Re: e$: The Book-Entry/Certificate Distinction

[Alan Penny <penny@tyrell.net>]

> Date: Wed, 23 Aug 1995 23:30:27 -0700
> From: tcmay@got.net (Timothy C. May)
> Subject: Re: e$: The Book-Entry/Certificate Distinction
> 
> At 4:10 AM 8/24/95, Alan Penny wrote:
> >The other night I heard that some of the rules for selling stock have
> >been changed to allow companies to sell stock directly to investors.
> >I have been thinking that this may have the potential to support an
> >interesting system.
> 
> My company sold stock to me directly, through a Stock Participation Plan
> and an Incentive Stock Option Plan.

I think that the point of the news report was that in the past companies
were limited in the type of investor they could sell to (e.g., employee,
stock-broker). I assume what they meant by the report was that a company
under the new rules could sell stock to anyone who asked.

> 
> >Imagine "Portfolio Accounts" with a debit-card like access method.
> 
> I use a debit card which directly accesses my stock account. More on this
> in a moment.
> 
> >Instead of paying for an item at a store with money or credit you use
> >your Portfolio-Account card and buy the item with shares/micro-shares
> >of stock. Stock brokers may offer this type of service in response the
> >competition of companies bypassing them. Stock brokers could setup
> >services that mediate between transactions calculating trades and values
> >"on-the-fly" (anonymity could be tricky to build into this system).
> 
> This is where it breaks down. Stock prices are denominated in dollars (or
> the local currency, as applicable). And local purchases are denominated in
> dollars. Nobody pays "one microMicrosoft" for a loaf of bread. They pay $1.
> And Microsoft stock sells for $100, not 100 loaves of bread.

Prices could still be denominated in dollars, but the actual transaction
could be executed with stock value (at the current market price). There
would be an element of risk in these transactions since after the
transaction a stock's value might go down, but it might also go up as
well. I would think that if a merchant had a large volume of
transactions and a varied stock "intake" a merchants portfolio would
tend to balance out in terms of stock increases and decreases.

>
> >If the company you worked for paid you with stock instead of money this
> >would complete the loop.
> 
> The IRS and other tax authorities have this one figured out: barter
> economies are not generally a way to avoid taxes.
>

Oh well, you win some and you loose some :-)

> >This also has the interesting feature of avoiding all taxes. Until you
> >"cash out" your account you would not have to pay taxes, if you never
> >need cash out your account, you never need to pay taxes. I suspect that
> >our friendly governments would try to "correct" this "problem" in the
> >long run if they can.
> 
> If you are paid in barter for some service, taxes are still owed, based on
> the estimated value of services rendered.
> 
> By the way, a simpler example than all this talk of partial shares of
> companies is simply to talk about paying each other in gold, or oil, or any
> other commodities.

Hmmm, a "micro-spot" commodity market?

Cordially,

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[                   Alan Penny, penny@tyrell.net                          ]