• The primary purpose of the stock market is for companies to raise capital by selling off ownership stake to the public. In return the buyers get back a share of profits and can vote on certain issues of company direction
• for simplicity, imagine every company as only selling out 100 shares of stock, each representing 1% ownership. A larger % of ownership represents a larger voice in controlling certain actions in the company, such as electing the CEO or making major purchases or sales or entry/exit into certain business ventures
• hedge funds (“finance assholes”) and investment banks are illegally “short selling” those shares of ownership. To short sale, you are supposed to “borrow” a share first to sell it, then buy it back within a certain time frame. They are “naked short selling”, which means no share is being removed from circulation to engage in the short sell.
• this effectively means that hedge funds can print shares out of thin air, increasing the number of shares outstanding, from 100 to 120 or more, and use those shares to take control of companies as they see fit
• once they take control of companies, by replacing leadership with loyalists or by rigging important votes, they begin using them for their own purposes, or to sell them off for spare parts

However, with GameStop

• People noticed their short selling before they were able to take control or close their positions
• People began directly registering their shares with GameStop to declare their ownership position formally, rather than “held in custody” as is the norm with the stock market. If the shares aren’t held in custody by compliant parties, they can’t be loaned out multiple times.
• the shares for those short positions don’t actually exist, and are numerous, so buying them back is going to be all but impossible for the banks/hedge funds