The long and short of it

 

Understanding a Long Position vs. a Short Position Long Position If an investor has long positions, it means that the investor has bought and owns those shares of stocks. By contrast, if the investor has short positions, it means that the investor owes those stocks to someone, but does not actually own them yet.

From investopedia. 


The issue is that commercial currency traders are charged with balancing risk. When commercial traders have a split in their long to short ratio, that means their clients have the opposite split. The split represents uncertainty in dollar outcomes has increased. The increased risk implies a longer term bet that the commercials dealers have to make. They are stuck with matching the distribution of risk among portfolio categories. Risk is now measured over a larger set of 'coin tosses'.

Why the increased risk?

Because the covid problem is taking longer than usual and the Fed taxes are likely to increase. The Fed tax per deposit can go as high as 2%, that is a large amount for retail banking.

In the sandbox:

The sandbox currency bankers are automated S&L trading pits with bounded marker risk.  So all the dollar futures get settled in about 3 minutes by adjusting one's S/L ratio.  In fact, all the futures, for even stock market equities, can be handled in the automated S&L pit.  Their is no need for an equity market, corporations with standard NASB accounting can just utilize the S/L.  The automated currency banker  exactly matches moments between cash in advance and deposits in advance, so risk is always balanced to within on known standard deviation.  

The shadow bankers are slowly moving to automated S/L.  Most portfolio managers have a moment matching function for portfolios.  The disutility of the futures market is all about the distortion of central bank money, the numerator is fouled.