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The US Dollar is a Security


brianwalden
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It's apparent that Gary Gensler and the SEC interpret the Howey Test extremely loosely to include almost any type of investment. But have they made the rules so broad that anything can be made into a security?

A security must include 3 parts:

1) An investment with the expectation of profit,

2) into a common enterprise

3) where profits are derived mostly from the efforts of others.

In America people barter their work or good that they own for dollars. These dollars have no intrinsic value, but are a loose proxy for a share in the collective economy of the country. No one except maybe a handful of people have the capability to affect the economy, and therefore the value of a dollar in any meaningful way. Therefore the dollar meets the conditions for being a security.

Even more damning, the government has created every dollar in existence out of thin air with no value or utility to back it. The government pays the salaries of millions of people in dollars, and pays benefits to many more millions of people without requiring them to participate in the economy at all. The government forces businesses to accept dollars as payment. The government has been running a decades long ICO where it first makes dollars available to banks and other large financial institutions, who are able to drive the most profits from them, and then the available supply slowly trickles down to the public. Ripple's actions seem like child's play compared to the size and scope of the scheme the Federal government has been running.

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Here's another, more realistic, one: Diamonds. DeBeers had a near monopoly on diamonds for over a century. They controlled the supply and fiercely marketed diamonds to increase demand. As far as I can tell, if during this time DeBeer's efforts were responsible for the majority of the value of a diamond, then anyone buying diamonds as an investment was buying a security. The Howey Test doesn't say that your purchase has to involve any type of agreement - the fact that DeBeers and not the efforts of the investors is the primary mover of the price makes it a security.

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Don't forget highly manipulated as well. Federal Reserve can apparently predict the future so as to appropriately set the cost of borrowing and thus direct greater or lesser expansion of resource use. Accounting of course for the future preferences, individual tastes and needs of every single person in the country and many globally, and the resultant economic and social trends they give birth to. Pretty simple, I'm sure.  At least for demigod ubermensch at the fed, who are undoubtedly worthy of directing the course of humanity toward the glorious future they are so deftly crafting.

And it isn't like they ever allow ideological concerns to interfere with this solemn duty of accurately setting interest rates. I'm sure they would never allow other concerns such as maximizing jobs or climate justice to dictate rates. 

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4 minutes ago, brianwalden said:

Here's another, more realistic, one: Diamonds. DeBeers had a near monopoly on diamonds for over a century. They controlled the supply and fiercely marketed diamonds to increase demand. As far as I can tell, if during this time DeBeer's efforts were responsible for the majority of the value of a diamond, then anyone buying diamonds as an investment was buying a security. The Howey Test doesn't say that your purchase has to involve any type of agreement - the fact that DeBeers and not the efforts of the investors is the primary mover of the price makes it a security.

This gives me an idea. Suppose a private mining firm buys a trip on one of Elon's rocket ships and sends a tiny probe bearing their company logo to asteroid 16 Psyche, which apparently is composed of some 16 quintillion dollars worth of gold (at ~current prices). They claim ownership of said asteroid and declare it a giant floating vault (most secure in the universe!). They issue a crypto, fully backed by gold reserves in their "vault". And of course, you are more than welcome to redeem your crypto tokens for their full gold bullion backing, the only caveat being that for security purposes they only allow exchange in person, directly at the vault.....security or no? 

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18 minutes ago, Montoya said:

This gives me an idea. Suppose a private mining firm buys a trip on one of Elon's rocket ships and sends a tiny probe bearing their company logo to asteroid 16 Psyche, which apparently is composed of some 16 quintillion dollars worth of gold (at ~current prices). They claim ownership of said asteroid and declare it a giant floating vault (most secure in the universe!). They issue a crypto, fully backed by gold reserves in their "vault". And of course, you are more than welcome to redeem your crypto tokens for their full gold bullion backing, the only caveat being that for security purposes they only allow exchange in person, directly at the vault.....security or no? 

I don't know, but this is exactly why the SEC doesn't want to get into issuing individual determinations on what is and what isn't a security. It's a mess.

From a practical standpoint the SEC should regulate things that obviously fit the traditional understanding of securities and work on educating the public to recognize that everything else isn't regulated by them which means that if they want to invest in them they're on their own, buyer beware.

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