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Now to see the insanity of the A-->B-->C-->D-->D-->E-->F setup: how can I lend you a chair, it goes from hand to hand from A to F, and at the same time I still

Now to see the insanity of the A-->B-->C-->D-->D-->E-->F setup: how can I lend you a chair, it goes from hand to hand from A to F, and at the same time I still have it on my patio? Stocks used to be pieces of papers. In the goold old days, in the end of the day people were spending hours moving papers "stocks" around from your account to my account (literally, papers)(https://duckduckgo.com/?q=paper+stock+certificates&t=ffab&iar=images&iax=images&ia=images https://duckduckgo.com/?q=paper+stock+certificates&t=ffab&ia...) I know that the big players are adding iterations, complexity (and other similar words) only so they can repack "the thing" re-sell it to someone. It's like derivatives in mathimatics. You raise, and you raise, and you raise, and you raise, and you... kinda like the movie Inception. (I apologise if I got the wrong math term.. it's been 'a while'). Edit: OP deleted his/her comment while Throw and I were drafting ours.

qeternity 6y ago
> Now to see the insanity of the A-->B-->C-->D-->D-->E-->F setup: how can I lend you a chair, it goes from hand to hand from A to F, and at the same time I still have it on my patio? Securities only have utility when you sell them. It’s more like having a chair in your garage that you’re not using, and lending it to your neighbor. Do you still own a chair? Yes. Does your neighbor have a chair? Yes. When you want the chair back you simply ask for it back, and your neighbor can either borrow a chair from someone else or buy their own.
- andi999 6y ago
  The danger with stocks is they are all the same (from the same company). Nobody would think of selling the chair they borrowed from the neighbor (if they want to stay friendly with the neighbour). Maybe it is more like eggs. You ask you neighbour for a few eggs, and later give them back (but everybody understands them to be different eggs)
  - exporectomy 6y ago
    People do that with money. "Can I borrow $20 to pay the rent? I'll pay you back next week, I promise."
thaumasiotes 6y ago
> Now to see the insanity of the A-->B-->C-->D-->D-->E-->F setup: how can I lend you a chair, it goes from hand to hand from A to F, and at the same time I still have it on my patio? You don't. Nobody claims you do, not even in the short-selling situation you're trying to describe; you can't vote a share that you've lent out. > Stocks used to be pieces of papers. In the goold old days, in the end of the day people were spending hours moving papers "stocks" around from your account to my account (literally, papers) This didn't change; it's just that, under US law, you can no longer own any stock. (Well, more specifically, you can't own stock that you buy on a stock exchange.) Instead, there is a company that exists solely for the purpose of owning all the stock and registering your interest in it. When you sell a stock to someone else, DTCC owns that stock before and after you sell it; what changes is that their internal records may or may not update the name under which that stock is registered. There's a fun paper here ( https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1017206 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1017206 ) going over the history: > Congress, in the 1975 Securities Acts Amendments, took the extremely unusual step of legally imposing a single technique for settlement on the markets. The effect on securities settlement was somewhat comparable the effects of a law that would require all computers plugged into the internet to run on DOS.
hntrader 6y ago
Chairs aren't a fungible commodity and chairs depreciate, which are the two reasons you can't short chairs. If chairs were fungible and didn't depreciate, then they would be shortable just like stocks, but you wouldn't be able to keep it yourself, you'd need to loan it out to be short-sold by someone else.
- lupire 6y ago
  The concept of a commodity fails when it's controlled by a cartel or can't be produced in sufficient volume to meet demand, as seen with oil and short squeezes.
  - hntrader 6y ago
    I'm not attempting to make a value judgement about one commodity vs another, I'm just outlining what is the necessary and sufficient condition for something to be short-able, which I think is widely misunderstood (I say this because of Elon's tweets that "we can't short cars"). Cars, chairs, etc, can't be shorted, since they aren't fungible. This reason is mostly a practical one. If people really wanted to short cars, despite the fact that they aren't fungible, they would be able to, they just need to prepare the necessary legal paperwork. Nobody does this because it would be extremely annoying to do so, and for very little benefit. Things that are fungible can be shorted easily with minimal legal legwork. Stocks are fungible and therefore can be shorted. Now regarding the supply of a commodity that's available to short, in the case of stocks that's determined by the executive team and board when there's a need to raise funds. I wouldn't exactly call that a cartel. They're just doing what they think is best for their business (i.e., issuing new stock when the company needs funds and they don't wish to raise through debt).

