How equity financing works and why it is superior to interest-based lending

Equity financing is a form of partnership between two or more parties who share the ownership, management, profits, and losses of a business venture. It is based on mutual consent, cooperation, trust, and transparency. It aligns the interests of all stakeholders and creates a sense of responsibility and accountability. It promotes risk-sharing and risk-management by linking the returns to the performance of the project. It encourages saving and investment by rewarding the savers with a share in the profits rather than a fixed rate of interest. It fosters innovation and entrepreneurship by providing access to finance for new ideas and ventures rather than relying on collateral and credit history. It supports sustainable development by investing in projects that are socially beneficial and environmentally friendly rather than maximizing short-term profits at any cost.

Interest is not the price of money, but the price of credit. It is not the reward for saving, but the reward for lending. It is not the cost of borrowing, but the cost of debt. It is not essential for allocating resources efficiently, but it distorts the allocation by favoring the rich over the poor, the short-term over the long-term, and the speculative over the productive. It does not balance supply and demand, but it creates excess demand for money and excess supply of goods. It does not ensure economic growth and stability, but it causes inflation and deflation, booms and busts, and crises and recessions.