From Wikipedia


From Investopedia

Finance describes the management, creation and study of money, banking, credit, investments, assets and liabilities that make up financial systems, as well as the study of those financial instruments. Some people prefer to divide finance into three distinct categories: public finance, corporate finance and personal finance. Additionally, the study of behavioural finance aims to learn about the more “human” side of a science considered by most to be highly mathematical.

Finance is the study of Money created as Debt. Interest on Debt Gives Investors a return on Money.


If we change the system to providing a return on Discounted Product or Services, then the tools and techniques of Debt Finance no longer apply as Money has no time value.


I have argued elsewhere “The time value of money tokens an idea past its use by date. ” It means we can remove the time value of money tokens by removing interest from newly created money tokens.

In particular, it means the value of repayments with equal repayments over N periods is:

R = C x (1 + sqrt(1+2 x D x N)) / (2 x N )

R = periodic repayment amount, C = Capital to be repaid, D = discount (or fixed interest), N = installments.

With debt, the repayments are:

R = (C x I) / (1-(1+I)^^N)

In the formula, the symbol x means multiply, / means to divide and ^^ means exponentiation.

The return on investment using Discounted Product or Services or Rewards has no exponential term. Rewards mean money has no time value. Rewards make Finance simple. Rewards replace money markets and the markets in derivates with simple fixed return markets based on the risk of producing products or services.

In the Repayments with Discounts, the value of the Discount can be different for each loan.  The earnings on the Loan are different for each Loan.  In contrast with Debt, all Money is deemed equal. Thus Money created by a government for people to pay their taxes is of equal value to money created as a loan to a consumer for gambling.  The risk of the consumer loan is higher than the government loan, but the money has the same value.  The finance system compensates by charging higher interest rates, but risk management proves to be expensive.  The discount localises the risk and removes the need for high-cost money management risk procedures.

The Discount Loans are transferrable and so are tradeable.  The market in Loans now becomes the Money Market.  Evaluating the risk of Discount Loans is simpler than calculating the risk of fungible money loans. This reduces the cost of finance.

One thought on “New Money means New Finance

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