4 ms·

> If they are shares held by the broker in inventory, then the broker is Mr. A except then Mr A does not own the shares, there is in fact a Mr Ax who lent Mr A

by clort 10y ago

> If they are shares held by the broker in inventory, then the broker is Mr. A except then Mr A does not own the shares, there is in fact a Mr Ax who lent Mr A's shares to Mr B. > No one is lending shares unless they own them or have a contract with the owner where the owner has agreed to allow such lending. as others point out, this is going to be in the small print of the brokers account However, I think Mr B is still fraudulent as Mr C bought some shares that were not for sale. I guess shares are supposed to be fungible but in some way they are not exactly - if the company has a share register, and shares are numbered then what number does Mr C get? If Mr C is offering to buy future-shares then he knows that he doesn't have a share today but that isn't what happened, he understood that he has bought something not an option to buy.

dpc59 10y ago
Good job, you just found out fractional banking is a government sanctioned ponzi scheme.
- idiot_stick 10y ago
  Only in YouTube conspiracies. Banks aren't even reserve constrained, and haven't been for a long time. Are you limited in the amount of credit you can offer, outside of finding a willing counter party? No. This is the freedom of our financial market.
dragonwriter 10y ago
> However, I think Mr B is still fraudulent as Mr C bought some shares that were not for sale. I guess shares are supposed to be fungible The entire idea of margin accounts, stock exchanges, etc., is that shares of the same class in the same firm are, in fact, absolutely and perfectly fungible; thats the agreement you make when you participate in those systems. If that wasn't the case, you'd have specific bid/ask prices for individual shares. > if the company has a share register, and shares are numbered then what number does Mr C get? The one that was borrowed, which must be replaced by the borrower with an equivalent one at the end of the specified term, per the terms of the contract under which it was borrowed (this is true for all the borrowers in the chain, however deep it may be.)
MaulingMonkey 10y ago
> I guess shares are supposed to be fungible but in some way they are not exactly - if the company has a share register, and shares are numbered then what number does Mr C get? Currency is also numbered. If I lend you $20, it's not fraud to give me a $20 back with a different serial number on it. It's not even fraud to give me back two $10s. Adding those kinds of restrictions would defeat much of the point of lending you $20 in the first place. It's also not fraud to spend it at Mr C's eatery for lunch, and hope you can replace it later - in fact, that's the whole point of borrowing money.

by clort 10y ago

dpc59 10y ago

Good job, you just found out fractional banking is a government sanctioned ponzi scheme.

idiot_stick 10y ago
Only in YouTube conspiracies. Banks aren't even reserve constrained, and haven't been for a long time. Are you limited in the amount of credit you can offer, outside of finding a willing counter party? No. This is the freedom of our financial market.

dragonwriter 10y ago

> However, I think Mr B is still fraudulent as Mr C bought some shares that were not for sale. I guess shares are supposed to be fungible The entire idea of margin accounts, stock exchanges, etc., is that shares of the same class in the same firm are, in fact, absolutely and perfectly fungible; thats the agreement you make when you participate in those systems. If that wasn't the case, you'd have specific bid/ask prices for individual shares. > if the company has a share register, and shares are numbered then what number does Mr C get? The one that was borrowed, which must be replaced by the borrower with an equivalent one at the end of the specified term, per the terms of the contract under which it was borrowed (this is true for all the borrowers in the chain, however deep it may be.)

MaulingMonkey 10y ago

> I guess shares are supposed to be fungible but in some way they are not exactly - if the company has a share register, and shares are numbered then what number does Mr C get? Currency is also numbered. If I lend you $20, it's not fraud to give me a $20 back with a different serial number on it. It's not even fraud to give me back two $10s. Adding those kinds of restrictions would defeat much of the point of lending you $20 in the first place. It's also not fraud to spend it at Mr C's eatery for lunch, and hope you can replace it later - in fact, that's the whole point of borrowing money.