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As I understand it, there is no direct correlation to shares short and shares in actual existence.

That is, no one 'borrows' or 'owns' the actual shares you sell short - there isn't a one-to-one accounting.

There is a correlation between shares short and shares in actual existence. Shares do have to be "borrowed". The subset of shares that can be borrowed is known as the float. Stated another way, the float is the portion of shares available for shorting. When you read about a high short float it means almost all the shares available to be shorted have been shorted.

The exception to all this is naked short selling, but as Wikipedia tells us, "In the United States, naked short selling is covered by various SEC regulations which prohibit the practice."
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