The stock market is a device for transferring money from the impatient to the patient.
— Warren Buffet
He almost had me.
Instead of saving the planet — like he’s been promising for a decade now — Elon Musk spent his weekend pumping a meme coin on social media. The following Monday, his company announced the purchase of $1.5 billion in a competing cryptocurrency.
Such wow…
The move sent bitcoin and other cryptos skyrocketing, prompting a lot of enthusiasts to post “told you so” comments directed at skeptics like me, as if this news proves anything other than the obvious fact that the world’s richest man can drive bubbles with social media spectacles, largely for the purpose of enriching himself.
I already knew that.
Still, I was one of the people refreshing my screen every few minutes for an afternoon, wondering if I should try to ride doge to the moon like a million other people are. And while I hope it does, for the sake of everyone invested, I’m not pouring hundreds of dollars into it for a quick return. Instead, I might put in a few bucks because I like underdogs.
Here’s why:
We can’t stop thinking about money lately, for a good reason.
Millions of people have lost their jobs and burned through their savings over the last 12 months, thanks to a pandemic and its catastrophic mismanagement by the last administration.
The new administration is now trying to sweep up the pieces of a broken nation, while battling conspiracy theorists and building a fragile coalition around a stimulus deal. Like the last two, this one might fail to deliver on its promise to help out the middle class.
If you’re not worried about inflation or the rising cost of healthcare, then you’re wondering when you’ll lose your job and have to start working at an Amazon warehouse, or delivering groceries for tips that your employer then funnels into their own profits.
It feels hopeless.
Imagine how it feels to read about companies like Amazon and Instacart fiddling with people’s tips, either in an attempt to steal from them or simply to advertise misleading wage offers.
Most of us haven’t seen a raise or a bonus in years. We’re forced to work multiple jobs and juggle endless side hustles to get where we want. No matter how hard we work, we seem to tread water at best. Given that, riding stock and crypto rallies feels like the only way out. It certainly does to my friends, and I’m watching some of them post endlessly on social media, trying to recruit new investors.
That’s the basic instinct driving 2021’s meme bubbles. It’s not greed. It’s not daydreams about private islands. It’s a blooming despair that’s overtaken the world, and Americans in particular. Now that energy has transferred into cryptocurrencies. It’s driving a frenzy.
The internet is buzzing with financially desperate people.
They’re looking for an escape.
Crypto enthusiasts enjoy railing at people like me for our “lack of understanding about crypto.” But here’s one thing I know:
There’s strong evidence that the 2017 bitcoin rally was engineered. It wasn’t dumb luck. It was rigged.
That late 2017 spike is the entire reason most of us even know what bitcoin is, and there’s reason to believe it was all the result of careful manipulation by one “entity,” known in crypto parlance as a whale. This whale spent months buying cheap bitcoin at slightly higher and higher prices. It gave the coin an illusion of stability, which gradually lured in more and more investors until social media hype took over.
According to financial news sources, there’s a couple thousand whales active in the bitcoin market now, and they control 40 percent. It’s not just happening in bitcoin, either. This is the exact same tactic I see discussed everywhere by crypto speculators. They’re all trying to be whales.
It’s basically what influential billionaires like Elon Musk are doing right now, pumping one crypto currency and then investing in another, then pumping that currency to drive up prices.
Don’t take my word for it…
If you doubt me, read the paper: It was published in 2018 by researches at the University of Texas and Ohio State University, and wound up making the rounds in major news outlets like Forbes and Bloomberg.
This behavior is nothing new.
It’s how rich investors have always driven interest into assets they’re looking to make a quick buck on. Seemingly wise old men like Warren Buffet might say markets are devices for taking money away from impatient people, but he’s wrong. In reality, they’re devices for taking money away from the poor and desperate, who fall for schemes because they don’t have the resources to learn about how these arenas are rigged for a select few.
And they always are.
Americans have reached a point where long term investments no longer offer any comfort or security. It’s impossible to put your money somewhere and not think about it for decades when you can’t afford gas or groceries, or you wonder if you’ll need it for medical bills. This is why more and more of us are jumping into bubbles, or trying to create our own.
It’s making us reckless.
That recklessness has real consequences. Consider the story of Alex Kearns, a 20-year-old who killed himself last year after getting in over his head on Robinhood, an app that brands itself as a tool for the little guy. Kearns thought he owed $750,000 and couldn’t get a straight answer from the app’s customer service. This might sound like a horror story, but it’s sadly endemic of stress and anxiety we’re all facing right now.
Kearns isn’t the only victim of this reckless meme culture. Millions of people are jumping into bubbles and losing all their money.
It’s becoming a commonplace.
There’s nothing inherently wrong with some of the ideas behind investing in stocks, or even cryptocurrency. The problem occurs when hype turns these ideas into grand solutions to all of our problems.
The immediate problem most Americans face today isn’t about having enough money 30 years from now, to pad their retirement.
It’s about having enough money for tomorrow.
There’s one simple way to solve most of our financial and economic problems, and it has nothing to do with cryptocurrency or stocks. It has everything to do with raising the minimum wage and forcing employers to stop taking from their workers, and to start paying them what they’re worth. If our elected officials would do that, then we would have money to invest.
Meanwhile, stay away from volatile investments. Desperation like we’re seeing now makes us do stupid things, and there’s always a few whales happy to lead us on by manipulating our emotions.
Don’t get eaten by a whale.
Be smart.
A Lone Bitcoin Whale Likely Fueled 2017 Surge, Study Finds
https://www.bloomberg.com/news/articles/2019-11-04/lone-bitcoin-whale-likely-fueled-2017-price-surge-study-says
The Weird World of Bitcoin Whales
https://www.telegraph.co.uk/technology/2021/01/22/weird-world-bitcoin-whales-2500-people-control-40pc-market/
Crypto Whales Moving Millions in XRP as Google Searches for Crypto Asset Explode to All-Time High
https://dailyhodl.com/2021/02/06/crypto-whales-moving-millions-in-xrp-as-google-searches-for-third-largest-crypto-asset-explode-to-all-time-high/
Bitcoin Whales Kept Accumulating During Monday’s Crash
https://www.coindesk.com/whales-investors-bitcoin-crash
Bitcoin Whales’ Ownership Concentration Is Rising During Rally
https://www.bloomberg.com/news/articles/2020-11-18/bitcoin-whales-ownership-concentration-is-rising-during-rally
Robinhood Sued by Family of 20-Year-Old Trader
https://www.cnbc.com/2021/02/08/robinhood-sued-by-family-of-alex-kearns-20-year-old-trader-who-killed-himself-.html