I understand the idea that there is a massive short on GME, and that it will (eventually) cause an even-more-massive 'short squeeze', sending prices 'to the moon'.
What I don't understand is how that translates into an actual financial benefit to (real) shareholders - because of two 'holes' that I see (as an amateur).
The 'near infinite' nature of the debt seems to allow for two scenarios that may be 'the first of their kind'.
First - What's to stop the 'big guys' from simply 'erasing' the transactions that say they have a short position? If they 'own' the markets, can't they (in a big enough emergency) simply scrub the books? (Of course I know this would be 'illegal', but what's to stop it from happening?)
Second - If the loss to any one entity is large enough, what's to stop them from simply declaring bankruptcy (or some similar 'out')? How would you 'recover funds' from an entity that is no longer in operation (and/or doesn't have the 'infinite assets' that would be required to cover the new 'to the moon' price)?
I'm an amateur too. Here's my take...
First question -- nothing, but how will the difference between what the brokers keep in records vs. the DTCC be reconciled? It will just prove the DTCC is not doing their job which will give Gamestop legal reason to remove their shares from the DTCC. If the brokers also fudge their books, then they would also be willfully doing something illegal against their customers.
Second question -- I believer the lenders of last resort goes something like hedge funds, underwriting banks, DTCC, then the Fed. Might not be totally accurate, but the concept is that at the end of the day, the Fed will be on the hook once everything fails.
My hope for the ultimate end game is decentralized finance and the end of the federal reserve (and hopefully, central banks globally) and maybe replaced by a rules based currency that keeps the purchasing power of 1 unit stable with no inflation and no deflation.
Of course, moon-tickets will be nice to have and I still expect them!
If the Fed is on the hook, could that be why they printed so much money out of thin air recently? Do they know it’s inevitable?
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MENE, MENE, TEKEL, UPHARSIN
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The Fed is a major asset/liability of the privately owned "western/central banking system".
The BRICS system is marginalising them and will ultimately destroy them.
They know this and are acting accordingly.