Author Topic: 1 AGS worth more than 1 PTS  (Read 19938 times)

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Offline Darkbane

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so does your knowledge support insider trading by employees, or does your knowledge say insider trading is bad?

Offline Darkbane

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Bytemaster... my point being... invictus claims this is all for the community and not the company... so if they are making a statement, why not back it with action...

I don't think it's unreasonable for them to acknowledge this is a potential huge conflict of interest... and to put a rule in place for employee behavior... maybe the day of or 72 hours after are not the right amounts for time... but I think there should be some buffer from people directly involved in the company... or an equal footing for those who aren't sitting around the office and know when the company is about to put out notice of a new DAC or other news that will directly impact the price...

this would seem logical and reasonable, maybe people can signup for some email announcements listing, that when company news is announced, all parties will receive and email within roughly the same time depending where they are on the list and how fast things get processed, but within minutes reasonably... then those who choose to can signup to receive company announcements and all receive the same opportunity... versus lost in the forums, website that isn't done yet, or finding out once prices double... then once all are given the same notice, employees can act 1 hour after? I don't know the time but the need to separate employee's from manipulating the market is important to the community...

if word ever got out an employee was doing this, how long do you think people would continue to support this whole project? then the community would fail because of the actions of someone who was not held to some conditions due to their ability to access information ahead of time... I think quite a lot of damage would occur if people saw employees or the company buying thousands of PTS before announcements and selling after it went up... thats damaging to us all...



While I am sure you have good intentions here, but I believe your logic is being clouded by a misplaced since of fairness.  Your premise is that *some* people are more entitled to profits and than others.  Namely, that profits belong to the lucky and not to the knowledgeable.  That having knowledge is 'unfair' and that not having knowledge and earning unexpected profits or losses is fair and virtuous.   In my opinion what is unfair is having a market where any information is being withheld from the price.   A ban on insider trading is thus a form of market manipulation and is grossly unfair to everyone. 

We are the most open development team you will find, perhaps to a fault.   Anyone can follow our code and commits and/or try the code out for themselves and know exactly where we are and make their own estimate on when things will be ready for release and how buggy it will be.  Anyone who is following us also knows that snapshots cannot be 'botched'  AND that ultimately we have no say over which snapshot the market accepts.    If we said... sorry guys, we meant March 28th... then the market would punish us dramatically and honor the 28th snapshot anyway while rejecting everything we say.

There are no victims of insider trading except those who were making the same bet AS the insider and were forced to buy at a slightly higher or slightly lower price.    These individuals will make slightly less profit from their dumb luck than they would have without the insider trading.   

Anyone with a buy and hold mentality is entirely unaffected by insider trading.

there is nothing illogical of wanting a "for the community" based company to set rules that ultimately will benefit the community...

do you honestly believe there is NO difference between an employee of invictus, and anyone else on the internet? do you honestly believe that having knowledge of the timing of announcements and deadlines the company sets internally, is not EXTREMELY advantageous compared to anyone else simply speculating without those firm dates or announcements in mind?

speculation is one thing, but having direct knowledge that will impact the community is another...

if my former employer allowed me to trade company stocks with the knowledge I had on a daily basis, I would have owned the company... however we were all forbidden due to company policy and US LAW not to trade based upon that information UNTIL IT WAS MADE PUBLIC in accepted ways... it wasn't simply post a message buried in a forum someplace... it was post it on the front of the website, it was post it to our subscribed emailers, it was release announcements to various media organizations and if they choose to run with it or bury it, we had upheld our end of what was required...

so the way you are arguing this...

am I to understand, the official invictus position, will be to allow employees and the company to buy/sell PTS prior to making public announcements (that they know will affect the value of PTS greatly in a short period), and then inform the public after they have bought/sold all they wanted to... and then buy/sell later after they've influenced demand??? is that the official stance of your company... because I would love to have that answered officially...

my sense of entitlement is that we should ALL fairly have the same opportunity... however sometimes its prudent to restrict those from the inside to certain restrictions those on the outside are not exposed to... like I said, the time frame I suggested is just that a suggestion, the goal however is equality and fairness... not insider trading advantages to any...

