What actually does "peer to peer finance" mean?

Well with sound money (including but not limited to for example a gold standard) p2p would be a real improvement on retail banking, although with truly sound money there'd be no fractional reserve banking so retail bank accounts wouldn't pay interest but would rather be offered as fixed rate bonds with no risk (unless the bank fails).

Right now though, p2p's not safer than bonds or stocks: it's about the same, and for the same reasons: debt mostly, funny-money also, and inflationary monetary policy and so on. All the usual stuff.

What is any good? No clue.


Without turning into a total libertarian cliché, probably something involving:

• Some exposure (15%+-) to tangible assets (precious metals, artworks, ammunition if you have a license for it, single malts, etc.)
• Internationalisation: buy foreign stocks that are priced below book value, preferably in a country that either isn't printing money, or else has already crashed (eg. Italy) and where the stock market has a low cyclically adjusted overall price to earnings ratio; also resource stocks, so long as they meet the old-style value investing criteria
• Farmland somewhere where it won't be taxed into oblivion or confiscated
• Some long-term food supplies: not overkill, maybe 3 months, lasting at least five years into the future (raisins, tinned fish, etc.)
• Physical cash kept somewhere safe, in case of deflation (temporary or not)
  
• Invest in skills, stop consuming, clear any outstanding debts for yourself and your family; maybe take a second job while you can
• Learn how to defend yourself

Well you've clearly not been reading my posts if you think I take life very seriously.
However I will first deal with any plans you may have to survive some apocalyptic future by stocking up on sardines. There is no certainty that food for five years, or even fifty years, would be sufficient to tide you over till better times come around. You should buy sufficient working horses to form a viable breeding stock, learn to plough with them, and find some defendable land. Oh and have enough children to take over from you when your back gives out. Alternatively, just join the Amish community - how do you look with a beard? This all assumes that those not so far seeing as you don't descend on you like a swarm of locusts and eat your horses - and, possibly, you into the bargain. As you can guess, I don't buy into the Hollywood versions of 'the future', as it's unlikely you'll look that handsome at the end of a days ploughing and you certainly won't have the energy for all those tangled relationships.
As for dealing with the real world; with age comes an acceptance of the imperfect.
A fair society (communism with a small c) has been tried but humans are incapable of following the rules.
Democracy seems to work best the further from the equator one lives. Dictatorships like it hot.
We may imagine our society and financial system are irredeemably broken, but consider the millions who would happily swap places with you given the chance.
You will have noticed I haven't gone into a detailed financial strategy yet, nor will I. You can make your own mistakes; there's nothing to learn from me on that score.
All I will advise is that if you drive a car, let somebody go in front of you - it might be me! (and don't be cross if I don't acknowledge your kindness; I'm clinging on to the steering wheel with both hands as likely as not).

Why do you think you're not lending money to the platform? You don't undertake bank transfers to the borrowers, you make the transfer to the platform. The platform then arranges for you to decide which companies receive funds. If you prefer psychologically to imagine that your money's kept in a separate compartment and then specifically lent to the borrowers you choose, that's not a problem as it makes no difference, but the opposite also makes no difference.
In the end, the time you'll lose your money will be when the platform goes under because they can no longer pay their bills from interest received by them.

Debt makes the world go round in the short term but in the long term it stops the world going round. The world can only go round when there's money to make that happen. Debt gives you more money today but it's predicated on the assumption that you'll either bring in more (somehow) in the future to pay it back with interest, or (more likely) you'll slow your consumption in the future. If you mean that debt is the sustainable path to prosperity, do you live that way in your personal finances? If so, how long have you been doing that?

As to what the government encourages them to do, I'd say the evidence is for the opposite: the Bank Of England sets the rate of interest so it's down to them that you can no longer get a 4%+ fixed rate bond from your bank. I still have one with Scottish Widows that ends in 2017, paying 4%. That was in a way the best financial asset I ever bought, though of course it comes with a certain amount of risk: the Lloyds group is pretty shaky and I'm just gambling on two things: 1. They won't go bust before July 2017; 2. Dave Cameron would come good on his word and bail me out to the tune of £85k.
Those are both high risk bets. 
The treasury and the BoE together then pursue a target for price inflation as measured by their various indices of the goods that people use. 
Currently the interest rate is at half a percent until at least next August and the price inflation target is 2%. That doesn't sound like encouragement to take out an ISA at 1.4% to me: it sounds like pretty firm nudging not to do that.

