course he/she might want an independent mill or two for separate work.

Contract and business plan in hand, they can go to the people's bank, issue their promise to pay, justified by the credit-worthiness of the contract, and buy all this equipment. Suppose the building won't be ready for 6 months, or other reasons exist which preclude establishing the anticipated stream of income immediately?

Fine. The machines are dormant until then, so why force the lifespan to start before the machines are even used? Thus, arranging all this is one thing; and we accommodate initiation of the payment when the building is together and the machines are all set up, and everything is ready to go to work.

DrKrbyLuv wrote:
To a degree, value is subjective (a) and we have no assurance that a property will be properly maintained. (b) A down payment, or a minimum amount of equity, may help protect the system from default losses by building in a buffer that would serve as an insurance policy.

a. Actually, to ensure that property *is* being paid for as we consume of it (potentially by inadequate upkeep/maintenance), it is incumbent upon us to verify maintenance. Periodic inspections to validate standards of maintenance are vital; or, b) should that be undesirable, yes, some sufficient maintenance insurance deposit applies the costs to the person or persons who incur them.

But again, in observing all our principles, we accommodate the accountable debtor to get into the related property by otherwise providing to pay for costs/risks imposed as they go, or we obstruct them from ownership. However we need to finance those risks justly, to get them into costs which they can afford, is our object. Perhaps practice of foresight tell us we need to make the insurance rates higher in the first year or some such extent of ownership for a class of property. So be it. The debtor may have to work harder with that set of Bridgeports over the first however long, until they establish a proven pattern of performing necessary maintenance.

DrKrbyLuv wrote:
A down payment would effectively be a savings, or reserve, through equity.

Yes. Absolutely; and rightly, this should *likewise* be an alternate way of avoiding the costs of alternate insurance! After all, prepayment of consumption negates the risks of an exceeding rate of consumption, above the rate of depreciation. In such cases as well, the anticipated lifespan should be adjusted downward, so that the remaining rate of payment equates to the remaining consumption.

DrKrbyLuv wrote:
When you subtract interest from the loan equation, you are supercharging the money (comparatively)... [and so on....]

Right. These kinds of situations exist across diverse potential endeavors. The "green" energy jobs Obama is hoping "to create" are actually only precluded now by usury. Fix the system, and we'd already have the jobs. Fail to fix the system, and by the time he hopes (falsely) "to create" the jobs (which have only been precluded), and the further multiplication of debt by interest we'll suffer by then will only further preclude the market from affording the product of those jobs.

Worse, unless you eradicate multiplication of debt, it won't be any more possible to sustain those jobs than it will be possible to sustain all the other jobs we are losing. After all, as we've already said, and as you've already explained is otherwise possible, *we would have those jobs if it weren't for the fact that multiplication of artificial indebtedness has already made it financially impossible to afford the production of those jobs — much less sustain the jobs!

DrKrbyLuv wrote:
IMHO, credit card should be replaced with debit cards - I agree with everything you're saying.

Exactly. Until debt was multiplied upward so that we required buying expiring products such as food on credit, credit cards didn't even exist, because they didn't need to exist. But even so, the costs of homes and so forth then would have been dramatically reduced as well, making it far more possible to afford short lifespan production without financing its purchase.

Under mathematically perfected economy™, we might have more than 10 times as much spendable income out of the same income, particularly if you account for downscaling of the costs of production made possible by eradication of the costs not only of interest, but of artificial multiplication of the sums of debt we are servicing, all along the course of production costs. There's way more leeway for higher wages/salaries as well.

DrKrbyLuv wrote:
One thing is for certain, a society that is more affluent (through MPE) is more likely to be more wise and benevolent in seeking the solutions. Until another solution comes along, guardians or advocates should continue to collateralize (co-sign) the required loans. I don't see how the MPE solves this problem but the benefits make it much easier to resolve.

Right. All mathematically perfected economy™ is, is a minimization of *all* costs, and the necessary schedule of payment which preserves the value of money.

No system can eliminate incumbent costs; it can only eradicate extrinsic, redundant costs. You're still left with the issue of who should pay for what. You can still impose injustice by wrongly saddling others with costs they should not be saddled with. It is still the responsibility of practitioners then to correctly apply the necessary principles in every case, in a best solution. If we had a clear idea of that, we would already have the ideal solution, within which mathematically perfected economy™ supplies the formula for optimal affordability.

DrKrbyLuv wrote:
and I might add that the efficiency equation requires us to reduce/eliminate all parasitic loads.

I'm glad you mention this. In my vision, we just have a small disparity in semantics. If you are designing a motorcycle racing frame, sure, you use tapered roller bearings around a swing-arm axle not just to eliminate friction and potentially adverse shock, but to put the swing-arm axle into shear (versus flexure), which of course a design may more efficiently resist.

What that leaves in my perspective of the issues, is a handling of the duty cycles the frame design is naturally subject to. I equate usury to an externally and redundantly imposed further force, akin to the redundant act of chaining the frame to a fence post!

But yes, it's equally valid to consider usury a matter of inefficiency, for it certainly is not only a matter of inefficiency, but ever multiplying preclusion.

DrKrbyLuv wrote:
By licensing banks to have a monopoly on the creation of our money, we are relinquishing the ability to do any central planning.

