As Civil War History Memestocks Explains

Stock prices plummeted and the biggest zealots moved from r/WallStreetBets to a new subreddit, r/Superstonk, and began posting many thousands of word essays they dubbed “dds,” short for “due diligences,” to explain what had happened happened.

These were supposedly research reports, perhaps modeled on the publications of professional financial analysts. They made the unsubstantiated claim that securities regulators, brokerage houses and those responsible for the day-to-day operations of the market had conspired and agreed to create fake shares of the stocks, which they secretly gave to hedge funds preparing to short the again.

To resist this perceived scheme, Redditors pledged to buy as many more shares of GameStop and AMC as possible to bring about the “mother of all short squeezes,” or MOASS for short, if short sellers were forced to pay whatever the price the Redditors were charging – maybe even $1 million a share – to cover their bets.

Reality check: There is no such thing as a grand conspiracy, there are no fake stocks; there will be no MOASS. The January 2021 short squeeze caused crashes in stock markets, the most dramatic of which occurred in the brokerage houses, which eventually stopped trading in those stocks, not out of moral authority but because they would run out of money to cover failed trades.

But the Redditors have achieved something real. Like Jay Cooke, who pointed out how difficult it was for most people to gain access to investment products in 1861, the Reddit crowd highlighted structural problems in the stock market and urged regulators to try to fix them. The Securities and Exchange Commission has since proposed several changes to exchange operations that would make them more visible, easier to understand, and faster.

Wall Street has long boasted that its great-great-grandfather firms saved the Union during the darkest part of the Civil War by generously lending money to the Lincoln government. This claim, repeated by financial titans to imply that their work is morally good and descended from anti-slavery, is now getting a facelift.

In Bonds of War, Mr. Thomson describes how elite financiers in New York, Boston, and Philadelphia, after arranging an initial $50 million loan in early 1861, essentially told Lincoln’s Treasury Secretary, an Ohioan named Salmon P. Chase that they wished him luck. They felt it was too risky to continue buying US debt, given that pre-war states had routinely defaulted on their debts. As Civil War History Memestocks Explains

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