Source
r/Superstonk•
monestates

I constantly the same question when I try to explain my position to friends and family, that I cannot answer after some digging. Does anyone know?

Question ❓

I'll keep this short:

Q: "What happens when HF's need to be liquidated and there is no more money to buy loaned stock?"

I cannot find what a realistic "upper cap" is. I know the DTCC has to step in but I have no idea to what extend or what comes "after that". Like what happens if the shorts run out of money, because they spent it all on FUD and short attacks.

I have done some Googling, but I think a language barrier or gap in knowledge is keeping me from really finding an answer.

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Edit: I noticed that there are a lot of people telling me this has been discussed in DD, which I have read, but maybe not fully comprehended. For other people trying to know (in the most BRRRRR scenario):

  1. HF's get liquidated. (then brokers, clearing houses)
  2. DTCC gets the bill.
  3. Money gets printed until shorts are covered. Which is both cool and terrifying to me.

That last part was something that a lot of people think is common knowledge or something, but I for one did not make the connection. Maybe because I am not a US citizen or have too little knowledge.

Thank you everyone for the answers, maybe this question could be added to FAQ if it gets asked so many times.

Posted May 31, 2021, 11:26 AM UTC · edited

052
randalljhen🎮 Power to the Players 🛑•

HFs pay. Then the brokers pay. Then the clearinghouse pays. Then the DTCC pays. Then the federal money printer goes BRRRRRRRRRR.

41
SmoothBrownguy🦧 Smoothest Ape 🦧•

This is the correct answer. You pass!

12
monestatesOP•

So there is a chance we will just literally be printing money for ourselves? That sounds both cool and scary!

-2†
randalljhen🎮 Power to the Players 🛑•

This is the consequence of allowing infinite losses (failed shorting) in a zero-sum system.

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CaptainLisaSu🦍Voted✅•

The govt has been printing money for ages. Did that scare you before gme?

2
monestatesOP•

yes

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CaptainLisaSu🦍Voted✅•

Good.

Now imagine that the govt starts printing FOR YOU and not to FUCK YOU.

You still live in a fucked up system but now you hodl the cards.

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[deleted]•

[removed]

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Fifaglu🦍 Buckle Up 🚀•

Guys instead of accusing OP of spreading FUD endulge him in the obvious answer that has been provided below by u/randalljhen . Not everybody has the time to sit through all the DD and catch everything. This is a legit question that since way back has been weaponised to spread FUD, "it will never go that high becuase there isn't that much money" or "I'm not gonna get payed because they will be bankrupt" etc etc.

If you consider it FUD, fine, best approach though is to counter it with the truth.

Apes help apes, a lot of people might have the same question and coming to posts and not beeing provided an answer and only accusations of spreading FUD is not the way.

Also, if you're gonna act like an asshole for somebody not knowing something or calling them "too lazy" to look it up then you should just shut up and not get involved in the first place, sit your petty ass in the cargo hold of the rocket and shut the eff up.

10
monestatesOP•

Thanks, I really appreciate it!

There have been many helpful comments, but I also noticed that there are a lot of people noting that this is a very recurrent question. Maybe it can be added to the FAQ's on the wiki? I don't know how someone would do that on reddit though.

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Fifaglu🦍 Buckle Up 🚀•

Yeah I didn’t even know there was a FAQ but definitely a question that is well suited there.

2
monestatesOP•

I have sent a message to the mods :)

2
Rangeninc⚔️ Took a Shill to the Knee 🛡 Power to the Players 🕹•

Honestly the best thing for us to do is answer the question and downvote the post. This way OP gets the answer and the front page isn’t clogged with stuff most people know. Karma is just a number.

3
monestatesOP•

I don't care about karma, but if the post sort of disappears there might be a lot more posts asking the same questions. I have sent the mods a message to add the q+a to the FAQ though.

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velvetstigma🦍 Buckle Up 🚀•

So they need to liquidate every single position they have in the market. Which is why the market will crash

8
monestatesOP•

I see, I have a friend who has no savings account at a bank, but instead invests his savings in SP500. It would probably be better for him to get his money out of there, correct? [I won't refer to your answer as financial advice]

2
velvetstigma🦍 Buckle Up 🚀•

If you believe the crash will happen that is. Nobody can predict when moass will actually happen. It is usually not a good idea trying to time the market. With that said I have personally reduced my position in other stocks.

