Central NE | dpilot83 - 11/3/2012 16:55 As a buyer, I am not loaning the seller any money that I'm aware of. I am providing my broker with commissions and giving them the opportunity to do unscrupulous things with my margin money but there are ways to protect against that.
You hand over your currency to your broker. They hand most of it over to the clearing firm. The clearing firm lends your money to the Treasury or other similar approved destinations.
So if the currency lent to the Treasury isn't a loan, what is it? And where did the currency come from that funded the T-bills?
Do you think just because you receive a paper statement from your broker with numbers printed on it that they are actually holding money? That is just a digital marker of sorts to keep track of how much of your money they are using. (which is another issue all by itself)
It is long gone and lent three times over.
The only reason you don't think they're borrowing from you is because they call it something else instead of a loan and they pay you no interest!
At least you aren't loaning full value of the bet like you do with ETFs. and if you do put up full value and take delivery in a comex vault, MF Global should teach you that the commodity isn't yours even after you pay full face value for it and have a warehouse receipt- it belongs to the firms that rehypothicated it.
Edited by Hayinhere 11/4/2012 01:54
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Silver drop
