This problem will repeat, if bitcoin becomes a "reserve" currency held by central banks and IOUs issued by them circulate as money. The fate of bitcoin will be what happened to gold, which failed to keep the state from coopting and controlling it.
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LN does not cryptographically assure settlement, or that it is not cost prohibitive. Nevertheless, for the money to be *productive* it must be lent to production (invested). There are no cryptographic guarantees in productive lending, despite futile attempts (see link above).
There are no guarantees, but there are potential ways to substantially reduce vulnerability, for examplehttps://twitter.com/NickSzabo4/status/1145094116121837568 …
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Now that would be a monumental invention - a guarantee of return on investment.
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What investment risk (vulnerability) does the diagram suggest is reduced?
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Proplet-controlled equipment could be used as collateral for loans with substantially less trust/vulnerability and repo costs than exist today.
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A fully-collateralized loan is not a productive loan. It's a trade of property for a period of time, and then a trade back. Only the uncollateralized portion can be considered productive. It's an example of the risk-free return fallacy.https://github.com/libbitcoin/libbitcoin-system/wiki/Risk-Free-Return-Fallacy …
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Trillions of dollars worth of collateralized loans are made every year: mortgages, ship loans, car loans, airplanes, etc. Both sides of each of these apparently think it is productive.
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You are using a colloquial definition for productivity. Production requires capital that can be spent. Where do you get the capital to collateralize your debt?
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Collateralized loans are quite often used to fund capital investments in plant, equipment, real estate, etc. I don't know what planet you are living on or what language you are talking in, but until you want to start making sense, muted.
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This is the problem with empirical economics. Observation leads one to false conclusions. If a company that raises investment and uses that money to collateralize a loan, that money is entirely non-productive. All interest earned is offset by that paid.
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