P.S. the insider is NOT making the "same bet" as the outsider, because as you acknowledge the insider was able to get the better price as a result of having the information prior to the public being made aware...  and buy and hold investors ARE impacted by insider trading as the long-term outcome of insider trading is usually a collapsed company as people lose trust and remove their positions in it... leaving the long-term investor impacted as a result of employee actions... so both types of traders are impacted...

« Last Edit: March 03, 2014, 12:50:47 am by Darkbane »

Offline Stan

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Offline Agent86

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Darkbane,

If you really want the inside scoop on a new DAC, perhaps you can put in the time to get involved and develop one.  Then, if you like, you can offer all of us 3 days to buy in before you.   I imagine you'll win the confidence of much needed "investors" who can buy your DAC cheap and sell it back to you 3 days later.  This way you don't unjustly benefit from your work.

Offline bytemaster

Bytemaster... my point being... invictus claims this is all for the community and not the company... so if they are making a statement, why not back it with action...

I don't think it's unreasonable for them to acknowledge this is a potential huge conflict of interest... and to put a rule in place for employee behavior... maybe the day of or 72 hours after are not the right amounts for time... but I think there should be some buffer from people directly involved in the company... or an equal footing for those who aren't sitting around the office and know when the company is about to put out notice of a new DAC or other news that will directly impact the price...

this would seem logical and reasonable, maybe people can signup for some email announcements listing, that when company news is announced, all parties will receive and email within roughly the same time depending where they are on the list and how fast things get processed, but within minutes reasonably... then those who choose to can signup to receive company announcements and all receive the same opportunity... versus lost in the forums, website that isn't done yet, or finding out once prices double... then once all are given the same notice, employees can act 1 hour after? I don't know the time but the need to separate employee's from manipulating the market is important to the community...

if word ever got out an employee was doing this, how long do you think people would continue to support this whole project? then the community would fail because of the actions of someone who was not held to some conditions due to their ability to access information ahead of time... I think quite a lot of damage would occur if people saw employees or the company buying thousands of PTS before announcements and selling after it went up... thats damaging to us all...



While I am sure you have good intentions here, but I believe your logic is being clouded by a misplaced since of fairness.  Your premise is that *some* people are more entitled to profits and than others.  Namely, that profits belong to the lucky and not to the knowledgeable.  That having knowledge is 'unfair' and that not having knowledge and earning unexpected profits or losses is fair and virtuous.   In my opinion what is unfair is having a market where any information is being withheld from the price.   A ban on insider trading is thus a form of market manipulation and is grossly unfair to everyone. 

We are the most open development team you will find, perhaps to a fault.   Anyone can follow our code and commits and/or try the code out for themselves and know exactly where we are and make their own estimate on when things will be ready for release and how buggy it will be.  Anyone who is following us also knows that snapshots cannot be 'botched'  AND that ultimately we have no say over which snapshot the market accepts.    If we said... sorry guys, we meant March 28th... then the market would punish us dramatically and honor the 28th snapshot anyway while rejecting everything we say.

There are no victims of insider trading except those who were making the same bet AS the insider and were forced to buy at a slightly higher or slightly lower price.    These individuals will make slightly less profit from their dumb luck than they would have without the insider trading.   

Anyone with a buy and hold mentality is entirely unaffected by insider trading. 



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Offline toast

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Sweet, if you make a rule that Dan can't trade from his knowledge as he develops, that means I'm the most-insider-while-technically-an-outsider since I read all his commits as he makes them!

Maybe the rule should be "nobody who reads the github or follows the forums is allowed to trade for 72 hours". That means you too darkbane, if you read the forum you would have known exactly what invictus is planning on doing!

Also since invictus isn't the sole representative of PTS/AGS holders, we should also not allow any closed-door meetings between ANY potential DAC developers who will honor PTS/AGS. You can only trade if you haven't talked to anyone or been on the internet for 3 days!
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Offline Darkbane

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Bytemaster... my point being... invictus claims this is all for the community and not the company... so if they are making a statement, why not back it with action...

