Turning individual ξ credit into Equity (ξ%)

Everyone is an investor in the ξ system — For it is one of the easiest ways to fairly introduce new capital into an economy without prejudice.  But what we want is a system that does not work like a “lottery” that can be manipulated with information or timing—things that Wall Street employ continuously to farm profits off of speculators and investors.  The foremost solution of ξ investing is getting rid of the idea of buying “shares” of stock instead buying equity (ξ%) over a continuum.   Equity is permanent–once purchased it is bound to the identity of the account. The risk is taken at the time of purchase, for there is no time of resale in the future.  It is like buying fuel for you car: whether the car takes you to your goal or not doesn’t mean that the fuel it burned travelling will ever return.  It cannot return, it was turned into heat and work, productive or not.  However, the benefits of ξ% are also permanent: whenever the firm pays a dividend for as long as the firm exists–you are paid your percentage until the firm can no longer operate.

No longer are you merely interested in the success of a company, now you are committed to directing your investments to companies that have real benefits to you.

ξ% Investing Example

Here are some numbers and a scenario to show how permanent equity works.

The Place: Springfield, USA; Population: 60,000.

Available Capital per Person: ξ11.0021. [ calculated: ln(60000) ]
Available Starting Capital from Springfield, USA: ξ660,125.99, or about ξ660Kh. [ calculated: ln(60000) * 60000 ]

Business Example: Lawn Removal and CSA Systems

Springfield USA is on a Community Supported Agriculture kick, and the largest supply of land is everyone’s front yard. However, just tearing up the lawn and planting isn’t exactly a clean or easy task for everyone, let alone maintain it for gardening. More than a few Springfield residents decide to invest some of their ξ-credit into a CSA business.

  • 500 invest ξ2
  • 1000 invest ξ4
  • 50 invest ξ6

So the total amount of ξ capital provided is 500 × ξ2 + 1000 × ξ4 + 50 × ξ6 = ξ5300. These investments become permanent equity (ξ%) and represent a percentage of future dividends should the business pay them.

  • 500 have ξ2  ⁄  ξ5300 × 100 = 0.0377ξ%
  • 1000 have ξ4  ⁄  ξ5300 × 100 = 0.0755ξ%
  • 50 have ξ6  ⁄  ξ5300 = 0.1132ξ%

The Lawn-Removal business begins its operations with ξ5300 of capital. It hires a master gardener and five workers to start–paying them well, at rates of 2.5× and 1.75× for full-time work (in the American tradition, 40-hours/week). Thus the weekly labor expense for operating the business would be ξ2.5 × 40h × 1 master gardener + ξ1.75 × 40h× 5 workers = ξ450/week.  With only ξ5300 of captial we’ve got about 11-weeks of “burn rate”—so we’d better build up some customers—fast.  The break-even hourly cost of labor is ξ2.5 + ξ1.75 = ξ4.25/hour—that is, if you set any price above ξ4.25/hour for the work performed in lawn removal and gardening. Below ξ4.25/hour and you’re consuming your captial to retain the master gardener and workers.  Let’s say that business is just starting and they manage to sell 9 lawn removals, averaging 7 hours of labor each, priced at ξ42 each–a rate of ξ6/hour. Pure profit for this work will be ξ6 – ξ4.25 = ξ1.75/hour. The business profited ξ110.25. To show an “early win” for the investors, they pay ξ50 of this in dividends and add the ξ60.25 to its savings for future needs. The investors receive:

  • 500 get 0.0377ξ% of ξ50 or ξ0.0189. 500 people divide ξ9.425
  • 1000 get 0.0755ξ% of ξ50 or ξ0.0377. 1000 people divide ξ37.75
  • 50 get 0.1132ξ% of ξ50 or ξ0.0566. 50 people divide divide ξ2.83

So, the dividends paid out to each group total up: ξ9.42500 + ξ37.75 + ξ2.83 = ξ50.00500 (There are some rounding errors as I’m simplifying the numbers, an actual implementation would seek to minimize these rounding errors.)

Nothing compels the owner of the business to pay any dividends to the investors–the owner can opt to instead to use the profits to expand the business further. However, if businesses never pay any dividends, then investors will seek other opportunities and should they need more capital, the business might find it very hard to raise more money.  If the investors in a successful business can look forward to receiving these dividend payments for a long running business, they will eventually earn back their original investment. If this business manages to pay ξ50 every week in perpetuity, the first investors will make their money back in two years. If the business pays a higher dividend, investors will break-even sooner and then earn money, perpetually for as long as the business thrives.

Note that since equity is permanent, there is no concept of selling shares at new prices because of market speculation. There is no short selling, there are no “special investor classes” who get paid faster than others. There is no insider trading.


Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s