Scams And Bribery Are Becoming the Foundation of Our Economy
It's bad and you should be alarmed.
The United States government taking steps to deliberately introduce cryptocurrency into the heart of our nation’s economy is kind of like a healthy person deciding to pick up a syringe and inject an unknown, harmful virus into themselves. Stick it right in the heart there! Make sure it gets into every last vein and capillary! Let’s see what this sucker does. Hey—it’s the future!
What is crypto? It is not anything. Is it money? No. Its value fluctuates far too drastically for it to be a proper currency. Is it an investment? Not really. A stock or a bond is a tangible claim on some future revenue stream; real estate and commodities are physical things that you can use even if their price drops. Crypto coins, or tokens, or however it pleases you to visualize these bits of ephemeral code, are pure speculative baubles, endowed with value only to the extent that you can convince another person to pay you more for them than you paid. They are a claim on nothing. They are the grandest embodiment of Greater Fool Theory ever invented by mankind. For most regular people, trying to work and save and invest for retirement, this is all that you need to know about cryptocurrencies.
The most meaningful use case for crypto—the one that we can use if we are trying to ascribe the least scammy motives to crypto people—is that they will one day create a global monetary system that sits completely outside of the control of governments. Is this a desirable thing? Though it is possible to conjure up use cases when this seems good (“the resistance supporters abroad must be able to stealthily funnel resources to the brave resistance fighters inside the dictatorship!”), the real answer to this is “no,” especially not if you believe in things like “financial regulation to protect consumers” and “responsible monetary policies carried out by central banks in order to stave off depressions and whatnot.”
But what if you don’t believe in those things? What if the totality of your view of the entire global economy is “I gotta get mine, and once that is done, fuck the world?” Well, in that case, you might be quite drawn to the crypto industry. It does, after all, have an excellent track record of being a place where gifted con artists can convince large numbers of people to invest in worthless things, for the benefit of said con artists. Sure. One reason why crypto’s advocates and critics tend to talk past one another is that the advocates say “You can make a lot of money in this” and that is true but only if you don’t care about the thing that the critics are worried about, which is “But you are inflating a harmful bubble and the bigger you allow that bubble to get, the more damage will be done to others when it pops.”
The dilemma the United States is now facing is that the people in charge of the government—the people who are supposed to be of the “concerned with the economy’s impact on everyone” type—are instead of the “gotta get mine” type. Their appalling and irresponsible decision to usher crypto speculation into the heart of our economy is guaranteed to make our entire economic system less stable, and more prone to bubbles, crashes, and scams. But it will also make the people in power rich, and they do not care about much besides that. At the very least, regular people should grasp what is happening here, and not be seduced into believing that there is a golden land of crypto opportunity that will magically solve the hard economic problems.
The White House will now allow retirement savers to invest in extremely risk and opaque crypto and private equity assets in their 401(k) retirement accounts. These sorts of investments had previously been banned. Why? Because they are risky and opaque and that is bad for retirement savers. Why will they now be allowed? Because both the private equity industry and the crypto industry are always in danger of suffering declines when enough money stops flowing into them, and opening the door to 401(k) money is a faucet of many hundreds of billions of dollars that will continue to keep valuations in those industries high. The shit that the smart investors would not pay for will now be packaged, branded, and sold to regular people who do not know any better. Who will benefit? Private equity firms, dumping their shitty stuff onto the public, and crypto firms, with a bigger pool of buyers for their worthless products. Who will lose? The public.
These predatory industries have paid the Trump administration enough money to win support for this. That’s about it. Longer explanations are mostly bullshit.
Major banks have now decided to allow crypto to be used as collateral for loans. This sets the stage for a rapid collapse in crypto prices to spread its harm much more broadly throughout the financial system. Do you remember when, shortly before the 2008 financial crisis, the CEO of Citigroup famously said, “As long as the music is playing, you’ve got to get up and dance”? I don’t know why I just thought of that.
The philosophy of business-as-scam is sinking ever deeper into the bones of the American economy. There is an ongoing phenomenon of companies that are not doing well simply buying a bunch of Bitcoin and rebranding themselves as crypto holding companies and then seeing their stock price shoot up. Because we are still in the frothy phase of the bubble, it turns out that investors will actually pay more for crypto held by a company like this than they could just buy the crypto for themselves on the open market. So a, you know, declining ball bearings manufacturer can go out and buy $1 billion of Bitcoin and announce that in a press release and then see their stock value increase by $2 billion. (Matt Levine, America’s most readable finance columnist, writes about this bizarre phenomenon endlessly in a tone of mystified bemusement.) This obviously irrational thing is a symptom of financial mania. History tells us this ends poorly. A rational government response would be to hedge against the fallout that will come when this bubble pops. Instead, our government is doing the opposite: leaning in to trying to skim money on the bubble’s upside, directly into the pockets of the Trump family.
