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The Forum > Article Comments > A new way of sharing in the share market > Comments

A new way of sharing in the share market : Comments

By Michael Tomlinson, published 3/12/2008

What about developing a new type of security that would generate a continuous stream of capital for companies?

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How ironical. To day OLO has a posting extolling the virtues of communism and one devising a system of continually capitalizing Capitalism.
Posted by skeptic, Wednesday, 3 December 2008 11:39:07 AM
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interesting concept BUT

i am against the name[securities]mainly because of security exchanges and their negative affect on inovation[not their own inovation,nor motivation of course]but that they trade paper as value ,and often the paper is worth less than its real valuation.

i may have missed where you stated that this applies to every sale [my point being do sales below price rate a refund due, ie incure a debt obligation instead of a credit income?#]

i can see merit in creating another alternative to the intended carbon tax to prop up the specualtors[gambelers in shares]but i favour a much simpler system [a trading tax ,along the lines of the china day traders tax]

what emerges is a differentisal tax [based on risk, or danger]
thus certain securities are at a higher rate [others at a lower rate] but each tade has its 'tax' bond trading tax rate, that underwrites and securitises EVERY trade [selling shares you DONT owe could include an extra punitive tax rate ,for esample]

basiclly the 'tax' becomes an investment vehicle for new shares in NEW companies doing new start ups ,50 percent of the new shares are floated and or financed via the credit gained via this day trade tax[gaining yet more income for re investment]

many ideas come to mind

some silly [others even sillier, but as im not paid to speculate i will leave an earlier dumb post to fillin space and save repeating it else where [my main issue [complaint] being federal reserve being PRIVATLY owned and able to create vast ammounts of fiat based credit as their only 'product',so that individuals get the ursury[intrest] not the govt treasury[thus its not the people ,whose tax supports the system]

why shouldnt the people get a dividend from loss of their 'resources'

how i see the new tax is it links to its home countries currency [banks trade only in their home monetary and regulatory systems [instead of the fed creating the money it is created by each countries central bank[thus aussie banks lend only our currency]

lend too much your currency devalues
Posted by one under god, Wednesday, 3 December 2008 1:50:47 PM
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Let's see what would happen - the sellers would try and charge more because the 1% is not going to them: the buyers, on the other hand, would not want to pay more because they are not getting any extra value. Would this be enough to drive the sellers off-market to an unregulated system? Possibly; it would be quick and easy to set one of these up over the Internet.

Meanwhile companies are getting a guaranteed revenue stream every time their shares are sold. If I were CEO, what would I do? I know -- fake volatility. Make gloomy announcements and then cheerful announcements in the hope of driving panic sales and panic purchases. In fact, the more my company's share prices lurched up and down the happier I would be.

Nope, this is not the way to establish a stable share market.
Posted by Jon J, Thursday, 4 December 2008 6:54:54 AM
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The problem with this proposal is the underlying assumption that companies are the ultimate producers of all the value of later or derivative sales of their stock. This assumption is not correct.

Marx made a very similar mistake, which he himself got from Adam Smith, who in turn got it from John Locke, that labour is the ultimate source of all the value of production. This is the labour theory of value.

If it were true that Van Gogh is the source of all the value in later trading of his paintings, then the price would be frozen in time as at the moment he last lifted his brush from the canvas.

But itís not: something else is contributing to the value of later sales.

You yourself acknowledge that this is true by leaving the later traders with 99% of the value of their trade. If your underlying assumption were correct, 100% of it should go back to the original company. Similarly if the price of securities later went down, the company should have to pay compensation to earlier traders in its derivatives.

If you employ someone for $40,000 for a year to make a wheelbarrow, the price of the wheelbarrow is the market price, not the cost of the labour. If you accidentally kick up a one kilogram nugget of gold, the value of the gold is not the value of the labour that went in to kicking it up: nothing.

Your proposal implies a theory of how prices are formed. But the theory is not correct.

What explains prices in any given transaction is the theory of marginal utility. The value is subjective to each party to the transaction. Each gives what he thinks is worth less, to get something he thinks is worth more.

Philosophers have tried for over 2,500 years to identify the Ďfairí price of things. All have failed. Their postulates are arbitrary. There is no objective fair price different from the market price. There is no problem to fix: let companies stipulate for their own capital.

See mises.org
Posted by Diocletian, Saturday, 6 December 2008 7:42:57 PM
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