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[deleted]•

[deleted]

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mackam1🎮 Power to the Players 🛑•

There's good DD about this. The DTCC get liquidated and then the Fed prints money to cover. I've seen values around 90 trillion before things get REALLY bad

5
monestatesOP•

Do you have a link to anything? I can't seem to find it. Thank you for your reply!

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mackam1🎮 Power to the Players 🛑•

https://www.reddit.com/r/Superstonk/comments/nletnn/gme_the_mother_of_all_short_squeezes_moass_thesis if you look right at the end it's mentioned here that the dtcc pick up the bill. I can't find the one I was looking for sorry. Have a good search

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monestatesOP•

Ah right, I did know that, but didn't know whether that would put an upper limit to the amount that could be paid for GME shorts. But from every comment in this thread, I think the result is dollars will be printed until the squeeze is over. Thanks!

2
Ok-Big8084🦍 Buckle Up 🚀•

In theory there would be the insurances taking over the bag and if they spent all their money, probably the FED goes on printing money. I said "in theory", since these events are unprecedented, we'll need to be patient and carry on.

Buy and HODL!

3
monestatesOP•

I see, so there is nu upper cap to the price for one share of GME?

1
Ok-Big8084🦍 Buckle Up 🚀•

Yes, that is exactly the basis of the MOASS hypothesis and the various DDs always come to the same conclusion. If enough shares are diamond handed until a reasonable price has reached in order to persuade the majority of apes (whatever they see fit 10k, 100k, 1M, you name it) this price will show up next to the ticker. The hypothesis' most important premise is that the short hedge funds aka Citadel has shorted our stonk to oblivion and the frenzy buying of the apes during the last months has ensured that we apes might easily own the float multiple times. This will make our shrewdness the most powerful whale so that even if institutional sell out will occur, the shorts will still not be able to buy enough shares to buy back the ones they shorted. This, in theory, will end up in an infinity squeeze where price will increase to infinity due to massive demand facing zero supply.

That's basically the essence of the whole mother of all short squeeze theory.

Of course, markets don't exist in a vacuum and the shrewdness still doesn't have a hive mind, infinity will not be reached but the price at peak will still get to ridiculous numbers...

HODL tight and remain patient and strapped in with your helmet sealed! We might soon be ready for lift off!

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monestatesOP•

Thank you for your answer!

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[deleted]•

[deleted]

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monestatesOP•

Ah, I didn't know it was a question that was regularly posted. Thanks for commenting anyway! :)

2
whyiseveryonelooking🎮 Power to the Players 🛑•

https://www.reddit.com/r/wallstreetbets/comments/m79wdx/why_the_gme_moass_mother_of_all_short_squeezes_is/?utm_medium=android_app&utm_source=share This was a great post that deserves more attention.

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monestatesOP•

Thanks, I have not read that one yet.

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dit-k🎮 Power to the Players 🛑•

typical FUD question...

-2†
class-action-now🦍Voted✅•

Could be FUD but my first reaction was not that. Seems genuine

7
monestatesOP•

Can you telly me why this is FUD? I try to explain my position to people I know for their own good, but my lack of knowledge really undermines the trust they have in my arguments. (Or the trust I have in my own arguments for that matter...)

It is something that keeps me awake at night, and I'm trying to find some answers.

1
class-action-now🦍Voted✅•

It’s not FUD bro. Keep preaching. Or don’t. We are gonna takeoff it’s not your job to bring anyone with you that doesn’t trust in your knowledge. I have tried with my people and a couple are on board the rocket. The others I will have a grand time displaying how I told them so(no need to rub it in with words they will see your lifestyle change). Fuck em

4
Sentence-Confident🦍Voted✅•

This is covered in the DD , perhaps it isn’t FUD but it is fucking lazy.

but since you’re lazy and can’t be bothered to do your own research , the debt chain goes from the DTCC to the FED. There’s is no upper cap , they pay us or print money to pay us until they cover.

1†
monestatesOP•

I have read DD to the extent that I can understand it. (which is not much)

This is covered in the DD

Cool, can you show me which one or what specific sequences of words I am looking for? Because I would like to read it but could not find anything that I could recognize as an answer to my question.

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Sentence-Confident🦍Voted✅•

Sorry I’m not spending time helping a lazy person be more lazy.

Do your homework.

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