Absolutely right. Unsecured debt at that. The only promise you have is from the taxpayer, up to £85k. After that, laws are in place already for "bail ins" (your cash deposit becomes shares in the company, valued at some fraction of your previous balance - in the case of Cyprus 17% (ie. -83%) I believe). There's nothing wrong with that in principle: it's just not what people in this country are used to and not what they necessarily think they're signing up for.

The bigger problem with bank lending is that it's all fractional reserve funny-money. If you give them £1000, they can lend out £66000 (I think that's the target reserve figure, 3% - most banks are 'aiming for that' so it's most likely worse, maybe up to £90000). Even that isn't the full story though: in practice the actual debt is created at will, on the understanding that as it's paid back, those currency units are destroyed. In practice they often aren't.
If you're inclined to think that sounds a lot like counterfeiting, I can only agree.

What we need is sound money: a currency backed by tangible assets that cannot be produced at will by governments. The obvious choices have always been gold and silver for this, since the supply grows at a finite rate and cannot be effectively manufactured. A legally binding fiat cryptocurrency could work as well under conditions of government monopoly so long as no Richard Nixon comes along. For free market money, gold and silver are more or less unparalleled. 

The more you think about it, the more worrying our banking system becomes. The monetary stimulus programmes, shrouded in technical language, always amount to the same thing: the central bank creates units of currency then buys assets (often Treasury Bonds!!!) from banks. It's the Left's version of "trickle down", and like all forms of trickle down, nothing ever trickles down. Quite the contrary: the first receiver of the new inflation spends the currency units at their present value, but as those units percolate through the system in further trade, the currency supply recalculates to account for the goods and services in existence.
That sounds arcane but it's not really. If the whole country has ten units of goods and services (I'm only using such aggregates as shorthand: of course goods and services aren't interchangeable and of equal fixed intrinsic value) and a hundred units of currency, then on the average people will pay ten units of currency for a unit of goods.
Expand the money supply to 200 units of currency and that average price becomes 20, but the first person who gets the extra 10 units of currency can still buy at the old price. This is why banksters and government contractors and basically anyone else politically connected enough to be chosen for QE becomes so fabulously wealthy and at the same time why everyone else feels the purchasing power of their wages fall over time.

(This is still simplistic and doesn't account for the velocity of money, but that's just further evidence for the same conclusion: as consumer debt stifles people's ability to consume, the velocity of money is reduced and the inflation remains primarily active in its earliest stages. This makes the banksters insanely wealthy but doesn't increase price 'inflation' in the short term. On the contrary it's entirely possible there'll be a price 'deflation'. (Excuse the scare quotes: the true meaning of inflation and deflation is changes to the money supply, rather than to prices. The scare quotes indicate everyday modern usage as basically the price level.) If that happens, governments and other huge debtors have a big problem because the value of their debt increases in terms of the purchasing power of the currency. They want the opposite: to inflate away their debts and default by stealth.)

It's all very unpleasant and immoral. Generally speaking, societies that debase their money and live by a corrupt morality always end in catastrophic collapse and societal disaster.

Just for reference, would you be so kind as to explain what you see as a low risk investment, then?

I know, it's nerve-racking. It's a five-year bond. I have no choice.
I think it's 50/50 whether there'll even be a Scottish Widows in 2017 lol

You're dead right. What seemed for a while like a very lucky piece of timing has turned into a high risk gamble. Makes the old axiom "learn from your mistakes" a bit hairy frankly.

adrianc:

"Just for reference, would you be so kind as to explain what you see as a low risk investment, then?"

The above bullet-point list. Basically anything where your asset isn't simultaneously someone else's liability, so that you're not relying on their continued success in order to prosper. If you buy a Rembrandt then you're not taking a gamble on some third party doing well. (No I don't have fine art works or anything else of value in my house before anyone thinks to come a'hunting.)
If you can't stretch to a Rembrandt then a handful of junk silver will do, or some diabetic cereal bars, pairs of shoes, bottles of Scotch etc.

Basically if you bought a single malt once a month instead of dining out, you might be glad some day.