Great. And the evidence of the crime is that we didn't even license them. They usurped the Wilson Administration, which had committed to a promise never to create a central bank. With the unwarranted power to issue a costless money, to the ever multiplying enrichment of the usurers, and to the equivalent cost of the rest of us... of course they were able to sustain their usurpation, not just of the government, but of the media, prevailing local corporate forces, and eventually, even distant, foreign cases of all.

Not only will we not have (just) "the big three." We'll have instant competitors not only for oil-consuming glutton-mobiles, but for more diverse and more ideal forms of transportation, and urban infrastructures. Probably better than half the redundant executive engineers at the big three are prepared and desirous of embarking right now on competing endeavors.

Instead of false bubbles, funded largely by liberal abuse of principle for a predominating purpose of replenishing an illegitimate currency which disappears at ever faster rates, we'll have far more prosperous, real industry — which imposes upon us a different set of obligations, which are to industrialize responsibly.

For the first time ever at least, we will be able to afford to do so.




mike


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 Post subject: Re: Borrowing for asset purchases including gold
PostPosted: 07 Jan 2009, 7:25 pm 
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Mike,

I was hoping to establish the girth of interest free lending from a consumers perspective. Homes and autos are easy to deprecate because there is tons of historical resale data.

1) What other assets might qualify? For example, may qualified borrows secure loans against the value of purchased appliances, home theater equipment, boats, RVs, computers and accessories, tires, guns, snow blowers, art, jewelery - well, you get the point?

2) Let's say a home owner wants to upgrade their HVAC (Heating, Ventilating and Air Conditioning) system to save energy. A general rule of thumb for HVAC is that the equipment costs will represent around half of the total installed costs. May they borrow enough to pay both the equipment and installation costs?

3) One subtle but important benefit of the Mathematically Perfected Economy™ might be that loans for home improvements; for example a new roof or a remodeled kitchen, might be secured separate from home equity borrowing. More specifically, if a person has $100,000 worth of home equity and they borrow to $15,000 to have a kitchen remodeled, they could still maintain $100,000 equity in which to borrow?

4) Would people be able to borrow money to buy gold? Gold is a physical asset that would secure the loan at least as fully and predictably as an auto or home addition and it would most likely deprecate less than any other collateral. In fact, it could appreciate. Should intent of purpose restrict a person from borrowing what they are qualified to borrow?

5) Depreciation - service life vs. viable life? We've talked about this before and I was hoping to nail down the duration (length) of a typical home mortgage. It is physically possible to build a home to last 100 years - but is it viable? I contend that the viable life expectancy of a home should be depreciated over 30-40 years. Homes will evolve to be more and more self-sustainable. For example, new building materials like Aerogel will become cost effective and they will greatly increase structural integrity while providing a superior barrier against outdoor temperature/moisture. Aerogel may be fabricated to be opaque or transparent - windows as strong as the walls.

A home builder may provide a 100 year slate roof but should this determine the rate of depreciation? Solar voltaic cells may replace shingles altogether. In light of coming technology, should we deprecate (loan duration) a typical home beyond 30-40 years?

Larry




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 Post subject: Re: Borrowing for asset purchases including gold
PostPosted: 07 Jan 2009, 10:32 pm 
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DrKrbyLuv wrote:
1) What other assets might qualify? For example, may qualified borrows secure loans against the value of purchased appliances, home theater equipment, boats, RVs, computers and accessories, tires, guns, snow blowers, art, jewelery - well, you get the point?

Yes.

DrKrbyLuv wrote:
2) Let's say a home owner wants to upgrade their HVAC (Heating, Ventilating and Air Conditioning) system to save energy. A general rule of thumb for HVAC is that the equipment costs will represent around half of the total installed costs. May they borrow enough to pay both the equipment and installation costs?

Yes, the general idea of course being, it isn't a finished product until it's installed (just as a home doesn't exist as a home until it's finished, etc.).

DrKrbyLuv wrote:
3) One subtle but important benefit of the Mathematically Perfected Economy™ might be that loans for home improvements; for example a new roof or a remodeled kitchen, might be secured separate from home equity borrowing. More specifically, if a person has $100,000 worth of home equity and they borrow to $15,000 to have a kitchen remodeled, they could still maintain $100,000 equity in which to borrow?

Yes. An improvement is additional value, so it comprises a separate element of an integral asset, the sum of which is greater than the original asset, to which the improvement is added. The addition/improvement would be depreciated at no more than its lifespan, and no more than the remaining lifespan of the asset to which it is integrated (the house).

DrKrbyLuv wrote:
4) Would people be able to borrow money to buy gold? Gold is a physical asset that would secure the loan at least as fully and predictably as an auto or home addition and it would most likely deprecate less than any other collateral. In fact, it could appreciate. Should intent of purpose restrict a person from borrowing what they are qualified to borrow?

Theoretically (and by sustainable intention), we are not financing the gold or other raw materials, but the efforts involved in producing a product with it. Neither should the value of such a product actually appreciate for any systemic reason; generally, if a certain product appreciates in terms of what the market might pay for it, it would likely be for reasons such as rarity of number and quality.

