Chaos erupted on Wall Street this week as members of a stock trading group on Reddit collectively bought stock in GameStop and AMC, among others, unexpectedly and exponentially raising stock prices.
Robert Hockett is professor of law at Cornell University and an expert in financial and monetary law and economics.
“Boomers are betting on Wall Street that GameStop's price drops, Millennials are betting it rises, and both are borrowing in hopes of making it rise or fall. It is in essence a multi-million dollar poker game.
“The macro point is that there is this much money available for nonsense betting, meaning that there is a lot of money not flowing productively (for vaccines, syringes, masks, windmills, batteries, EVs, etc.).
“This is a good test for the Volcker Rule - whether it's keeping this wasteful gambling decoupled from the productive lending sector and hence the real economy.
“It is also a good test for the post-2008 'naked short-selling' regime - whether losses will remain confined to the gamblers.”