Regulation Does Not Make Investments Safe

I saw an interesting YouTube video about person-to-person lending practices in China. As you know, China is anything but a free market economy.  People there need access to financing without going through their endless red tape and bribing commissars, which is the normal route.  The conclusion of this video is that governments and their bankster friends will save the day from risky investments. I guess they forgot about the crashes every 10 years since the 1970s. They forgot about Enron, the housing crisis and the multiple trillions of dollars counterfeited by the Federal Reserve. All to save the poor banks.  And China’s economic situation is not any more stable than the US.

Yet government regulation is supposed to fix all that. Someone takes out a speculative loan for a dim promise of 12%, but they think there’s no risk involved. Even if it is risky, it’s up to them. What happens, happens. But the ”there ought to be a law cult” still echoes in the minds of some.  Too bad that doesn’t work out (unless you have political pull).  That doesn’t last forever, as we saw in 2008. Risk is personal, subjective, and the most challenging subject there is, but it cannot be judged or evaluated by rules.  That is the essence of entrepreneurship.

Person-to-person let lending can be done based on having real collateral. There is no replacement for that. As privatized bankers, we use real collateral. That’s why the risks to us are those shouldered by others (by contract) and the risks to our financial institution are minimized. Whoever uses the money has a responsibility to pay it back. Whoever undertakes risk has the obligation to understand the risk.  We believe in responsibility.  The companies that we own owe us the most careful use of our funds, and we owe it to ourselves if we use them.

The continued misconception about the use of money, the nature savings, and the reality of investments—no matter what level of risk—remains sadly astounding, but we are dedicated to educating others.