It is not desirable simply to finance any natural resource, particularly as anyone could hoard and exploit them then. You would not sell all the trees in the forest to a timber crew. You would finance their equipment, allow them to bid on harvesting acreage, or allow them to win acreage for the purpose of harvesting it, based on guaranteed prices to the market. But they don't own our trees, nor are we buying the trees when we buy lumber. We're buying the work which rendered production; and that's what production is. We're financing production. The idea is to eradicate the games and exploitation. If you don't do that, you aren't suffering systemic failure (which you've solved), but you can certainly subvert the whole purpose of the system still by allowing extrinsic exploitation. We need to decide the principles of ownership (having paid for what you possess) and earning (producing), or we're soon going to expire as a consequence of our iniquities.

DrKrbyLuv wrote:
5) Depreciation - service life vs. viable life? We've talked about this before and I was hoping to nail down the duration (length) of a typical home mortgage. It is physically possible to build a home to last 100 years - but is it viable? I contend that the viable life expectancy of a home should be depreciated over 30-40 years. Homes will evolve to be more and more self-sustainable. For example, new building materials like Aerogel will become cost effective and they will greatly increase structural integrity while providing a superior barrier against outdoor temperature/moisture. Aerogel may be fabricated to be opaque or transparent - windows as strong as the walls.

A home builder may provide a 100 year slate roof but should this determine the rate of depreciation? Solar voltaic cells may replace shingles altogether. In light of coming technology, should we deprecate (loan duration) a typical home beyond 30-40 years?

Homes which were built when I was a boy can expect much more than 40 year lifespans (they've already delivered that, and appear fully capable of delivering far more). In any case, the influence of perfecting the economy is that the best home to build is the one which gives the most lifespan for every dollar. We've discussed some of the further considerations, such as the undesirable design which would be inadvisable to finance for more than the lifespan of the original owner. Otherwise, I expect care, superior engineering and craftsmanship to return, as they deliver more lifespan per unit of effort, which in turn drives the cost of the home over any timespan down. As we've said, if $1,000 worth of effort adds ten years to the life of a 40-year home for instance, it's far better to spend that $1,000 over the life of the home then under mathematically perfected economy™, because in paying for that effort over the lifespan, you're actually reducing the costs per year or month almost 25 percent.




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 08 Jan 2009, 5:56 pm 
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Thanks for the answers. Can you help clarify the following:

4) Would people be able to borrow money to buy gold?

Quote:
Mike answered: Theoretically (and by sustainable intention), we are not financing the gold or other raw materials, but the efforts involved in producing a product with it. Neither should the value of such a product actually appreciate for any systemic reason; generally, if a certain product appreciates in terms of what the market might pay for it, it would likely be for reasons such as rarity of number and quality.

It is not desirable simply to finance any natural resource, particularly as anyone could hoard and exploit them then. You would not sell all the trees in the forest to a timber crew. You would finance their equipment, allow them to bid on harvesting acreage, or allow them to win acreage for the purpose of harvesting it, based on guaranteed prices to the market. But they don't own our trees, nor are we buying the trees when we buy lumber. We're buying the work which rendered production; and that's what production is. We're financing production. The idea is to eradicate the games and exploitation. If you don't do that, you aren't suffering systemic failure (which you've solved), but you can certainly subvert the whole purpose of the system still by allowing extrinsic exploitation. We need to decide the principles of ownership (having paid for what you possess) and earning (producing), or we're soon going to expire as a consequence of our iniquities.


I understand your distinction between natural resources and finished products. What if the gold were used in a finished product, for example gold and silver coins (antique and newly minted) and artistic bars. Plus, there are a number of collectible items that many enjoy accumulating and profitably trading - stamps, jewels and precious stones/minerals, antiques, etc. Would the purchase of these "assets" be permissible?

5) Depreciation - service life vs. viable life?

Quote:
Mike answered: In any case, the influence of perfecting the economy is that the best home to build is the one which gives the most lifespan for every dollar. We've discussed some of the further considerations, such as the undesirable design which would be inadvisable to finance for more than the lifespan of the original owner. Otherwise, I expect care, superior engineering and craftsmanship to return, as they deliver more lifespan per unit of effort, which in turn drives the cost of the home over any timespan down.


We have many local and national codes that specify construction requirements and procedures. The problem is that while some are enforced (plumbing and electrical codes for example are more closely monitored), most are never verified. You have mentioned on several occasions that verification should be required for construction quality and performance. This could easily be done with fee based services. These charges could be rolled into the mortgage since they are essentially, value added. Since the Mathematically Perfected Economy™ reduces the traditional amortized mortgages by more than 50% by eliminating the interest, it makes it much more affordable to do the job right.

Still, no matter how well we build homes today, I think you will see very big changes coming. For example, energy costs and the preservation of our environment will become huge concerns. We are moving towards the day, sooner than many think, where it will become a standard practice to make homes totally energy self-sustainable. The structures roof and exterior surfaces for example will be probably be impregnated or coated with solar voltaic collectors to generate electricity.

We already have standardized life cycle analysis values that are based and compared with historical data. The insurance (underwriters), construction and financial industries readily accept these durations - why not simply use them to establish the maximum duration of a mortgage? This would take a mortgage out to 30-40 years max at least as a starting point.