I don't think it's unreasonable for them to acknowledge this is a potential huge conflict of interest... and to put a rule in place for employee behavior... maybe the day of or 72 hours after are not the right amounts for time... but I think there should be some buffer from people directly involved in the company... or an equal footing for those who aren't sitting around the office and know when the company is about to put out notice of a new DAC or other news that will directly impact the price...

this would seem logical and reasonable, maybe people can signup for some email announcements listing, that when company news is announced, all parties will receive and email within roughly the same time depending where they are on the list and how fast things get processed, but within minutes reasonably... then those who choose to can signup to receive company announcements and all receive the same opportunity... versus lost in the forums, website that isn't done yet, or finding out once prices double... then once all are given the same notice, employees can act 1 hour after? I don't know the time but the need to separate employee's from manipulating the market is important to the community...

if word ever got out an employee was doing this, how long do you think people would continue to support this whole project? then the community would fail because of the actions of someone who was not held to some conditions due to their ability to access information ahead of time... I think quite a lot of damage would occur if people saw employees or the company buying thousands of PTS before announcements and selling after it went up... thats damaging to us all...

imagine if we ALL sat around the same table, and we ALL heard invictus announce that on february 28th they will take a snapshot of the chain and will base their reward of BTS on that... we'd all have immediately gone and bought PTS since we KNEW it was about to run up quick as people scrambled to get in while they could... and shortly after invictus made the announcement, what happened to the price of PTS, it went on a steady steady rise... (almost 3x where it is today)

now imagine only employees heard that information first, and only employees bought ahead of the curve at the lowest possible price... who would you say was taking advantage of the situation? the employee who is supposed to be doing this all for the community, or the community? with great power comes great responsibility... just asking for the right use of that power, not unreasonable at all...

now imagine all this happens on every future DAC, the employee with knowledge before its made public gets a 3x return on their purchase... thats not speculating... thats insider trading...

what if, like recommended by Stan I believe, we did not hold on to PTS until march 2nd, just in case something went wrong with the snapshot... and employees knew something went wrong, and before the community did, they went out and bought PTS today for $6 each, and then after they were all done buying what they could, the company announced it would have to take another snapshot in 3 days... well now there will be a made dash to scramble up PTS as quickly as possible and once it doubles or triples again, the employees sell off and cash in... using knowledge unfairly only they had access to at the time of purchase... not unreasonable for a request of some limits in place for them...
« Last Edit: March 02, 2014, 07:06:01 pm by Darkbane »

Offline Troglodactyl

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...
Is one side in the debate ever completely wrong?
...

Yes.  :P

Note that this doesn't mean they have bad intentions.  I try to give people's intentions the benefit of as much doubt as I can possibly muster.  It's entirely possible that those responsible for this mess weren't trying to scam the world, but actually believed that currency distortion was a good idea.

Offline biophil

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Hey! You're not supposed to flippantly write off the entire point of my post by highlighting my imprecise choice of words..

Well it is clear that the forum and text communication doesn't convey that I meant that in the most light-hearted way possible.   I did that because like you I try to avoid making logical fallacies or contradicting myself and yet I frequently choose words poorly ;)    I hope I went on to address the rest of your point so you cannot quite say that a flippantly wrote of the entire point.

Yeah, this conversation would probably work better over a beer. I hereby retract my allegations of flippancy. :)

I just thought that it was ironic that you must be highly suspicious of yourself ;)   Probably a good policy to have.

I'm a big believer in that policy. I tend to get myself into trouble when I take my opinions too seriously. :)
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Offline bytemaster

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Hey! You're not supposed to flippantly write off the entire point of my post by highlighting my imprecise choice of words..

Well it is clear that the forum and text communication doesn't convey that I meant that in the most light-hearted way possible.   I did that because like you I try to avoid making logical fallacies or contradicting myself and yet I frequently choose words poorly ;)    I hope I went on to address the rest of your point so you cannot quite say that a flippantly wrote of the entire point.   

I just thought that it was ironic that you must be highly suspicious of yourself ;)   Probably a good policy to have.
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Offline biophil

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What the Fed gives us
Take the concept of an elastic money supply. One of the reasons the modern world runs on an elastic money supply rather than on a fixed money supply (such as a rigid gold standard) is that it is a powerful tool for the government to enforce a stable purchasing power for a currency. Stable purchasing power is a good thing for a currency to have! It provides a real economic benefit if people can expect things to cost the same next month as they do now.

