24 Feb 2021

Murphy Twin Spin

Bob Murphy Show 1 Comment

BMS ep 182 is my idea for children’s rights in a free society.

I have a new article at mises.org on short selling.

One Response to “Murphy Twin Spin”

  1. Tel says:

    I generally go along with the gist of your Gamestop article.

    The implication is that loaning the share also would imply loaning the voting rights that go with the share. It’s kind of interesting that in Australia they have the CHESS system on the ASX where you can see exactly what shares you hold, and then you have separate share registry to identify voting rights and dividend payments.

    Many people are out there contemplating the idea of a share registry based on “blockchain” technology which ensures that at any time precisely 100% of the shares are owned by somebody, and it would allow any individual shareholder to identify that they do indeed own the share. That doesn’t stop them lending it out, but it avoids the ambiguity when a broker tells you they sold you shares but then nothing gets delivered. I think that’s all achievable by today’s technology. The ASX is in the process of replacing CHESS with a decentralized system, but the details are still a bit sketchy. I think they might have found it a bit more difficult to put together than they expected.

    Go one step further and consider the idea of a trading system built around a “blockchain” technology … this would be genuinely new. Point being that you must have at least two different commodities and some kind of price between them. That allows you to create bids and offers and then process traditional transactions with money going one way and goods going the opposite direction. None of the current cryptos achieve this, although perhaps there are ways to build contracts somehow that have the same effect.

    Something else I noticed: the basic “proof of work” mechanism operates as a blocker to prevent High Speed Trading, or at least higher than the mean rate of a successful mining operation. In principle, these events should follow an exponential distribution, therefore memory-less and destroying all high frequency information.


    I couldn’t help searching and yes it turns out that at least one person went and empirically checked the theory and it’s not a bad fit … although it deviates for unusually short cycles, probably due to network latency, which tends to be roughly a Gaussian distribution but only small compared with the mining effort. For those people who see HFT as a problem, anything employing the “proof of work” mechanism automatically limits that.

Leave a Reply