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 08 Jan 2009, 6:56 pm 
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DrKrbyLuv wrote:
4) I understand your distinction between natural resources and finished products. What if the gold were used in a finished product, for example gold and silver coins (antique and newly minted) and artistic bars. Plus, there are a number of collectible items that many enjoy accumulating and profitably trading - stamps, jewels and precious stones/minerals, antiques, etc. Would the purchase of these "assets" be permissible?

The purchase of anything is permissible. The question is how you need to depreciate it to conform with our requisite circulation and duty to pay for what we consume with an equal measure of our own production. In the case of gold, you have a harvested raw material which does not really depreciate. Some of it may wear off or be otherwise lost, but otherwise gold is something which can be re-used.

So let's just take this apart together to see how we can figure to comply with our principles.

4.a. A miner harvests the gold. While it is in your possession then, you should be responsible for paying the costs of harvesting it (which would be the original cost of the raw gold). Because the gold does not depreciate, you are responsible for the full value of the gold from the moment you take possession of it. Thus to compel payment for consumption equal to the consumption (of the effort to harvest the gold, instantly taken on by taking possession of the gold), we can argue rightly that a person pay for the gold itself upon taking possession.

4.b. The gold is then involved in some end product. Whatever that product is, it may have some expected lifespan, not necessarily limited or extended even to its potential physical durability, but limited furthermore to the personal appreciation for the end product, or the remaining lifespan of the possessor. Whatever is least is the lifespan over which we can afford to finance the costs of producing the gold into the end product.

4.c. So what do we do with this then?

We have a class of end product; and we have a class of raw material, involved in that end product. Our vital object always is that the object is paid for as it is consumed, to whatever degree it is consumed. So a comprehensive system would finance the end product according to a class of production depreciated none, according to a precious, perpetual value of the material; and the remainder of the costs of production would be depreciated according to a separate class of production, fitting a definition of lifespan which ensures payment over the course of consumption.

Obviously, the approach to these classes can be quite simple, if carefully devised to represent all of the few classes of critical factors. Alternately, a society deciding it doesn't want to deal with specific cases accordingly, might opt instead to not finance such classes of production (which would result in deflation, and diminished capacity or inability to sustain such industry), or they could opt to apply even more generic/simple rules. But in any case nonetheless, the object of the monetary system is to sustain all desirable industry; and to retrieve/retire payment as the production is consumed. You're asking all the right questions; so you see, a clever person can foresee these issues; and, observing the principles, it is not difficult to come up with just two classes of material, and less than a handful of conditions which predicate even fewer classes of depreciation: over the remaining lifespan of the possessor (where this limits the practical appreciated lifespan); over a portion thereof (where ability to pay may be a portion thereof); over the full lifespan of the product (as in a home, the further ownership of which can realistically be expected to be transferred/sold during the lifespan of the home); or a portion thereof (where the appreciated value of the home is limited by another factor, which limits its financial lifespan likewise). In each diminished case, the resultant "lifespan" becomes the period of depreciation/consumption; and either a generic standard regression of the rate of depreciation may be applied, or the implementing society might develop and apply different numeric methods of depreciation however they deem fit. No need to make things more complicated than they need to be however. The idea is to depreciate as the subject society perceives the actual depreciation in value over a lifespan, whereas a personal lifespan might be the actual limiting factor of appreciation.

The bottom line is, we force people to pay at rates at which we can always collect; which neither inflate or deflate the circulation; and which financial accommodations sustain all desirable industry.


DrKrbyLuv wrote:
Still, no matter how well we build homes today, I think you will see very big changes coming. For example, energy costs and the preservation of our environment will become huge concerns. (5.a) We are moving towards the day, sooner than many think, where it will become a standard practice to make homes totally energy self-sustainable. The structures roof and exterior surfaces for example will be probably be impregnated or coated with solar voltaic collectors to generate electricity.

We already have standardized life cycle analysis values that are based and compared with historical data. (5.b.) The insurance (underwriters), construction and financial industries readily accept these durations - why not simply use them to establish the maximum duration of a mortgage? This would take a mortgage out to 30-40 years max at least as a starting point.

5.a. I realize we're on the edge of that; in fact, archaic systems could have accomplished this pretty much more than 10 years ago — maybe closer to 20. We all applaud that. I researched it a long time ago, and have built/installed systems which did as much as you could do with the circumstances you had to contend with. Complete energy independence will save us so much other maintenance and development of untilities as well. It's something that has to happen; it's something that certainly will happen, if we survive the artificial catastrophes we impose upon ourselves.

With that in mind, the only caveat to raise is the sustainability of usury. Obama hopes to create millions of jobs in this area. We're losing the jobs faster than he is creating them; and there's only all the greater chance we won't be able to afford the production of those jobs then (under even greater sums of debt) than we can now (which is to re-raise the fact we cannot afford those products now, nor in worse conditions of worse, debt). After all, he's suddenly announcing trillion dollar annual federal deficits. States are selling off infrastructures the people have already paid for many times over, just to make ends meet. Things aren't going to be pretty 2 years down the road. There's one way and one way only to afford those things now (and/yesterday); and that is to re-finance all existing and new debt under mathematically perfected economy™. Then and then alone can we afford our own production with no more than it must cost us. Mature technologies can be embraced and industrialized. Even immature technologies can.

