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Sigh...it is very tiresome to hear the same wrong headed myths about investment == gambling that have been circulating for years and gaining currency among the younger generations.

While I don't believe gambling is equal to investing either, I just had the impression that this particular person was going to blow it all on penny stocks or into a risky businesses he had no good knowledge off. Secondly which I should have explained, he was getting a three year loan at 24% which is pushing it real hard if he was going to invest in something secure like a SP500 ETF index.

There is nothing wrong in taking a margin account with your broker at say 7.9% and then investing it into a corporate bond that gives 9% or a growth stock that will give 10%+.

I was just trying to imply that borrowing money at high interest to invest in the stock market without a good plan is a bad idea because there is the possibility that if you invest poorly that you'll loose the investment and still owe money.

And yes fund managers do generally leverage all the time with borrowed money but they generally know what they are doing (well some of the time) and tend to diversify to reduce risk.

But yeah I agree pretty much on your second statement.

A debt based monetary system may have an adverse effect on those living within it?

The other day I was looking for investment opportunities and came across Prosper.com which is a P2P lending company which you give to micro invest in people's loans. Reading some of the stories of why these people need loans started to make me laugh and then start to die inside a little bit after realizing that America is full of these people who just don't know how to deal with financial responsibility. One guy on there was asking for a $5,000 loan in order to buy stocks. That's the most retarded thing I can think of that you can do with a loan besides go to Las Vegas with it.

Sadly, our society cannot function without credit because its there in the first place. Because we can have mortgages and car loans, the demand for housing and cars increase which of course leads to higher prices which means the chance of getting. This is most likley tied into the situation we have with Freddie and Fannie now and the housing fiasco.

The only solution I can think of is to actually focus on long term solutions is get a house that is close enough public transportation which you intend to pay off in 30 years and then keep it in the family so that future generations don't have to put up with this crap.

I think the majority of our societal problems is related to ignorance towards what we need and what we want and the issues that puts on everyone else. Personally, I don't really care that other people took out loans they couldn't pay back, but when it starts to affect my life because of the national economic situation then it becomes bothersome.

Then again, I suppose I should start living off of other people's ignorance and bid on their loans.

can also be observed in another rather limited case. In the arena of Person-to-Person (P2P) lending on the Internet, the first-mover company Prosper.com had so much trouble with its first set of forums, that it deleted them (a copy is available at ProsperReport). "Uncensored forums then sprang into existence at prospers.org. The tone of the Prosper forum, which is moderated and where each post is subject to review before it is allowed to pass is dramatically different from the tone of prospers.org, where a number of the vocal critics of Prosper continues to point out flaws in the operation of P2P lending and in the company itself.

Many people freely give their money away on sites like Prosper.com

I've always been jealous of the way the banks and credit card companies lend out so much money at high interest.

Now, there are micro-lending options for consumers - this business is still in its infancy, but its worth a look:

http://www.prosper.com/ (U.S.A. only)
http://www.zopa.com/ (U.K. only atm i think)

I personally have over a hundred loans out to various borrowers, and even if many (%20+) of them default, I'm still beating the return I'd get from a money market account. They are legitimate, unsecured loans, and adversely affect borrowers credit ratings if they are delinquent.

They've been in the news a lot recently too: http://news.google.com/news?q=prosper.com

Also, try Prosper.com where you can lend money to other people. I know a few people who are making bank on this site. You go in with other people buying notes, sort of like an online consumer loan auction. Each month, when the borrower makes a monthly payment, you get a portion of it based on the initial investment. Plus there's groups and tons of other stuff. There's a lot of high quality borrowers on there now, also.

Assuming the amount of effort in the initial investment is the same between propser and a CD, you get better returns and better security with the CD.

To invest $1000 into either of the above banks, you simply send in a deposit. To invest $1000 into prosper, you have to diversify to spread your risk. So, maybe you break it up into $100 chunks. Now you have to find 10 people who you want to lend the money to.

I think that many lenders instinctively penalize pics from borrowers that seem fake, sexed-up, or pimp out borrowers' teenage daughters (figuratively, anyway: http://www.prosper.com/public/lend/listing.aspx?li stingID=13608 ). Many lenders realize that manipulation of this sort is a bad signal. If anything, a fair-sized chunk (though by no means majority) of the Prosper lender population is composed of technological and financial early adopters, who tend to possess a certain degree of internet-tempered cynicism about listings, and resort to various forms of vetting of borrowers' stories. They also tend to be most vocal about their discoveries on forums and informal lenders' groups. In essence, every lender gets to free ride the efforts of the obssessive crusaders. of Prosper In fact, stronger social grouping seems to be forming among various lenders than borrowers. Frequently, dishonest borrowers get ripped apart as lies are exposed on Prosper forums-- examples: http://prosper.spreebb.com/index.php?showtopic=134 2 Borrower's securities fraud record dug up by lenders: http://prosper.spreebb.com/index.php?showtopic=784 The borrower who was a guy/girl/puppy... http://prosper.spreebb.com/index.php?showtopic=578 &hl= Lenders rip on each other as they argue about vetting the vetters: http://prosper.spreebb.com/index.php?showtopic=604 If nothing else, I suspect that even the shrewder investors spend inordinate amounts of time vetting, interacting, and bidding, and if they instead spent their marginal chunks of time on their day jobs or other forms of investing, they'd undoubtedly get superior returns. Nonetheless, investing in Prosper has an engagement level and addictivity similar to online poker, only w/better odds, and as such, the concept will prosper, even if true economic returns are lower than accounting returns.

Additionally, in order to surmount state-set interest rate limits, they've already snagged tons and tons of special lender licenses (not that they are lending illegally in other states) on a state by state basis: http://www.prosper.com/public/legal/states_and_lic enses.aspx

What I gotta know is how Trailer Mama from Yuba City was off and running with this before I, a regular /. troll, ever even heard of it:

https://www.prosper.com/public/lend/listing.aspx?l istingID=13608

I guess desperation is a mother of early adoption.

Well that didn't take long.
http://www.prosper.com/public/lend/listing.aspx?li stingID=13833

Description includes:
single father
three sons
wife left us

Profile image contains: Two males, one female
Titled: me and my sons

Back in my day, scammers at least previewed the family photos that came in their wallets.

I'm far, far, far from an economist.

In this scheme, if I understand correctly, a large group of people get together and lend money. Any loss is the same but spread out over a large group. It's like financial leverage. Think about what happens to the force needed to lift a tonne supported by a hundred pulleys (neglect friction). Same thing, different physics.

For example, this guy intends to build a sportscar and is raising $16,000. There are currently 65 bids mostly between $100-200. He defaults, these people lose $100 each while if he doesn't they make a little cash.

I'm far, far, far from an economist.

In this scheme, if I understand correctly, a large group of people get together and lend money. Any loss is the same but spread out over a large group. It's like financial leverage. Think about what happens to the force needed to lift a tonne supported by a hundred pulleys (neglect friction). Same thing, different physics.

For example, this guy intends to build a sportscar and is raising $16,000. There are currently 65 bids mostly between $100-200. He defaults, these people lose $100 each while if he doesn't they make a little cash.

The article discusses two different lending assocations. Only one of them actually claim to use credit reports!