Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
He doesn't see why:

(a) these obligations should necessarily be recorded TWICE per node - and therefore FOUR times per transaction if you consider that the seller and the buyer each make double entries in their accounting records which are a mirror image;

(b) these entries need be disconnected, with the resulting errors, need for audit, etc etc

Because each independent entity needs to keep its own accounts for internal purposes and double-entry accounting introduces an element of redundancy that helps catch errors.

Of course, if transactions happen through the clearinghouse of an exchange, then the transaction needs to be recorded (again TWICE) by the clearing house in its own books. What you and Todd seem to want to do is abolish clearinghouse members' in-house accounting and instead have them generate their balance sheets from the clearinghouse's database. That way you reduce the number of annotations per clearinghouse transaction from SIX to TWO.

As with your Open Capital ideas, this has value for the big fish in the capital markets, but it is useless to players who are not large enough to be members of an exchange or clearinghouse.

Todd postulates an accounting universe within which clearing "bots" or "agents" seek and net out obligations.

I postulate a Guarantee Society with a "Default Pool" of value (eg a pool of "fungible" energy units or land rental units) from which settlement will be made should a buyer default.

You postulate the abolition of in-house accounting and the centralisation of everyone's accounting into a P2P system which IMHO is patent nonsense.

Disclaimer: I am not an accountant and I don't play one on TV.

Oye, vatos, dees English sink todos mi ships, chinga sus madres, so escuche: el fleet es ahora refloated, OK? — The War Nerd

by Carrie (migeru at eurotrib dot com) on Mon Sep 24th, 2007 at 07:12:53 AM EST
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