Gamestop, Bitcoin and the Commoditization of Populist Rage

Many articles written about the GameStop story mark the event as a watershed moment in the markets and an epic tale of the establishment vs the little man. I won’t tell you these things. In fact I assert the GameStop story is relatively inconsequential. This story does however hold up a mirror to a more profound truth. A deeper story about the rage that’s boiling just beneath the surface of modern life and how a new class of people have learned to tap into and release that pressure for their own personal gain. It’s the story of how Gamestop and bitcoin are symptoms of same collective neurosis and how, through technology, nihilism and rage have been turned into a tradeable commodity.

Let’s state the uncomfortable truth. The future for many Americans is bleak and their lives are going to be nasty, brutish and short. Everyday I see a world where many in my generation have simply given up all hope for opportunity of a family, a house, a stable career and forced to confront an uncertain future in a world that is slowly boiling itself to death.

Most of the stories we tell ourselves concern how to just cope with life in the presence of escalating Malthusian struggle. And millennials are desperate for stories that give them a sense of hope for a future of prosperity and a return to the lives their parents once led. And truth be told, we don’t have those answers yet.

There’s a simple inescapable truth that is not lost on people who have studied the economics of the situation. Millennials are suffering because they are poor and many will never recover from back to back crises of 2008 and the global pandemic. The last ten years have seen a massive redistribution of wealth from this age bracket into older demographics.

It’s not surprising that when it comes to their investment strategies, that the “you only live once” philosophy and a preference for high-risk high-return investments is preferred. What has this generation got to lose?

And so we see Gamestop story fall out of that. In a nutshell a bunch of retail investors (possibly with help from institutional insiders) decided to pump a small cap stock far beyond what the valuation of the company should be. The whole setup requires a significant number of people to buy and hold the asset at a price that makes no sense economically. And in doing so they have locked each other in a game of musical chairs in which they collectively have to pour more and more money into this unsustainable scheme in order to maintain the bubble.

This is a horrible prisoners dilemma in which a bunch of retail investors, many of whom can’t afford to play this dangerous game, are sustaining this “protest bubble” at their own expense, under the illusion of one of two (or possibly both) narratives: a) they will make obscene wealth from it b) they are sending a giant middle finger to the establishment. Neither of which are true in any meaningful sense.

Equities markets are efficient and the majority of people who joined this bubble late are all but guaranteed to lose money. But you know who is making a killing off all this fiasco? Goldman Sachs, Citadel, Andersen Horrowitz those guys are making transaction fees, getting on the other side of your trades and facilitating Robinhood’s public offering. And they don’t give a damn about timing this bubble because they make money in either direction. The temporary inflation of a failing microcap stock for a few days is completely inconsequential to the larger market.

What’s the endgame in this situation? Sure these activists can topple over a single small fund who was maintaining some dodgy shorts. But anyone who knows anything about high finance works knows those guys are laughing this charade off and already building their next hedge fund. While a bunch of retail investors are at best left holding a bunch of garbage equities in their portfolio.

I’m very sympathetic to the retail investors in this bubble because a lot of their anger is absolutely justified. But we have to ask what has this achieved? Yes, a tiny group of colluding insiders are richer; but a ton of investors are left holding bags and a bunch of institutions made a killing taking their money. This isn’t some David vs Goliath moment. This is Goliath drinking champagne while David dances for his amusement.


A similar story has been spun around bitcoin investments for years in order to solicit billions in investment from the public. The prospectus is a similarly simplistic and easily-digestible story:

Investing in a cryptocurrency means you are putting your money toward a technology and a currency that somehow could one day replace the modern financial system

And who wouldn’t want that? Yes, let’s replace the evil corrupt system that screwed us over! There are only two problems with this story: Its economic absurdity and technical absurdity.

Bitcoin doesn’t work, it’s a naked speculative bubble based on a technology that doesn’t scale can’t and can’t replace any existing financial service. Sure you can gamble on it, you buy a bitcoin and then maybe you sell a bitcoin to a greater fool for a profit. That’s it. Economically this is a negative sum game, or a natural Ponzi scheme as the economist Robert Shiller describes in his book on the analysis of bubbles.

The emperor is running naked through the streets and a cottage industry has emerged of people taking bets on the colour of his cloak. And whenever you criticize the emporer’s choice of attire, you often get accused of simply not understanding the heights of sophistication in nudist haute couture.

Simple answers to complex problems are optimized for viral transmission. Build the wall, drain the swamp, buy bitcoin. These stories resonate because they fit the existing memetic frames of people’s hopes and fears. Bitcoin serves as an emotional dual to the lottery. While in the lottery people pour their hope and money into the chance of life-changing winnings based on impossible odds. The same class of people pour their rage and money into bitcoin out anger towards a financial system that isn’t working for them. Buying lottery tickets and trading manipulated crypto assets are both a tax on the poor and disenfranchised.

The Gamestop story and bitcoin story are two sides of the same coin. The synthesis of faith in technolology, resentment, and populist rage has been exploited, financialized and turned into a digital speculative commodity. And in doing so anger at the financial system has itself been transmuted into a vehicle for wealth extraction from the gullible to the greedy for the same system. Bitcoin is overthrowing the financial system in the same way a Che Guevara t-shirt on sale for $5 at Primark is overthrowing capitalism .

The cryptocurrency philosophy wraps itself around a warped view of economics stripped of rigour and calculation and is left to brew in an angry stew of conspiracy theories, revealing only the naked will to power. It is an intellectual contagion that feeds on the hopes of the hopeless, metastasizing in the dark corners of the internet and mutating resentment into greed. A death cult with a central faith in digital alchemy that purports to transmute entropy into gold by channelling its true believers worst instincts of resentment and greed into energy waste.

I make no pretense that I don’t despise the bitcoin philosophy and believe it is one of the most insidious memes infecting our generation. And sadly it is one enabled by my own industry. At its core it is a philsophy that channels the mutual suffering of our generation, not into productive activity or reform, but into the very same worst excesses of financial speculation and climate change that created our generation’s problems.