>From: "Joubin Houshyar" <joubin_444@...>
>
> > Electronic cash – ie the anonymous electronic equivalent of paper
> > money – poses a significant, if long-term, threat to governments
> > globally through the leakage of tax revenue "offshore".
>
>I can not claim to know the measure of the type of money movements
>you are addressing here, but based on your own characterization of
>its nature as a "leakage", I would strongly question the **extreme
>remedy** that you advocate as a counter measure.
>
> > In addition, the growth of proprietary currencies such as Beenz
> > means that Central Banks are in danger of losing control of the
> > money supply, with possible inflationary consequences.

>You also claim that "Only by direct issue of electronic money –
>which, as Robin Bloor pointed out, "knows who owns it" – can
>governments avoid such leakage."
>
>This is most certainly not true.

Why do you say that? Anonymous paper money (or come to that bearer shares
etc) guarantee a Black Economy and "leakage".
>
>(This is leaving aside the question that what exactly is done today
>about "leakage" when we do have anonymous paper money? I guess we
>should ask Marc Rich about that, eh?)
>
>Certainly, if issuance of e-Money was limited to a government body,
>and if such informational artifacts carried verifiable tags which
>identified (a) the Sovereign authority, (b) Currency, and (c) Units;
>and further if according to international agreements no exchange of e-
>Money from one currency to another could occur without disclosure of
>the involved parties, then you could easily stop
>unauthorized "leakage" of monies across borders.
>
>What you (seem to) advocate goes **far beyond** addressing
>the "leakage" and provides **far too much power** in the hands of
>unrepresentative, unaccountable, non-transparent, and clearly
>unrepentant, entities.
>
>Is that wise? Or are do we seem that stupid?
>

Clearly the whole nature of corporate, national and international governance
has to change in order for the model to work.

For that you need a new approach to capital markets as well as the money
markets. I call this "Self Listing"

The “Self-Listing” decentralised securities market model is based upon a
very simple proposition: that the most obvious and logical place to buy and
sell securities is on the website of the corporate, institution or
government which issued the securities in the first place.

It has always been possible for buyers and sellers to conduct a transaction
face-to-face in the way that they did before formalised Exchanges came into
existence. However, this Market 1.0 mechanism is unsatisfactory for
numerous reasons, notably the absence of price discovery and the slow and
problematic settlement procedure.

The “Peer-to-Peer” Market 3.0 model would create corporate and individual
securities market user groups and connect them into a market network
configured around a shared securities market transaction registry and a
shared securities market title registry.

Essentially the "physical presence" of Market 1.0 is replaced by the
"network presence" of Market 3.0. (Market 2.0 being the centralised
Exchange-based markets which have gone as far as is possible and are now
obsolete)

Membership of these securities market user groups would confer the right to
place bids and offers on the website of the relevant corporate, institution
or government and enter into and settle legally binding contracts.

Essentially the result is as though Instinet or Bloomberg – proprietary
electronic brokerages - were owned and operated by a co-operative of its
customers, rather than by Reuters or Bloomberg.

The securities market would be a utility operated by a consortium MSP of
financial service, communications, technology, market data and other service
providers in partnership with the market user group of end user customers
and market makers.

Parallel to e-money, the requirement is for the creation of “e-securities”
transaction and title registries operated for and on behalf of the listing
institutions and at their expense. The investor would not be charged for
use of this Capital Market 3.0 infrastructure.

Note that under this model, institutions such as funds become obsolete. My
investments are always tagged with my ID. I will probably employ a manager
for my investments, and reward him on performance, but I will have a direct
connection with the companies or institutitions in which I invest.

And the process is already starting. Note that Liquidnet is already engaged
upon peer to peer wholesale securities market transactions to the detriment
of investment banks and brokers alike.

However I recognise that decentralised global market platforms require
decentralised market regulation (FYI my background is in market regulation)-
Regulation 3.0 if you like. That is what I am working on.

> > And it appears inescapable logic that a "Value Transfer Tax"
> > applied at the point of payment would render all existing taxation
> > systems obsolete.
>
>(By the content of your post I assume you are a 'subject' of the Q of
>E). Here in good ol' USA, our tax system is based on _voluntary
>compliance_. A VAT, or any such point of sale, tax system is of
>course not voluntary and is compulsory.

Why is it you guys can't tax internet transactions?

My understanding is that it is because you have literally thousands of sales
taxes on a state by state basis.

I guess what I am proposing is not a million miles away from a Tobin tax.

And location has to be a factor in whatever system we come up with.

