Peer to Peer Finance

Finance consists of two things: credit, which facilitates trade and enables the creation of productive assets; and investment, which consists of conflicting financial claims over productive assets. These are secured debt (e.g., mortgage loans); and equity, which is an ownership interest in a corporation, and typically exists in the form of shares.

Credit and investment may be achieved without the intermediation of banks. Since bank capital will be further depleted as the credit crunch spreads into the productive economy, peer-to-peer finance offers a solution from an entirely unexpected direction.

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