Has it appeared to anyone that we are essentially turning our gold into paper when we invest in stocks?
Yes, of course. Or, put another way, gold is money and you can invest your money in stocks.
therefore the share 'represent' gold.
I would not say so. I would say the shares should represent an ownership interest in the income potential of the underlying company. In other words, a share of stock in The Gold Casino http://8715605.thegoldcasino.com/ represents an interest in the stream of future earnings of the casino. Its value is therefore based on the net present value of that future earnings stream. Since that ownership interest in that stream of future earnings is expressed very directly in terms of dividends (and nice ones, too) it is well that the dividends are paid in gold.
By the same token, I'd argue that it is essentially a promissary note twice removed from gold. And that makes it paper - digital paper if you will.
I disagree with the "promissory note" idea. A promissory note is a note to pay the principle invested at some future date. It may contain terms for payment of interest, which both your philosophy and mine refer to as usury. It is possible to organize a promissory note for fee.
Shares of stock, however, are something different. The dividends paid are not interest. They are a portion of the earnings of the company. Though some stocks have been issued which do not offer to pay dividends, I think these are much more speculative in nature. For a while, Microsoft didn't pay cash dividends, but seemed to endlessly split its stock - paying a dividend in more shares of stock. While the stock price was consistently rising, that was acceptable to investors. More recently, Microsoft has begun paying dividends, though only a tiny amount of earnings per share, as I understand it.
Of course, TGC is generating revenue in gold and hence it is able to pay dividends and redeem shares for gold. That is if they are (a) profitable and (b) able to pay their way in gold as well - which they are unlikely to be able to do. I would expect that at least wages are paid in fiat.
I would expect no such thing. If I were them, I'd pay only contractors and denominate all such contracts in gold. I'd pay out in gold, too, and assist the contractors or employees in finding exchangers who can assist in converting, say, e-gold to local currency.
Major areas of cost for the Gold Casino: domain registration, web hosting, web development, flash programming, other programming, help desk support, accounting - all of these are presently available from various contractors who accept e-gold.
no way of being sure that the shares are in fact redeemable for e-gold, are we?
Since there is a private market for the exchange of shares, and since share sales are in grams of gold, yes, I do think the shares are redeemable for gold. E-gold and other currencies are available for bailment and redemption of dBourse accounts, I think.
(which isn't regulated anywhere and hence there is no garantee that a sale to anyone but a third party is even possible),
I think dBourse is regulated by contract, by public scrutiny of which your message is an example, and by the management of the Gold Casino. I don't see any indication anywhere that TGC offers or plans to buy back the stock it has made available to the public.
they then would inexchange e-gold to honour their promise.
I suppose you could buy a share, today, wait for the dividend on 1 November and try to get your dividend payment out of your dBourse account and into your e-gold account. That would indicate something about whether their promises are any good.
Having done exactly that dozens of times with my TGC account, I feel very confident that these guys are good to their word. I have never heard of anyone who has been screwed by TGC after placing bets and winning gold.
we have no way of telling, do we?
We don't have a huge amount of information about the exact behavior of TGC with regards to money. However, I think JP May has previously stated that ISL did a bunch of the programming for TGC. I have heard from one of the programmers of the multi-player poker on TGC. So, these major areas of expense appear to me to very likely have been paid in gold, either e-gold or GoldMoney or Pecunix or e-Bullion. I think it very likely that the other major identifiable expense areas can also be paid in e-gold or one of the other forms of online gold. I could get you a list of vendors who accept e-gold for domain registrations, a list of those who accept e-gold for web and domain hosting and e-mail hosting, a list of those who accept e-gold for accounting. But, I feel confident that you could get these results for yourself.
Of course, I still think it's all a great idea and all, I was just pondering the eery similarities of how people with the best of intentions are creating precedents that other then abuse to remove the value components from money...
I think you are confusing money for financial instruments. Yes, shares of stock in TGC are financial instruments, and are not as liquid as money. Shares on other private stock exchanges such as PVCSE: http://pvcse.com/ex.change...000222 are also financial instruments and not money. However, I'm a bit baffled by what you think people should do with money.
One of the things people have done with money for tens of thousands of years, whether that money was cattle or bits of leather or gold or silver or wampum or bits of paper or iron hoes or steel blades or tally sticks has been to invest it. I believe tally sticks were part of the first investment in the Bank of England back in 1684 or thereabouts.
People invest in stocks or bonds because they believe that the managers of the company involved have the ability to generate value in the future. Wealth creators have always sought capital (money) from investors so that they can turn their future stream of earnings into immediate resources to pay bills, etc.
I believe I understand your objections to usury. What is your problem with stocks? Why are they more prone to abuse than any other behavior? How is an individual supposed to invest his money if stocks and stock exchanges aren't available?
It seems to me that we can learn from the past. It seems that paper money is a relatively recent thing, having first cropped up in China about AD 1000. It was soundly rejected, and there has been a lasting commitment by some former subjects of the Mongol empire to avoid paper money. Repeated lessons in the 18th, 19th, and 20th centuries should have convinced everyone by now that paper money is prone to inflation if it is not strictly redeemable for metal.
Similar lessons appear to be available for usury. A great deal of writing for the last few thousand years has established the difficulties of usury.
At the same time, the innovations of risk insurance, joint stock companies, and other methods for sharing both risks and rewards have been developed, beginning with anonymous societies of the Thirteenth Century. Like the double-entry bookkeeping accounting of the same time period, this appears to be a tremendous innovation, enhancing economic development and accelerating the pace of change.
Regards,
Jim http://www.ezez.com/
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