5.b. OK. If that's what the data is... if that data accurately projects our potentials... that would be the upper limit for now. That may be all that homes we're building right now are meant or capable to last. But a few years stepping back in construction techniques or quality I think might readily multiply that at least by 2. I mean, we've dispensed with proper wood drying methods just for instance... and members just turn into pretzels after they've been installed. That sort of thing is a product of little cost cutting — costs which were readily afforded just a short while back. It's a crying shame if we can't build homes which last far longer than 30-40 years; and I do suspect there's some skewing of lifespan data by an insurance company.

But all that aside, the housing contractor who can back up extended lifespans for comparable cost is going to be the contractor to use; and I for one expect they can do far better (genuinely) than 30-40 years. Still, *whatever* lifespans are (accurately) is a maximum depreciation cycle ("lifespan").

Good points, Larry.

(Understand I'm just suggesting how to abide by the essential principles. It's still up to the people to decide — whatever the gamble of the consequences.)




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 09 Jan 2009, 10:41 am 
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You established once before that people would be free to "prepay" loans and mortgages in order to accelerate the retirement of the loan. To paraphrase, I think you said that by prepaying, the person is actually building a savings held in the value of the asset.

From this, is it safe to predict that a person may chose to decrease the loan duration as part of their budgetary planning? For example, an automobile might have a deprecated life of 60 months but a buyer may want to pay it off in 36 months.

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4) Mike Said:

The purchase of anything is permissible. The question is how you need to depreciate it to conform with our requisite circulation and duty to pay for what we consume with an equal measure of our own production. In the case of gold, you have a harvested raw material which does not really depreciate. Some of it may wear off or be otherwise lost, but otherwise gold is something which can be re-used.

Obviously, the approach to these classes can be quite simple, if carefully devised to represent all of the few classes of critical factors. Alternately, a society deciding it doesn't want to deal with specific cases accordingly, might opt instead to not finance such classes of production (which would result in deflation, and diminished capacity or inability to sustain such industry), or they could opt to apply even more generic/simple rules. But in any case nonetheless, the object of the monetary system is to sustain all desirable industry; and to retrieve/retire payment as the production is consumed.


If a qualified borrow wants to finance the purchase of gold coins or other valuable collectibles like stamps, antiques, etc., (things that may appreciate in value) the problem seems to be how do you depreciate their value? In these special cases, what would be wrong with "arbitrarily" declaring the maximum length of the loan? For example, for loans in this class, a 5 or 10 year maximum duration might be agreeable. If the value of the asset doesn't depreciate as fast as the duration of the loan would this in some way throw off the economy? Wouldn't the net effect be to simply have an increase in personal savings?




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 09 Jan 2009, 3:39 pm 
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DrKrbyLuv wrote:
From this, is it safe to predict that a person may chose to decrease the loan duration as part of their budgetary planning? For example, an automobile might have a deprecated life of 60 months but a buyer may want to pay it off in 36 months.

Absolutely; and all the while, the value of the remaining lifespan that they have prepaid off (equity) can be converted into instant cash. As this effectively returns to them only what they had overpaid toward depreciation, the return of the pre-payment of course restores the balance to be depreciated so much as whatever equity is re-financed. (Simple accounting.)


DrKrbyLuv wrote:
If a qualified borrow wants to finance the purchase of gold coins or other valuable collectibles like stamps, antiques, etc., (things that may appreciate in value) the problem seems to be how do you depreciate their value?

Nothing actually appreciates in value. It remains whatever it is, aged or otherwise diminished by time, however it is. If the cost of harvesting the gold is $200/oz, or that's what the miner demands, that's what you pay for the gold. If that actually appreciated over time, you have people getting something for nothing; and so, in a finite system, this can only come too at the cost of injustice to someone else or a plurality of affected persons, who must suffer the same degree of loss (as in buying the gold at an inflated cost). Now, if they're agreeable to that, fine. But if not, if it's done by coercion or exploitation, that isn't what we can afford to tolerate in a just economy. Only by cementing finances to original value do we retain the value of the currency; so we cannot simply say we would finance the gold (or anything else) at some later time, for more. That gold (if it is financed) can only be financed for $200/oz, so long as we want to maintain the value of the money related to the value of the gold at the time it was financed.

But that's not really our situation, because we're not financing the gold for unearned profit, and because it is a natural resource — and one which doesn't lose value (depreciate). Because the possessor holds the full, undiminished value so long as they possess it, you have a situation to resolve. You have to guarantee payment for the gold; and the implementation of the gold in and end product may (and will) comprise a separate value, which may or may not be depreciated as well. All you have to do is account for these things.

So, shall we just finance this for anyone, allowing perhaps the first person merely to think to do so, to hoard all the gold by financing their purchase of it; and then not require payment because we can argue the gold never depreciates? Do we argue then that we can re-finance it for however many others at multiples of the original cost, granting profit for nothing to the first hoarder, so that further hoarders can loosen his grip on the gold for other purposes?

