So when they're pulling money out of the markets, brokers are getting less transactions, they're managing less money.

My new balance you will look like this 150 and 150.

And that seems like a pretty reasonable proposition.

The least important form of capital, in this project, is financial capital money.

less capital intensive that there's less money that's required

And I'm actually going to initially capitalize this bank with 200 gold pieces.

But if it's a logical world in which investment in fundraising actually raises more funds and makes the pie bigger, then we have it precisely backwards, and we should be investing more money, not less, in fundraising, because fundraising is the one thing that has the potential to multiply the amount of money available for the cause that we care about so deeply.

So my initial equity is 300 gold pieces.

Japanese corporations are slashing their capital spending programs.

In the last set of videos, we've hopefully familiarized ourselves with the different ways that a company can raise capital.

Let's say my building is worth 100 gold pieces and then I capitalize it with another 200 gold pieces.

At the time they were mostly losing money.

Where am I taking this money out of?

So it gives these shares to each of these people, and they have to contribute 200, so essentially, it puts another 1,000 into the pool, that Pete can now manage, and so now the total NAV for the fund is 2,000 now and Pete will get his 1 management fee off of this entire 2,000.

And all of that is, essentially, just consumption that just destroys wealth.

Or the other way to view it is, assets minus liabilities is equal to equity, right?

I have 300 gold pieces of reserves

And so liabilities plus equity is equal to assets.

We don't know if that's true or not, and he can also solicit funds from the public.

Why has it been rising since the '70s?

To make money it is necessary to have money, capital.

The second actor, different cast of guys, is the donors.

Well, surprisingly of course venture capital always does follow on rounds so this was kind of a trick question.

And of course, these people benefit because they get safekeeping for their accounts and their money is actually growing.

No more than I already gave you.

We put in the value of n, and we call it again.

So this is lending some cash.

Khalid is asking for some money to be made as a donation to the mosque.

And of course the investors would care that the money that they're essentially giving because they're giving money to the investment bankers who are giving money to

In return on equity, the numerator is the net income that we got, so it's 350,000.

That's me, so I get one share, and in exchange I gave 100 to the fund.

I raise funds.

Now, let's say that the next year I sent them statements that say, look, I made super awesome investments again, the money doubled again.

My own work focuses on making philanthropy more effective and capitalism more inclusive.

Decreases the components reference counter.

I have factory tools worth 500,000, and then that cash will go away.

But they are extremely efficient organizations.

So we paid people to build Lego Bionicles, like the ones that you see.

Because remember, income statements are just telling you how do you get from one balance sheet to another.

We weren't sure at all. And we managed to convince him.

Let me do it in a different color just so the equity stands out from the liabilities.

From 500, let's say it goes to 1000, then that 1000 is now essentially split among these 5 shares now.

Typically our retrofit designs save about 30 to 60 percent of the energy and pay back in a few years, while the new facility designs save 40 to 90 odd percent with generally lower capital cost.

That's around 130 billion dollars a year it's a lot.

That's simply not true.