From: "Frank O. Trotter, III" <fotiii@crl.com>
Date: Mon, 8 Apr 1996 17:33:17 +0800
To: cypherpunks@toad.com
Subject: Re: the cost of untracability?
Message-ID: <199604080217.AA24295@mail.crl.com>
MIME-Version: 1.0
Content-Type: text/plain


> FWIW, I think that there is no capital-gains-type tax on currency 
> conversions.  In other words, if I take dollars and buy yen today, and the 
> interconvert rate changes and I convert back and make a "profit," that is 
> not considered income.  If that's the case, then ecash has an excellent 
> precedent behind it to avoid any taxes on interest, especially if that 
> interest is, in effect, paid by increasing the inherent value of the currency.
> 
> And most of the "interest" will simply be the avoided inflation loss that 
> would have otherwise occurred.  Buying ecash may be equivalent to buying an 
> absolutely non-inflating currency that the government can't manipulate.
> 
> Jim Bell
> jimbell@pacifier.com
>
There is a tax event that occurs when one converts from one currency 
to another (be it capital or current).  In your example the purchase 
of Yen and later sale may result in a gain if the Yen appreciates, or 
a loss if it drops.  This is a taxable event.

You actually refer to the method that was used in the 14th - 16th 
century in europo to pay interest when it was against church (really 
"Church") law.  Early banks would do currency or metals-to-currency 
trades with people and imply a rent or interest rate.  It was also 
the begining of the discount trade bill (I'll give you 90 cents 
today  and get your dollar in a year from the person you sold those 
chairs to).

I'll still cling to my Ecash is curency not a currency agument as 
well BTW.

Frank O. Trotter, III  -   fotiii@crl.com
www.marktwain.com  - Fax: +1 314 569-4906
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