You see, first of all, under mathematically perfected economy™there is no need or benefit to holding some asset, ostensibly to ensure the value of money or preservation, in the asset, of your wealth, because they are indifferent in mathematically perfected economy™. You don't need to own gold to save yourself; your money holds its value. But it only holds its value because we observe the necessary principles. So whatever we decide to do about the gold has to ensure that whoever owns it pays for it (with expectably, whatever is determined to be an equal measure of their own work). Some aspects of say gold jewelry may have a determinable lifespan over which we should compel payment. But the gold itself does not expire the way a 2x4 might expire with a home, even as all the composite materials of the home do not expire together. Gold does not expire; and is reusable.

The gold in this case is an exception to the rules we apply to the depreciation of the home. It is not right that the possessor does not pay for it. And if we allow financing of perceived/conceived "appreciation," we destroy the value of our money. We also grant something to someone for nothing, at cost (injustice) to someone else. So, from the day the miner produces that gold, we have a different problem than with other materials, because if we finance it, at least we can only finance it for no more than its original value.

OK. So whoever buys it may only appreciate it for another 10 years; they're going to live another 40; but the gold lasts virtually forever. So let's examine the implementation you seem to be leaning toward, which is perfectly fine so long as we ensure payment.

Depreciation over the shortest practical lifespan is the only one which ensures payment, because after that, the value can be perceived to be consumed so as might not justify continuing payment. So let's just say there's whatever (round numbers) 1/10 oz of gold in this ring at $200/oz, and say another $500 of work in the ring, all of which the society determines simply to depreciate over 10 years (the shortest practical lifespan ensuring payment) [which is to say, "the identified limiting factor of 'lifespan'"]. For the sake of simplicity, we'll just take the depreciation to be figured linearly, although a regressing rate of depreciation would probably be deployed, because it fits the general trend of perceived remaining value across a lifespan.

So there's $20 gold and $500 work or a total of $520 to be depreciated over 10 years (linearly); and the annual payment of depreciation therefore is $52/yr. That's just fine. It upholds our principles. Although we might be able to say we could more accurately do so by other more complex processes, we can decide to dispense with the complexity and simply handle it this way, because we still meet our goals of ensuring payment at the rate of consumption.

At the end of the lifespan we still have a question to consider. The "consumed" product is still comprised of the same amount of gold it originally was. We have indeed paid off the miner. But now, what of the re-utilization of the gold?

There are different ways we can adhere to our principles here too.

So now, say for instance because oil is so much more expensive to produce, and because miners use fuel to run most of their equipment, gold is now $400/oz (from miners). Same margins of profit.

So can the lady who owns the ring sell the gold in the ring for $400/oz, and can we finance the gold in the old ring, perhaps in a new ring? Well, of course we can, although it might not be the most perfect thing to do. It's a truly free market; so if someone wants to pay the going present price for the raw material, and we don't care to trouble ourselves identifying which gold was mined into commercial existence at $200/oz, $300/oz, etc.... if someone wants now to pay $400/oz for that, we can re-finance it in a new product, because that's what the market has determined.

The thing we really can't do is refinance that same gold during the lifespan of the original transaction, in another transaction. In other words, the value of the money is preserved by the 1:1 ratio of debt/circulation/remaining value. So the original owner has to pay off the original debt before the gold goes into a subsequent product which is financed differently, and even at a different ostensible value of gold.

In truth, that subsequent selling of gold does not deserve to be financed at the costs of more expensively mined gold; but if a society chooses to dispense with the administrative overhead and so forth of distinguishing eras or genres of gold across time... so be it.


DrKrbyLuv wrote:
In these special cases, what would be wrong with "arbitrarily" declaring the maximum length of the loan? If the value of the asset doesn't depreciate as fast as the duration of the loan would this in some way throw off the economy?

The potential offenses of arbitrary lifespans are 1) that we force someone to pay faster than they consume of the related asset; or, 2) on the other hand, they might not pay as much as they consume (which does potentialize damage to the economy, because they might turn their back on payment, and we can't collect from the remaining value).

You want to minimize the first offense, because it needlessly stresses the debtor, and because it removes circulation at an excessive rate, depriving related, depended industry from liquidity to sustain payment as easily as it would be sustained otherwise. Although we can determine the degree of such offenses mathematically, it isn't easy to perceive them in the actual economy. But they're there, and, over the scope of *many* instances, in fact they can be very substantial. So the idea of arbitrary lifespans applied to classes of debt for instance is not unworkable; and it still adheres (not as perfectly) with our necessary principles. In the end, still everyone pays for the production of others with no more than whatever they determined to be equal measures of their own production... it is just not as easy or liquid for them to do so within artificially constrained timespans and circulations.


DrKrbyLuv wrote:
Wouldn't the net effect be to simply have an increase in personal savings?

Actually, their savings would be less over the duration of the contracted, arbitrary lifespan; and the equity they would have otherwise would be reduced as well (assuming you mean to impose a short/conservative lifespan, versus voluntarily paying more than obligated rates of depreciation). This of course would be balanced (equally) *after* the arbitrary, shortened lifespan, where their savings would be greater.