So much for...

Quote from: biophil
I'm highly suspicious of anyone who denounces something as categorically bad if someone else praises it as categorically good.

Hey! You're not supposed to flippantly write off the entire point of my post by highlighting my imprecise choice of words... There's no reason my philosophy on this point can't be self-referential! I think it's well worth calling my own value judgements into question.

I apologize for saying things that make me sound generous towards the Fed. I'm not trying to persuade you that you're wrong, because I think you have many valid points! So what am I trying to do... Not sure, I just like talking about how most people aren't completely wrong. The concept that (almost) nobody is completely wrong is one of the cornerstones of my worldview. I'm not even going to try to justify why I think it's relevant to the discussion in this forum (hint: it probably isn't relevant); I realize that I'm rapidly going way off topic.

So where does that leave us? please refer to the last thing I said in my previous post:
Having said that, I support Invictus and the goals of BitShares XT because they look like we may have finally reached a moment in history when technology will allow us to build a fair, deterministic financial system. And that makes the engineer/economist in me smile.

Bytemaster, I think you and I share that strongly in common. :)
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Offline bytemaster

Quote
What the Fed gives us
Take the concept of an elastic money supply. One of the reasons the modern world runs on an elastic money supply rather than on a fixed money supply (such as a rigid gold standard) is that it is a powerful tool for the government to enforce a stable purchasing power for a currency. Stable purchasing power is a good thing for a currency to have! It provides a real economic benefit if people can expect things to cost the same next month as they do now.

So much for...

Quote
I'm highly suspicious of anyone who denounces something as categorically bad if someone else praises it as categorically good.

Price stability is an red herring.  Tell me one person who owns dollars that DOESN'T like falling prices???    Tell me one person who owns dollars who likes rising prices??   There is no reference point for price stability and to state the 'end' justifies the 'means' of transferring wealth gained by increased efficiency and thus lower prices from the people who hold dollars to the Fed is letting the Fed steal the entire productive capacity of mankind.   If you look at it in very simple terms...

   Suppose you have $100 dollars and  100 chairs and the market price of chairs is $1 each.   Someone invents a more efficient process of using the same resources to produce 110 chairs.   The result is prices fall, there are now 110 chairs chasing $100 and thus to clear the market chairs would have to sell for $90.  To "solve" this horrible outcome for people who like to sit down, the Fed decides to print up $10 from nothing and use it to buy 10 chairs.  The price remains $1 per chair, but now the fed has 10 free chairs and everyone else in the economy gets NOTHING for SOMETHING.... errr... they get price stability at the cost of transferring 10 chairs to the Fed.       Note that the economics in this example are oversimplified but it illustrates the point that someone who can get something for nothing means someone else is getting nothing for something.   Price stability is a means of masking monetary inflation with natural deflation.

Quote
at some point in history, someone thought the benefits outweighed the costs.

Yes the benefits to the power elite of the current system are huge.  They can buy the entire increase in production of mankind for NOTHING while maintaining 0% inflation and then rationalize the need to steel a small portion of everyones savings by low inflation... just to further suggest that deflation is bad.   

When comparing a government to a company the accounting looks nearly identical and it becomes clear that money is the stock of the government.   Imagine APPL telling shareholders that their goal was PRICE STABILITY of the stock and to achieve price stability they would issue new shares to their executives and friends as necessary.  Shareholders would revolt!   For the sake of this argument lets assume that APPL was an *employee owned company*... everyone is working for this stock and yet the harder the employees work the more stock the CEO gets so that his employees can have 'price stability' in their shares.  Sure the CEO will recognize that employees will demand a raise, so he will issue more shares to pay the employees a steady 3% pay raise but this pay raise comes at the cost of price stability, so the CEO starts promoting 3% price inflation as a good thing and hopes no one notices that the real price inflation is 10% because he couldn't resist burning up company profits in target practice and giveaways.