Consider this.

(1) If I get paid for my services there is a transfer of value. An employer
receives my services. I receive his money. He pays VAT to me, which I pass
on to the Government net of my VAT "inputs" as we call them. I pay Income
Tax etc on my earnings.

Forget all that.

I pay x % ( transferred directly @ the Central Bank). My employer pays y%
(again by direct transfer).

In the US I guess there is scope for state or local taxes depending on where
my employer and I are when services pass.

(2) If I buy goods in the US, the question is when and where does the value
pass.

Eg I am in Arizona. I order goods from a NY company for delivery to my ski
place in Colorado.

There is a Value Transfer Tax paid by the NY company on receipt of my
payment.

There is a Value Transfer Tax paid in Colorado upon delivery of the goods to
me (ie my acceptance of them).

With maybe a Federal VTT overlay (say 0.5%)
>
>And should the measure of a compulsory tax, such as you propose, be
>deemed unreasonable by honest citizens, their refusal to comply would
>be most detrimental to their lives and well being -- as (for one)
>they would no longer be able to eat!
>
>(Need I remind you why the colonists rebelled against the Crown in
>1776?)
>

I doubt whether there would be a rebellion if people were told the
following.

"If you utilise the new payment mechanism you pay tax at Y% and have zero
bureaucracy. But if you really want to stick with Paper money you can deal
with the IRS and pay 2Y% or more. "

If the rate of a VTT is trivial then it will cost more to evade than it
would do to pay it. So only the most hardcore tax evaders would bother.

> > The proposition is a simple, but powerful one. Electronic banking
> > for all via the Central Bank.
>
>** It is indeed a powerful device ** that is being proposed.
>
>But since these central banks are not democratic institutions, and
>here in US, the (nominally elected) Executive is afraid of making a
>peep in regards to Monetary Policy -- the control over which (again I
>must remind you) was deemed by the your own Iron Lady as the
>fundamental measure of Sovereignty -- one must raise strong
>objections in placing such absolute power in the hands of people such
>as Mr. Greenspan (and who knows who else).

In my view the current Capital Market 2.0 (which has been around since John
Law introduced the construct in France a couple of hundred years ago) is
based upon a fundamentally flawed monetary mechanism based upon the issuance
of currency which is essentially "evidence of debt" from the Central Bank to
you and me.

I prefer to consider a Banknote as a quasi-share certificate issued by the
Central Bank on behalf of US Inc or UK plc, with me voting every few years
to elect someone to the Board.

This "equity" is backed by the physical assets and the "human capital" of a
nation. And investment in infrastructure (which over here is paralysed by
"public sector good, private sector bad" dogma) merely serves to increase
the capital of the nation and the asset backing of the currency. Rather than
being a drain on the public purse.

"Hard" currency requires either asset backing (eg Swiss Franc, which is
backed by assets looted over centuries from countries whose currencies
thereby "soften") or the backing of both assets and great human capital - as
is the case with the US $.

If we descend one level from the government to the corporate, I believe that
a distinction has to be made between equity and debt. Essentially I would
reconfigure corporate law so that there is a clear distinction between
equity and debt and specifically providing that dividends in cash are no
longer possible.

Dividends would still effectively be made through issuing further shares
reflecting the increase in value of the company. This is in fact happening
anyway by default, since there is a trend away from dividends towards share
splits. E-shares enabling microtransactions makes this administratively
trivial.

The value of this equity reflects the investors' judgment in relation to the
human capital of the corporate in terms of its ability to generate an
increase in value over time.

The other capital raising mechanism concerns the securitisation of assets
and particularly cash flows. (cf David Bowie's securitisation of his royalty
stream). And here I can see a new model for utilities such as telecoms,
railroads, markets and other essential infrastructure service providers.
Come to that Microsoft, which is essentially a utility, could put its
thinking cap on and go down this road.

The bottom line of all this, Joubin, is that the viral processes that will
lead to this Market 3.0 model will in fact also lead to both decentralised
Regulation 3.0 and Government 3.0.

And my view is that Pandora's Box is open and that the World Bank and the
IMF and all the rest are increasingly irrelevant. If you hand over the
capital and money markets to the users, then there IS no way of controlling
them without the consent of the users themselves.

Finally, if there are too many vested interests in developed countries to
introduce such a model, then I believe that emerging markets (such as Iran)
can and will go down this road. Because they sure as hell can't afford the
centralised Market 2.0 model.

As you say,

Peace

Chris Cook


"In Five Years time we'll all look back and say how simple and obvios it all
was".













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