So the offenses are as I have already said. You're stressing the debtor with a shorter, arbitrary lifespan, *over* the arbitrary lifespan. The stress is manifested in two ways: a) higher than necessary rates of payment; and b) corresponding diminished circulation, less capable of sustaining the industry which the debtor hopes to participate in, to pay the debt.




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 09 Jan 2009, 4:04 pm 
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Larry,

I could spend some more time answering to this, and I did try to clean up some ambiguities. I'm thinking I should make clear however that the ideal and only perfect implementation, if you're going to finance an unconsumed resource (possessed however), is forever to finance it at the original cost of producing the resource. This alone prevents unearned gain, which is an unaffordable principle to forfeit. After all, when later demands arise, they have to justify the further cost of further gold, because nothing less is practical or possible. Earlier, cheaper gold may be made available to those needs, but nothing really justifies charging more, because the gold has already been spoken for and paid for.

What I'm trying to get across is if we depart from the vital rules, we pave the way for abuse and destruction. Why not then rush about for instance, buying vast tracts of homes up, merely to impose the same kinds of troubles we suffer now, expecting to be able to exploit a market?

We exalt unearned profit today; but in fact there is no such thing but at the equal, unjustified cost to others. It is only by eradicating all unearned profit (systemic and otherwise) that we provide for ourselves to procure each others' production at whatever we deem to be a sufficiently equivalent measure of our own. Allow exploitation (which is always for unearned gain at the equal cost of others), and not only do we pave the way for whatever resultant magnitudes of destruction... we practically ensure that those avenues will be exploited at least to, if not however far beyond, the full degree we might have thought only innocently to tolerate.




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 19 Jan 2009, 5:14 pm 
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1. Home Improvement Loans

With most home improvements, the cost of the project returns less than 100% upon the sale of the home. For example, a wooden deck addition returns on average 81% while a office remodeling project returns 55%. A major kitchen remodel returns around 71% and a bathroom remodel returns 74%.

http://www.remodeling.hw.net/2008/costvsvalue/national.aspx

Most current home remodeling projects are secured through existing home equity. My understanding is that under the Mathematically Perfected Economy™, a remodeling project might be secured without using any existing home equity. Can you please clarify this?

2. Food, beverages, entertainment, traveling, lodging, etc.

Since these things are semi-instantaneously "consumed", I assume that they would not qualify for Mathematically Perfected Economy™ loans. If this is the case, then the alternative would be to use money saved or to borrow through a home equity line of credit or loan.

3. Mixed purchases

If the items I listed in number 2 (above) do not qualify for Mathematically Perfected Economy™ loans then this could complicate purchases. For example, let's say a shopper goes into Walmart and buys food and clothing - the clothing would qualify (probable deprecation life 1 year) but the food would not. At the check-out, would the cashier have to separate the items and ring them separately?

I am visualizing Mathematically Perfected Economy™ credit cards that could be used for qualified purchases.




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 19 Jan 2009, 5:41 pm 
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DrKrbyLuv wrote:
My understanding is that under the Mathematically Perfected Economy™, a remodeling project might be secured without using any existing home equity. Can you please clarify this?

You're absolutely right. The value of the improvement secures the effective loan (issuance of a promise to pay), with the improvement being depreciated at its natural rate, or at most, the remaining lifespan of the outer property (home).

DrKrbyLuv wrote:
Since these things are semi-instantaneously "consumed", I assume that they would not qualify for Mathematically Perfected Economy™ loans.

Exactly. What you consume you pay for. We could finance it for some while over which it was planned instead to be kept, if that's the purpose. That would be legitimate. But the fact is, we're going to be a as much as a dozen times as liquid under mathematically perfected economy™, so once again, the perceived need to finance short-term debt will disappear.

DrKrbyLuv wrote:
At the check-out, would the cashier have to separate the items and ring them separately?

Good question. Once this thing is rolling, they wouldn't have to separate them. Barcode could be processed automatically for instance to separate the items into classes of production which are financed and depreciated by specialized formulae. In other words, you would go through a check stand as you do now, and the items would automatically appear in your accounts in their respective account categories. There they would simply be processed automatically. Warnings and credit-worthiness limits would automatically be imposed, etc.




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 19 Jan 2009, 6:25 pm 
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My understanding is that under the Mathematically Perfected Economy™, a remodeling project might be secured without using any existing home equity. Can you please clarify this?

Quote:
Mike said:

You're absolutely right. The value of the improvement secures the effective loan (issuance of a promise to pay), with the improvement being depreciated at its natural rate, or at most, the remaining lifespan of the outer property (home).


But what about the fact that the remodeling costs are most likely not fully recoverable upon the sale of a home? For example, a wooden deck addition returns on average 81% while a office remodeling project returns 55%. A major kitchen remodel returns around 71% and a bathroom remodel returns 74%.

If the home is sold, only part of the cost of the remodeling project is realized. Is this a concern?




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 19 Jan 2009, 8:52 pm 
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Larry wrote:
But what about the fact that the remodeling costs are most likely not fully recoverable upon the sale of a home? For example, a wooden deck addition returns on average 81% while a office remodeling project returns 55%. A major kitchen remodel returns around 71% and a bathroom remodel returns 74%.

If the home is sold, only part of the cost of the remodeling project is realized. Is this a concern?