That is not an exaggeration. Remember how the United States president launched his own crypto coin just before his inauguration, which netted him tens of millions of dollars? Wow. And remember how Trump’s shiftless idiot sons jumped into the crypto industry in order to allow the family to capitalize on its name? These are laughably corrupt actions, impeachable, bold and shameless examples of America’s highest elected official placing a cup labeled “BRIBES HERE” on his desk. (The desk is labeled “DESK OF SCAMS.”) Now, this bribe pipeline will be supercharged: the Trump family’s crypto company is doing a deal with a small, publicly traded biotech company in which that public company will buy a bunch of the stupid Trump crypto coin. Bloomberg explains that the deal “would bolster World Liberty Financial, which is not currently listed on cryptocurrency exchanges, by effectively putting a stockpile of the token inside of a publicly traded company, whose shares are easy to buy and sell.”
It’s all coming together, folks! Here we see today’s most popular insane stock market mania scam, “We’ve Bought a Bunch of Crypto That Is Completely Unrelated to Our Core Business, Please Buy Up Our Stock Now,” combined with underlying operating principle of the US government, which is “Please Bribe the Trump Family In Order to Get Anything Done.” Now, bribing the Trump family will be easier than ever—anyone can just buy up chunks of a publicly traded stock, which will directly boost the inherently worthless crypto price, which will enrich the Trumps.
It is thoughtful for the king to enable his bribery people to pay him off right from their own Fidelity accounts, without having to go through a lot of hassle.
Look, you do not have to explain to me things like “America was always corrupt!” or “People have always just been trying to get rich!” Yeah. This is not the same though. This is worse. I mean, there have always been profound philosophical disagreements in the field of political economics, but even right wing, Milton Friedman-esque economists based their arguments on the premise, “This selfishness will actually serve the common good better when it’s all said and done.” That’s not what this is. There is no argument for the common good. There is just the power to take a skim off the top of everything, and fuck the consequences.
Every bad, self-serving, extractive, harmful aspect of the economy is being magnified and worsened and paraded around in the open. The guy who has assumed personal total control of the world’s most powerful government is openly campaigning for bribes and self-enrichment and directly selling the integrity of our financial system to predatory fraud peddlers in exchange for little payoffs. This is very bad and it will end badly for the general public. The least that we can do is to speak plainly about this.
This is all hilariously corrupt and the US business community, Wall Street, the Republican Party, and some of the Democratic Party is just going along with it because they want to keep their own dance going while the music is playing. It is a crime against the interests of everyone else.
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Related reading: The Business Community Is Extraordinarily Stupid; Strongman Economics Are Piss; Divergence From the Interests of Capital; The Land of Greater Fools; Crypto, as a Political Characteristic.
I talked to The Failing Writers Podcast about writing a book and how weird the publishing industry is. Funny guys! You can listen to that here.
Events. I have some coming up. If I’m in your area, come out and let’s talk about making America better.
Monday, August 18: Detroit, Michigan. I’ll be on a panel at the Reuther Library at Wayne State University, along with the great Kim Kelly, speaking about telling workers’ stories. The events begin at 11 a.m. Flier here, and you can RSVP here.
Monday, August 25: Brooklyn, NY. I’m speaking about why unions are important at a cool event put on by Brooklyn Web Workers, a new group organizing in tech. The event is at 7 pm at Easy Lover at 790 Metropolitan Ave. There will also be bands and booze. Get tickets here.
Sunday, August 31: Manhattan, NYC. I am giving a pre-Labor Day speech at the American Society for Ethical Culture, about how labor power can beat fascism It’s at 11 a.m., and the full event link and info is here.
Saturday, September 20: Atlanta, GA. I’m the keynote speaker at the Atlanta DSA’s big annual fundraiser, the Douglass-Debs Dinner. 7 pm at the Loudermilk Conference Center in Atlanta. Get your tickets here.
I'm getting the distinct impression that the reason that the 'opposition' party does nothing about these crimes is that because they see them as opening future opportunities to exploit if power shifts back to them. What a mass delusion. Or mass incompetence. Can't decide which.
The thing I think about is the possibility of rug pulls with "stablecoins." We saw it with the Melania coin. How big can a rug pull be? Can it destabilize an economy? I hope we don't have to find out.
The full faith and credit of the U.S. government is becoming a joke. We are devaluing the means by which we keep our massive debt afloat. To what end and who benefits? I think the end game may be to end all fiat currency in order to exert a decentralized control. It was Peter Thiel's dream two decades ago, I don't think that has changed.