I agree with one point:  once you understand how the system works you can make money in any system.   But just because you can make money in any system doesn't mean that the average person can make money in any system and it doesn't mean that some people are not looting the economy.
« Last Edit: March 01, 2014, 08:52:08 pm by bytemaster »
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Offline biophil

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In my opinion the entire concept of insider trading is ridiculous and based upon envy-based motives.  Anyone buying something they do not understand fully is gambling and not investing.   There is no *objective* line on what constitutes 'insider' vs 'outsider' and the reality is that every market participant has different insider information and by trading on their information they send price signals to everyone else in the market.    Suppose a competitor discovered a flaw in our system and thus took an opportunity to sell all of their position prior to publishing the flaw, isn't that *INSIDER* trading?   

I try to take an agnostic view on these kinds of things. I'm highly suspicious of anyone who denounces something as categorically bad if someone else praises it as categorically good. Is one side in the debate ever completely wrong?

Unless you believe in some sort of financial-liberal-amoral-elite-conspiracy against the honest people of the world (mind you, I'm not saying that bytemaster doesn't believe in this  ;)), the modern political-financial system arose for actual reasons. At least some of those reasons were actually good.

What the Fed gives us
Take the concept of an elastic money supply. One of the reasons the modern world runs on an elastic money supply rather than on a fixed money supply (such as a rigid gold standard) is that it is a powerful tool for the government to enforce a stable purchasing power for a currency. Stable purchasing power is a good thing for a currency to have! It provides a real economic benefit if people can expect things to cost the same next month as they do now.

What the Fed takes away
Unfortunately, the only way that an elastic money supply can achieve the goal of purchasing power stability is to run a continuous, low level of inflation. Continuous inflation provides short-term purchasing power stability at the expense of long-term savings stability (there are other costs as well, such as the marriage of banking power with military power - this is not meant to be an exhaustive analysis of our modern situation).

Why I'm agnostic
The moral of the story is that you can't get something for nothing. Bytemaster and Friedman and company claim that the benefits of purchasing power stability aren't worth the price; but the fact remains that the modern economic system didn't come out of nowhere: at some point in history, someone thought the benefits outweighed the costs. Why would I subscribe to one or the other? I am smart enough to prosper in a world that's designed by either side of the argument, so on a personal level I don't really care which system we use. Having said that, I support Invictus and the goals of BitShares XT because they look like we may have finally reached a moment in history when technology will allow us to build a fair, deterministic financial system. And that makes the engineer/economist in me smile.

Ok, I think this thread has been sufficiently hijacked... I'll shut up now.
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Offline toast

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inb4 darkbane is a prosecutor baiting politically charged posts from i3
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Offline bytemaster

Remember guys and gals, this is not an investment opportunity any more than giving to your local church is investing in treasures in heaven.  Darkbane is simultaneously calling for us to avoid using terms that may be confusing and invite legal scrutiny and then asking us to ACT like this is an investment with so-called insider trading.

In my opinion the entire concept of insider trading is ridiculous and based upon envy-based motives.  Anyone buying something they do not understand fully is gambling and not investing.   There is no *objective* line on what constitutes 'insider' vs 'outsider' and the reality is that every market participant has different insider information and by trading on their information they send price signals to everyone else in the market.    Suppose a competitor discovered a flaw in our system and thus took an opportunity to sell all of their position prior to publishing the flaw, isn't that *INSIDER* trading?   

Suppose someone overhears us discussing our plans at a diner and makes buying decisions on that information... are they INSIDERS? 

http://mises.org/daily/5289

In general, speculators perform a useful social service when they are profitable. By buying low and selling high (or by short-selling high and covering low), stock speculators actually speed up price adjustments and make stock prices less volatile than they otherwise would be.

In this context, we can see the absurdity of the general view of "insider trading." There is a whole literature on the economic analysis of the subject, and economist Alex Padilla's 2003 dissertation defended the practice from a specifically Austrian angle. In a nutshell, insider trading is beneficial because it moves market prices closer to where they ought to be. Those profiting from "inside knowledge" actually share that knowledge with the rest of the world through their buying and selling.

Insider Trading: Who Is the Victim?

Above, we acknowledged the fact that obtaining information in illegal ways obviously had actual victims. But the mystique behind "insider trading" suggests that somehow if a person financially profits from special knowledge, that he or she is bilking the general public.

