@jimmysong I'm confused by this in your latest newsletter. I'm not a trader and haven't followed the Gamestop thing closely, but isn't it possible to innocently lend more than 100%? E.g., Alice owns $FOO, lends $FOO to Bob, who sells it to Carol, who lends it to Dan, who sells it to Edith, etc.
@harding With bearer instruments your analysis would be correct. When it's centralized, there are a lot of shenanigans that can take place like this: https://www.euromoney.com/article/b1320xkhl0443w/naked-shorting-the-curious-incident-of-the-shares-that-didnt-exist
They're really fractional reserve lending shares they have custody of, which isn't too far off from what used to happen with gold.
@harding thank you. I'll correct this on the website now.
@harding @jimmysong What I understood was that in this case it was a single hedge fund that borrowed 140% of floated GameStop shares.
I don't think one can argue that they weren't aware of the total float.
So they just knew that the would at some point have to buy back 1.4 x the total float to pay them back to their owner.
The social network of the future: No ads, no corporate surveillance, ethical design, and decentralization! Own your data with Mastodon!