[compiler-guy]

They borrowed the shares and held those borrowed shares briefly, and sold them. So they don't hold them any longer, but they do have a contract where they are required to buy them later.

The original owner doesn't hold the shares either, but they do have a contract for them to be returned.

As a practical matter, this effectively creates shares, just like a bank loaning money creates money.

[Atheros]

I still feel like there is a difference between Fractional Reserve Lending and this. 181 million shares are anti-owned: the traders don't want to own the thing, they want to anti-own it. Surely that has to count for something!

If a short seller decides, today, that they no longer want to involved with this stock at all and, simultaneously, by pure coincidence, the person they borrowed the share from decides that they also don't want to be involved with this stock at all so they both close their positions and settle up. The third person out on the market keeps owning the share that they never knew was borrowed at all, and everything stays exactly stable. One 'long' dropped out of the market but it had no effect on anything because the 'short' also dropped out at the same time.

That's not what happens when someone takes their money out of the bank and converts them to Benjamins: there is less money available to lend which raises the interest rate somewhat. That's an actual effect!

[pjjpo]

I think I follow this and most people probably also understand what it is that causes a bank default (i.e. everyone withdraws their money simultaneously). Still trying to dig at the mapping.

IIUC the main difference with stock is the market prices the items by demand unlike where the treasury effectively prices the items by supply and banks work under that. So the stocks are expected to always be liquid potentially at a lower price while banks have to be bailed out by the government for liquidity if a bank run. This definitely feels different, though I guess the extreme case gets closer, if every single bank needs to be bailed out at once, the currency price will go down like stocks do.

[adrr]

It can go on and on. Short seller 1 sells to party A. Party A allows short seller 2 borrow shares. Short seller 2 sells shares party c. On and on.