DXRedux

In any financial system of promise, it is a given that speculators from snake-oil salesmen to profiteers will find their way into it ...

Thus, it is a responsibility of the system to account for limiting the effect of those entities on its operations, for its own sake and that of its participants.

It seems that's what the DXinOne system is doing right now, and for good reason. This tenet is a huge consideration for any entity of substantial means who may be evaluating the DXiO system as a viable placement of financial resources on either a mercantile or equity-participation basis.

As an analogy for why this is so important, let's look at New York's stock market crash of 1929.

A slowing economy at the time did indeed converge with margin-buying formats that were thinly supported by actual liquidity. However, the market was performing in an acceptable manner. In fact, except for those five fateful days of panic selling in Sep 1929, the market continued to perform in an acceptable manner.

It is now widely held that the underlying cause of the crash was an overly restrictive monetary policy by the Federal Reserve. That summer, they tightened their gold outflow (the dollar was still gold-backed in those days) in conjunction with raising the discount rate. Thus, when the economy began to slow, money supply in the market became more and more limited. The Fed's pressure on the banks and brokerage houses had restricted their cash reserves, so they were forced to begin making margin calls.

Investors were caught in two vices, as their cash flow had slowed to a trickle and their portfolios were overinflated. The crash became inevitable and the losses to many were insurmountable.

That should be the real moral to the story, as regards DXiO or any other market-economy model.

This scenario was a primary reason why the USA government imposed two items of legislation that form the cornerstones of the financial world today:

1. The Securities Act of 1933, which required full disclosure regarding the asset base of publicly-traded securities; and

2. The Securities and Exchange Act of 1934, which created the governing authority (the Securities and Exchange Commission) to regulate the industry.

DXiO is self-governing, from a practical standpoint. However, it is surely taking note of unhealthy practices in a fundamentally-sound market economy model and moving in a direction that may result in more stringent regulation. It is not uncommon to see patterns of incremental additions and/or amendments in fiscal policy in these instances, so I would argue that DXiO is currently acting in a rational and predictable manner.

Speculators were not the real cause of the 1929 crash, and I would argue that those who entered the DXiO system to exploit it (ie- assumptions of high yields with little capitalization) are not the real cause of its current stagnation. The issue, I believe, is in the relatively scant regulation afforded by the system to both protect the system from exploitation and to protect the participants from themselves (eg- overcommitment of capital to risk conditions such as the timing of capital return).

I see growing indications that DXiO is moving to address this issue. I like their method to date, as I don't believe in over-regulation and it seems that they're attempting to determine a level of governance that would be effective and acceptable to both the system itself and the independent contractors involved. Clearly, the independent contractors have considerable influence in this process. Their ablity to comprehend the system, as displayed by their own corrective and disciplined actions --- or lack thereof --- will directly affect the level of governance ultimately deemed to be necessary.

When that level is attained, I believe the DXiO system will begin to move as intended and studied entities with larger amounts of capital will then begin to commit themselves to it.