LogFAQs > #964289856

There's a difference between a liquidity trap and a situation where shorts are mathematically cornered (the only way to cover is to buy from a shareholder who refuses to sell). I think these long chains of synthetics exist in lots of things all the time, and they rarely ever blow up. Exploiting these things is how market makers make money.

It's difficult for these liquidity traps to blow up because market makers can supply virtually unlimited liquidity. As long as it really is a liquidity issue. It's like expecting to profit from a liquidity trap in the broader economy by shorting while the Fed is in charge. As long as it really is just a liquidity trap, the Fed can provide unlimited liquidity to get rid of the problem.

I know you want to call that rigged, but it's really not that rigged, or perhaps it's better to say it's not rigged in a stupid way. Because there are problems unlimited liquidity based on unlimited leverage cannot solve.