Never underestimate the Internet:

Never underestimate the Internet.

The world will soon learn how powerful the Internet really is.

This movement is global. Millions of people bought into the same idea of a better life for themselves and everyone involved. It’s inspiring. 

Power to the people.

The ultimate democratization of information.

For too long, big corporations and governments lived by different rules. They assumed people at the bottom couldn’t understand what happens in the financial markets. They want to ‘protect retail investors’ because they think it’s too complicated for people to understand.

Well guess what? The Internet has millions of people all watching the same thing. When a small percentage of them start to do research, people uncover a lot of dirt. 

They uncover a lot of things that don’t make sense. How can you create fake shares out of thin air? It’s basically creating free money. How is that different from people who try counterfeiting money who get put in prison for 20 years? Please explain it to me, because I don’t understand.

Because market makers and hedge funds make so much money from this charade, they use the money they make to ‘donate to politicians.’ This is a legal bribe. Let’s call it what it is. It’s essentially like ‘hey buddy, if you want to campaign and get elected, you have to play by my rules.’ Money wins in America.

When this happened in 2008, the banks got bailed out and the regulation that got put in place got repealed. Ken Griffin is quoted in Bloomberg interviews saying banking deregulation is amazing because Wall Street can police itself.

Ha.

Ha. Ha. Ha.

Police itself?

How?

When the system is set up such that you can CREATE FAKE SHARES out of thin air, you are artificially increasing supply. That’s illegal. Yet they’ve been doing this for years. Jim Cramer discusses all the tactics hedge funds use to crash the price of stocks in an interview from the mid 2000s. One of the tactics used is hedge funds create fake stories in the media to get people to believe a company is performing terribly. Because they crash the stock price using fake shares, it makes people think that the stock is performing lower than possible. Most people don’t know what they’re buying so when they see red for a long time, they sell. This is how hedge funds short hundreds of companies into bankruptcy.

You know what’s great for them about the whole charade?

They don’t pay any capital gains tax. They’re not taxed on the money they made by destroying a company.

Wait, what?

Yup.

Shorting companies into bankruptcy means you don’t pay any tax on your gains.

I want to be clear. Shorting should exist in markets because it uncovers a lot of fraud and BS that goes on behind the scenes at companies. We know that. How did Enron get discovered (Side post: Citadel is basically doing the same thing – wrote it here)? It’s healthy for markets to have shorting.

But shorting companies with shares that don’t exist? That’s wrong and illegal.

So what did retail and Reddit do in the last few months? 

They followed the money trail. Shout out to _atobitt on Reddit, a true hero in my mind. This guy’s due diligence on the financials of Citadel is nothing short of spectacular. This is the type of investigative journalism that no one in the media did. Yet he uncovered years of fraud.

Him, along with many others, started asking questions and looking for answers. 

Is it legal for a single company, Citadel, to cover 47%, almost half of all retail volume? Is it legal for them to get a majority of the retail trades through Robinhood and other brokers, so that they can go against what retail is buying? Is it legal they can pay brokers to see what retail volume is going through their platform? Is it legal that Citadel and other hedge funds own multiple shell companies? Is it legal that Ken Griffin donated 66 million dollars to the Republican party in the last election? Is it legal they’re so over-leveraged because of what the banks gave out?

Yes. All of it. The system is designed by the people at the top and they will do everything they can to maintain that system which has benefitted them so much.

But, is it legal Citadel is shorting the Treasury bond market and trading treasuries between themselves? Is it legal Citadel and other market makers are allowed to create fake shares that don’t exist?

No.

How does that make sense? How are they not being punished for the fraud they’ve been committing for years?

Because Wall Street doesn’t regulate itself.

They’re in the business of making money. They will take every advantage they can get, even if it means stealing from you.

***

All of that’s flipped now. You know who has the power?

Retail.

Hedge funds got lazy.

They thought people wouldn’t catch on to what they were doing.

Once Michael Burry and Keith Gill, aka DFV, figured it out, they exposed a loophole.

Gamestop short squeezed for a few days and then got stopped because Robinhood and other brokers didn’t have enough capital to pay. But it’s much more than that. Citadel and others were the ones who put those short positions on and had the most to lose from Gamestop mooning. So what did they do after Gamestop fell? They continued shorting those companies. Retail saw and kept buying on every single dip. Now they own so many more shares than exist. Once the annual meetings happen at AMC and Gamestop, the world will see how many fake shares these hedge funds and market makers created.

Guess what? Market makers like Citadel have to buy back all those fake shares.

Because Citadel is so powerful today, if they fall, the whole market falls.

They created this situation by committing fraud.

They got caught 58 TIMES by FINRA for violating the law. 58. Because each fine is only a few million dollars, which they make every day, it’s peanuts.

It’s the cost of doing business.

Until those rules get changed where the people who commit the fraud are the ultimate ones who pay the price by being criminally prosecuted and spending their lives in prison, we have a problem.

Because this will happen again.

It happened in 2001. It happened in 2008. It’s happening now.

Hedge funds were committing fraud and banks were too over-leveraged because of the massive amount of money printing that the US Federal Reserve has conducted since Covid.

The Internet found out and flipped the whole financial world upside down.

Never underestimate the Internet.