That man borrows money from many lenders.

Money lenders are enjoying a profitable period.

My lenders can't come back after me.

And that essentially is lent to the borrowers.

Banks are cutting lending to industrial borrowers.

It allows let's say this group of borrowers let's say this pool of borrowers right here actually didn't

Let's say some of these borrowers start defaulting.

Keep it in your mind. 1 billion goes to a bunch of borrowers, goes to 1,000 borrowers, to be specific.

But only very few people knew how to use it, usually wealthy merchants and money lenders.

So now in this situation, we have the same borrowers.

So we start with borrowers who need to buy houses.

Let's say a bunch of borrowers start defaulting on their loans.

Some percentage of these borrowers are going to default on their mortgage.

So that's 10 for each of them is 100,000 and then as we said, there's 1,000 borrowers.

But you can assume statistically, and since this is a large number of borrowers it's 1,000, right?

Without continual new and ever larger generations of borrowers to produce growth, and thus pay off these debts, the world economy will collapse.

Well, in the last presentation, we described a situation where you had a bunch of borrowers.

Of these 1,000 borrowers, 200 of them are just going to lose their job or whatever.

So there's a whole class of borrowers that they might have not been able to service.

So it's only 10 , indefinitely, if all of the borrowers pay all the money and never default or anything like that.

Millions of students are paying less for college today because we finally took on a system that wasted billions of taxpayer dollars on banks and lenders.

Kiva's facilitated more than 150 million dollars, in little 25 dollar bits, from lenders and entrepreneurs more than a million of those, collectively in 200 countries.

Kiva borrowers, as I interviewed them and got to know them over the last few years, have taught me what entrepreneurship is.

But that's why I noticed Grameen Bank, which is a bank for poor people, and had 1,100 branches, 12,000 employees, 2.3 million borrowers.

The borrowers use the newly created loan money to grow their businesses, and pay back the debt, with an interest payment which requires more growth.

Well let's say we know that this pool of borrowers that my pen keeps not working that 20 will default.

What happens if let's go to that scenario where we talked before 20 of the borrowers just say, you know what?

But essentially what happened is the investors in the mortgage backed securities provided the money to the special purpose entity to essentially loan to the borrowers.

Now one thing I want you to keep in mind is, they get 10 only if every one of these borrowers pays their loans, never defaults, never pre pays.

And then each year, those borrowers are going to give the special purpose entity this is just a corporation designed to kind of structure these mortgage backed securities they're going to give 10 of the billion, or 100 million back into this.

But when there's a large number of borrowers, you can kind of do the math and say, OK, on average 200 of these guys are going to default, and instead of actually getting 10 , since 10 of the loans are going to be worthless, I'm going to get 10 less than this 10 .

This pool of borrowers actually aren't the traditional they don't have 25 down and they don't have kind of the traditional requirements to get a normal mortgage but if I pool a bunch of people who don't have those traditional requirements, but they're good in other ways they have a high income or high credit score I can go through this alternate mechanism to find investors that are willing to loan them money.

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And and this is an and.

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