What if there were no such things as stock, bonds, etc. - Tilted Forum Project Discussion Community

mattgical · 11-23-2004, 05:31 PM

what would the world economy be like if there were no such things as Stocks, Bonds, Treasure Notes, etc. You know, all the "funny money".

what if it was just all cash.

onewolf · 11-23-2004, 06:29 PM

The answer to your question depends on your premise.... do you mean that the idea of loaning each other money simply does not occur in any way, shape, or form? Or just not via official, governed instruments called stocks, bonds, or notes?

If the former - then we'd still live in the dark ages. Without loans, society would advance at a snail's pace. Henry Ford might think that he could mass produce cars, but if he didn't happen to be a millionaire who could finance it, then he'd just be stuck dreaming about the possibility.

If the latter, then there would still be those instruments - they just wouldn't be governed by laws that protect investors, and instead loan sharks would rule the world. For example - let's say you need $10,000 to pay for a new roof on your barbershop so I loan you the $10,000 and charge you $200 per month until you repay me (kind of like Billy Packer and Mr. Cash). That's a bond that pays me very handsomely and rips your ass off.

In either case, we wouldn't be discussing this in a message board, and in fact there probably wouldn't be computers yet. The main reason for stocks and bonds is to raise money so a company can grow by creating new ideas and advancing technologies. The secondary reason is to make investors (those who loan the money) a nice return in exchange for their assumed risk (eg. the company goes bankrupt).

11-23-2004, 05:31 PM	#1 (permalink)
mattgical Upright	What if there were no such things as stock, bonds, etc. what would the world economy be like if there were no such things as Stocks, Bonds, Treasure Notes, etc. You know, all the "funny money". what if it was just all cash.

11-23-2004, 06:29 PM	#2 (permalink)
onewolf Tilted	The answer to your question depends on your premise.... do you mean that the idea of loaning each other money simply does not occur in any way, shape, or form? Or just not via official, governed instruments called stocks, bonds, or notes? If the former - then we'd still live in the dark ages. Without loans, society would advance at a snail's pace. Henry Ford might think that he could mass produce cars, but if he didn't happen to be a millionaire who could finance it, then he'd just be stuck dreaming about the possibility. If the latter, then there would still be those instruments - they just wouldn't be governed by laws that protect investors, and instead loan sharks would rule the world. For example - let's say you need $10,000 to pay for a new roof on your barbershop so I loan you the $10,000 and charge you $200 per month until you repay me (kind of like Billy Packer and Mr. Cash). That's a bond that pays me very handsomely and rips your ass off. In either case, we wouldn't be discussing this in a message board, and in fact there probably wouldn't be computers yet. The main reason for stocks and bonds is to raise money so a company can grow by creating new ideas and advancing technologies. The secondary reason is to make investors (those who loan the money) a nice return in exchange for their assumed risk (eg. the company goes bankrupt).