In general, this analysis doesn't hold up, as Murray Rothbard has pointed out. For example, suppose a Wall Street trader is at the bar and overhears an executive on his cell phone discussing some good news for the Acme Corporation. The trader then rushes to buy 1,000 shares of the stock, which is currently selling for $10. When the news becomes public, the stock jumps to $15, and the trader closes out his position for a handsome gain of $5,000. Who is the supposed victim in all of this? From whom was this $5,000 profit taken?

Quote
"In a free society, there would be no such thing as laws against so-called insider trading."
The $5,000 wasn't taken from the people who sold the shares to the trader. They were trying to sell anyway, and would have sold it to somebody else had the trader not entered the market. In fact, by snatching the 1,000 shares at the current price of $10, the trader's demand may have held the price higher than it otherwise would have been. In other words, had the trader not entered the market, the people trying to sell 1,000 shares may have had to settle for, say, $9.75 per share rather than the $10.00 they actually received. So we see that the people dumping their stock either were not hurt or actually benefited from the action of the trader.

The people who held the stock beforehand, and retained it throughout the trader's speculative activities, were not directly affected either. Once the news became public, the stock went to its new level. Their wealth wasn't influenced by the inside trader.

In fact, the only people who demonstrably lost out were those who were trying to buy shares of the stock just when the trader did so, before the news became public. By entering the market and acquiring 1,000 shares (temporarily), the trader either reduced the number of Acme shares other potential buyers acquired, or he forced them to pay a higher price than they otherwise would have. When the news then hit and the share prices jumped, this meant that this select group (who also acquired new shares of Acme in the short interval in question) made less total profit than they otherwise would have.

Once we cast things in this light, it's not so obvious that our trader has committed a horrible deed. He didn't bilk "the public"; he merely used his superior knowledge to wrest some of the potential gains that otherwise would have accrued as dumb luck to a small group of other investors.

To repeat, stock-market speculation is not a zero-sum activity. Even though we can look at any particular transaction and tally up the "winners" and "losers," the presence of speculators enhances the overall functioning of the stock market. For example, the market for any particular security is more liquid when there are rich speculators who will quickly pounce on a perceived mistake in pricing. If an institutional investor (such as a firm managing pensions) suddenly has a cash crunch and needs to dump its holdings, speculators will swoop in and put a floor under the fire-sale price. This is good for the beleaguered pension fund, and for the stock market in general.

Laws against Insider Trading Give the Government Arbitrary Power

Crackdowns on insider trading are harmful because they chill the cultivation of superior knowledge and speculative correction of market prices. Beyond this loss of general economic efficiency, insider-trading laws are insidious because of the arbitrary power they give to government officials.

In the specific case of Rajaratnam, prosecutors for the first time relied extensively on wiretaps to prove their allegations of insider trading. Legal experts predict that the government will expand its eavesdropping on the financial community in light of this courtroom "success."


More generally, Murray Rothbard argued that every firm on Wall Street is technically engaging in "insider trading." If they literally relied only on information that was available to the public, how could they make any money? Thus, the government has the statutory authority to harass or even shut down anybody in the financial sector who doesn't play ball. In Making Economic Sense, Rothbard declared,


Quote
There is another critical aspect to the current Reign of Terror over Wall Street. Freedom of speech, and the right of privacy, particularly cherished possessions of man, have disappeared. Wall Streeters are literally afraid to talk to one another, because muttering over a martini that "Hey, Jim, it looks like XYZ will merge," or even, "Arbus is coming out soon with a hot new product," might well mean indictment, heavy fines, and jail terms. And where are the intrepid guardians of the First Amendment in all this?
But of course, it is literally impossible to stamp out insider trading, or Wall Streeters talking to another, just as even the Soviet Union, with all its awesome powers of enforcement, has been unable to stamp out dissent or "black (free) market" currency trading. But what the outlawry of insider trading (or of "currency smuggling," the latest investment banker offense to be indicted) does is to give the federal government a hunting license to go after any person or firm who may be out of power in the financial-political struggles among our power elites. (Just as outlawing food would give a hunting license to get after people out of power who are caught eating.) It is surely no accident that the indictments have been centered in groups of investment bankers who are now out of power.

« Last Edit: March 01, 2014, 07:45:54 pm by bytemaster »
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