Ep. 178 Tom Woods and Bob Murphy Discuss the GameStop Shorting Controversy
Tom Woods invites Bob onto his podcast to discuss the coordinated actions of retail traders to implement a short squeeze on hedge funds, in the process causing GameStop stock to increase some 1,500%. Tom and Bob explain the basic economics involved and the political implications.
Mentioned in the Episode and Other Links of Interest:
- The Tom Woods Show.
- A Bloomberg article and an ARSTechnica article giving good summaries of the timeline.
- Bob’s article on “The Social Function of Stock Speculators,” and a 2008 article criticizing the government’s forbidding of short-selling financial stocks.
- Chris Cillizza’s CNN article blaming GameStop controversy on Trumpism.
- Help support the Bob Murphy Show.
The audio production for this episode was provided by Podsworth Media.
About the author, Robert
Christian and economist, Chief Economist at infineo, and Senior Fellow with the Mises Institute.
Loved it. I would have been curious to hear you talk about collateral requirements and also any possible link to monetary policy (was hinted as increasing appetite for risk in a recent mises.org article but not in much details).
A bunch of “New Users” on Wallstreetbets are now pretending that WSB is going to all short SLV (silver). It is defintely a scam. The Hedge funds short GME are long silver. The news saying that WSB wants to short squeeze silver is pure fantasy.
“there were more shares shorted than total shares”
Maybe it’s like a state getting back more mail in ballots than it mailed out.
Would’ve been interested in hearing what makes a “gamma squeeze” over just a regular short squeeze. I read the description but I didn’t get it.
Thanks for the episode, Bob. I especially appreciated the explanation of how they could be short more stocks than were in existence. My question is this – how is this different than fractional reserve banking? Especially since I think a lot of short contracts means that the original owner can call the debt at any time. You seem to have no problem with multiple claimants for the same stock on a callable loan, but take issue with multiple claimants for the same dollar on a callable loan. Is there a difference I’m missing?
The one aspect I wish was discussed or at least verified is that short sales have a specific timeframe…that is, a date certain that the contract, the return of borrowed shares, has to be fulfilled by. It’s not like the institutional investors could wait five years to buy back the shares they shorted…but many were likely due 1/31/21, right? and those deadlines – are they public? so people would know that X million shares have to bought to fulfill the short sales by 1/31/21? That info would be helpful to know.