qeternity 6y ago

> Now to see the insanity of the A-->B-->C-->D-->D-->E-->F setup: how can I lend you a chair, it goes from hand to hand from A to F, and at the same time I still have it on my patio? Securities only have utility when you sell them. It’s more like having a chair in your garage that you’re not using, and lending it to your neighbor. Do you still own a chair? Yes. Does your neighbor have a chair? Yes. When you want the chair back you simply ask for it back, and your neighbor can either borrow a chair from someone else or buy their own.

andi999 6y ago
The danger with stocks is they are all the same (from the same company). Nobody would think of selling the chair they borrowed from the neighbor (if they want to stay friendly with the neighbour). Maybe it is more like eggs. You ask you neighbour for a few eggs, and later give them back (but everybody understands them to be different eggs)
- exporectomy 6y ago
  People do that with money. "Can I borrow $20 to pay the rent? I'll pay you back next week, I promise."

thaumasiotes 6y ago

> Now to see the insanity of the A-->B-->C-->D-->D-->E-->F setup: how can I lend you a chair, it goes from hand to hand from A to F, and at the same time I still have it on my patio? You don't. Nobody claims you do, not even in the short-selling situation you're trying to describe; you can't vote a share that you've lent out. > Stocks used to be pieces of papers. In the goold old days, in the end of the day people were spending hours moving papers "stocks" around from your account to my account (literally, papers) This didn't change; it's just that, under US law, you can no longer own any stock. (Well, more specifically, you can't own stock that you buy on a stock exchange.) Instead, there is a company that exists solely for the purpose of owning all the stock and registering your interest in it. When you sell a stock to someone else, DTCC owns that stock before and after you sell it; what changes is that their internal records may or may not update the name under which that stock is registered. There's a fun paper here ( https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1017206 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1017206 ) going over the history: > Congress, in the 1975 Securities Acts Amendments, took the extremely unusual step of legally imposing a single technique for settlement on the markets. The effect on securities settlement was somewhat comparable the effects of a law that would require all computers plugged into the internet to run on DOS.

hntrader 6y ago

Chairs aren't a fungible commodity and chairs depreciate, which are the two reasons you can't short chairs. If chairs were fungible and didn't depreciate, then they would be shortable just like stocks, but you wouldn't be able to keep it yourself, you'd need to loan it out to be short-sold by someone else.

lupire 6y ago
The concept of a commodity fails when it's controlled by a cartel or can't be produced in sufficient volume to meet demand, as seen with oil and short squeezes.
- hntrader 6y ago
  I'm not attempting to make a value judgement about one commodity vs another, I'm just outlining what is the necessary and sufficient condition for something to be short-able, which I think is widely misunderstood (I say this because of Elon's tweets that "we can't short cars"). Cars, chairs, etc, can't be shorted, since they aren't fungible. This reason is mostly a practical one. If people really wanted to short cars, despite the fact that they aren't fungible, they would be able to, they just need to prepare the necessary legal paperwork. Nobody does this because it would be extremely annoying to do so, and for very little benefit. Things that are fungible can be shorted easily with minimal legal legwork. Stocks are fungible and therefore can be shorted. Now regarding the supply of a commodity that's available to short, in the case of stocks that's determined by the executive team and board when there's a need to raise funds. I wouldn't exactly call that a cartel. They're just doing what they think is best for their business (i.e., issuing new stock when the company needs funds and they don't wish to raise through debt).