It's a concern alright. But accounting for the concern is easy. The point you raise is a generic issue of not recovering the price of the improvement/remodel when the home is sold. So whatever the pattern of depreciation for a remodel/improvement (demonstrated by this pattern of unrecovered cost), *that's the pattern of depreciation at which the home owner must pay for the remodel/improvement.

This demonstrates how you would handle the problem, but the figures seem a bit odd, because surely the data source isn't claiming that a bathroom remodel returns 74% of the costs over the whole remaining lifespan of the home, is it? In any case, that doesn't seem to be an accountable report. Certainly it wouldn't concur with natural perceptions of depreciation, for depreciation doesn't just stop somewhere, mid lifespan.

I assume therefore that the data must infer some stage of the lifespan of the remodel, or it isn't accounting for the issues of determining a rate of depreciation. The real/necessary way to determine a representative rate of depreciation would be to ascertain the depreciation over the lifespan of the home and/or remodel and account for that with basic pattern matching (generic numeric methods). The thing is, if your rate of depreciation is off, ostensibly nonetheless you find that out when the market is willing to pay more for the remodel than the rate of depreciation anticipated. You never lose anything, one way or the other, because in the end you pay the costs of the remodel if you consume all of those costs; otherwise whatever rate you've overpaid is returned in a higher than anticipated selling cost. It's merely ideal to match the rate/pattern of depreciation as close as possible to perceived depreciation (determined by perceived remaining value).

In other words, while your data may state that these percentages are just where the perceived remaining value of the remodels sits... I think when we study actual figures in their respective time spans and conditions, that we'll find there's a general pattern of depreciation from new to expired which is sufficiently accurate for all things. If not, the subjects of the system can make their patterns of depreciation as complex and ostensibly comprehensive as they desire. Rather than bickering over negligible controversies, simplicity is the best course.




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 23 Jan 2009, 5:11 pm 
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Land Only Loans

Quote:
'MPE™ 114' — LAND

By work, we may prospectively add to the value of land. But no person creates land, even by building levees around subaquatic property.

Land nonetheless is regularly made an instrument of unearned gain, even to the degree that usual individuals are ultimately compelled to pay lifetime after lifetime for properties produced by but a few months' of work.

If you desire unearned gain, you have its consequences. On the other hand, to eradicate unearned gain so that we can procure production with an equal measure of our own production, we must heed the alternate concept of a right to enjoy land at no more cost than the value added to it.

There are of course further obligations. We must dedicate land to its best use, versus letting unearned gain and lack of planning distribute it in ways which in fact are quite adverse to us. If land is to be a reusable resource, we must recognize obligations to preserve its virtues and use to the future.


Determining a fair and equitable duration for Land Only Loans is a difficult challenge. Logically, land, as an asset, is rarely consumed and so it may be fair to provide loans with 100 or 1,000 year durations. On the other hand, should anyone be permitted to secure a loan with a duration well beyond their expected lifetime?

For me, the bigger issue is our stewardship of the land and its resources. And, we have an obligation to keep land available for future generations. The bottom line is Land Only Loans may have some just limitations. Would it suffice to limit "Land Only Loans" in several arbitrary ways:

1) Duration limited to 10-15 years. If qualified improvements or development take place, the duration may be increased to the viable life of the improvement (for example, if a home is built on the land, the land loan would be bundled in the mortgage).

2) Longer duration loans could be available through a down payment. For example, for a 20 year loan, the down payment might be 20%. 30% down for a 30 year loan, this could continue until an arbitrary maximum is reached.

3) Qualified business plan Land Only Loans. For example, a business that needs a bigger parking lot may buy the land with a longer duration; 30-40 year max. Or, a farmer may submit a business plan to show that the land is being used as an asset for a longer duration loan.

4) Land equity may never be used to secure any other loan (except with a mortgage to build).

Thanks...

Larry




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 Post subject: Re: MPE questions about Loans & Leasing
PostPosted: 23 Jan 2009, 10:58 pm 
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Land is a squeaker.

I believe, like Native Americans, that each person has a right to land; that is to its beauties and to its benefits; and to respect those in such a way as preserves each forever to all. I believe the usage of land should be delegated strictly to its best purposes. Agricultural land for agriculture. Inhabited land far enough from watershed to avoid pollution. Those kinds of things. A person should receive their share of land if we have to be anchored to a spot (unlike nomads). If we do anything to the land, such as build a home on it, I believe we should be responsible for returning the land to its natural state. Maybe that means leaving a deposit. Whatever.

I don't believe men can rightly claim a penny from other men, for whatever they didn't produce.




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While 12,000 homes a day continue to go into foreclosure, mathematically perfected economy™ would re-finance a $100,000 home with a hundred-year lifespan at the overall rate of $1,000 per year or $83.33 per month. Without costing us anything, we would immediately become as much as 12 times as liquid on present revenue. Transitioning to MPE™ would apply all payments already made against existent debt toward principal. Many of us would be debt free. There would be no housing crisis, no credit crisis. Unlimited funding would immediately be available to sustain all the industry we are capable of.

There is no other solution. Regulation can only temper an inherently terminal process.

If you are not promoting mathematically perfected economy™, then you condemn us to monetary failure.



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