#EatTheRich has been trending on social media after some Reddit users beat hedge funds at their own game. It involved many tears, great memes, heck-loads of money switching hands, and the media class racing to Youtube for a crash course on ‘short squeezes’.
The moral of the story is reasonably straight forward.
Nasty, evil, billionaires on Wall Street were profiting from other people’s misery by betting in favour of their demise – essentially using the share market as a casino to gamble on falling share prices. This is no random game. Hedge funds are in possession of powerful friends who set about deliberately manipulating the market by helping that share price fall. This can be done in lots of ways, including something as simple as penning a few disheartening articles about the company so that brokers encourage their shareholders to tap out.
These hedge funds inadvertently stepped on a cult favourite. The dying, outdated, unassuming little company ‘GameStop’ was considered an endangered species. As a seller of physical video games, their decline began when major corporations like Sony Playstation and Microsoft Xbox shifted toward downloadable games, cutting the retailer out of the market.
The industry-wide shift to renting products, rather than owning them, is a scary story on its own.
Regardless of GameStop’s prognosis, it was loved – the kind of love that boys have for their video collection in the garage despite no longer having anything to play them on. When Reddit users discovered that the hedge funds were about to ruin GameStop to line their silk pockets, they decided to protest in a productive way by using the system against the big boys.
The behaviour of hedge funds is already controversial – and rightly so. It goes against the whole spirit of the share market by clearly demonstrating that the value of shares can be manipulated, not by worth, but by bad actors. In other words, it is not really a market. What they do is not illegal, nor are there any plans to outlaw it because – well – because the most powerful and wealthy people in the United States are making their fortunes in lucrative hedge funds. They then use this wealth to enter politics where they actively protect the system that funds their lifestyle.
Fine. Whatever. The Reddit users were not trying to stop the game like illiterate school children gluing themselves to the tarmac. They did something much smarter. The Wolves of Reddit, as they are now affectionately known, decided to teach the hedge funds a lesson.
They sat down at Casino GameStop, waited for the hedge funds to place their bets with the broker, purchase a heck load of stock, and sell it back to the market. Then – the wolves bought it all.
This started a timer that continued to push the price of the shares up, rather than down. The longer it went on, the greater the demand for the stock became and thus the higher the price. Hedge funds found themselves in a situation where not only were their bets wrong, but they were required to buy back the stock inside the time frame and cover the loss – stock that Reddit users refused to sell.
‘Hold the line!’ was chanted through the forums. It was crucial that, despite the outrageous wealth that these previously poor users were theoretically acquiring, they continued to hold onto their stock.
Hedge funds were shedding billions over a ridiculously small company that most people had never heard of. Worse still, the people holding their money to ransom were not part of their extensive contact group of ‘important people’ – they were ordinary kids, sick of the bullshit, who were able to ignore personal profit for the sake of the greater good. By the end, the short squeeze increased GameStop’s share price by 1,500% in two weeks.
Easily the best meme of them all came from blunt_person.
‘We can remain retarded for longer than they can stay solvent.’
Billboard maker Matei Psatta spent US$18 putting up a huge digital message in Times Square, New York. ‘$GME GO BRR’ which is another meme referencing the sound of money flipping around. His motivation? ‘Did it purely to support the movement and make some people smile.’
This is what happens when morally ambivalent people cross paths with those who have nothing to lose from screwing around with terrible systems.
The fallout of this event was extraordinary.
Most of the action took place over a couple of weeks with hedge funds losing around US$9 billion. Individual Reddit users changed their tens of thousands into millions. Life changing fortunes were made by people who were never meant to make them. One Reddit trader said that he turned his US$50,000 investment into $US22 million. Although Reddit users are anonymous, which makes checking these claims difficult, there is no doubt that the investments were real and so were the increases, with a start price of $US2.57 up to $US483.
The resentment of Wall Street was immediate. Their friends and clients had lost money, while nobodies were making it. The whole incident sent their other customers into a panic. What if this happened again? How was this even allowed to happen? Aren’t there controls to stop groups of people manipulating the share market?
Their outrage could not be more hypocritical, and yet the powers of government regulation immediately came to their rescue.
Some hedge funds decided to limit trade of the GameStop stock. For an industry freaking out over rules, their first instinct was to break them. There was no technical reason for this action except that hedge funds did not like losing money. It was a way for them to limit the damage.
The Robinhood trading platform, whose historical namesake was famous for taking from the rich to give to the poor, decided to do the exact opposite. After an alleged $US3 billion order for capital that came from US regulators, Robinhood stopped its customers from purchasing GameStop shares. Reddit users on the Robinhood platform were allowed to cash up and sell what they had, but it locked all their accounts from buying more of the stock. The hope was that personal greed would eventually see the stock sold so that hedge funds could buy it back and fulfil their legal obligation to the brokers, whom they borrowed it from originally.
‘Blink if someone is holding you hostage right now,’ billionaire car manufacturer Elon Musk said to Robinhood Chief Executive Vlad Tenev.
‘We knew this was a bad outcome for customers,’ Tenev admitted. ‘Part of what has been so difficult is Robinhood stands for democratising access to stocks and we want to give people access so that’s been very, very challenging. But we had no choice in this case we had to conform to regulatory capital requirements.’
It is no surprise to find Elon Musk fighting on the side of the little guy, despite being the richest man on Earth at the moment. During his early years, his Tesla company, which may as well be his baby, fell victim on several occasions to predatory hedge funds.
When Reddit users continued to hold onto their stock, mass censorship of forums was enacted to stop them from communicating with each other. Despite there being no rules about bankrupting hedge funds for shits and giggles, these forums reclassified the talk as ‘hate speech’ and shut it down. Of course, no one forced these forums to explain how making money on the share market constituted hate of any kind. That is the problem with hate speech – it is used by big tech to mean whatever they need it to.
In a further attempt by Wall Street to force the little guys out of the system, hedge funds have been trying a ‘short-ladder-attack’ where they trade between each other to artificially drive the stock price down by making it appear worthless. Official media outlets joined in, talking down the stock value in defiance of actual market behaviour. In other words – lying.
After the crisis died down and Wall Street was left to lick its wounds, talk began in earnest about how they could stop the peasants from ever sitting at their table again.
As Tim Pool said, ‘The GameStop rebellion has the machine shook.’
The power that online social media groups can wield without warning terrifies those who hold the keys in our civilisation. The Reddit board behind this short squeeze contained over five million users. Even if they were all dirt poor, there are enough of them to cause serious damage.
It was social media that put Trump in the presidency and social media that threatens to topple the biggest international money making scams of the millennia. Social media uncovered the illegal dealings of powerful people, social media digs up what the rich try to hide, and social media that circumnavigates press censorship – bringing civilisation’s difficult stories to the surface. Politicians made it their first priority to control social media, censoring it in ways that suited them politically. We are at the point where legacy media is so politicised that it can look at an anti-establishment activity like The Wolves of Reddit and call it ‘far right’ hate speech.
‘There should be legal and regulatory repercussions. This is unnatural, insane, and dangerous.’ Tweeted Michael Bury, a man famous for predicting the 2008 housing bubble bust.
Hedge funds technically aren’t allowed to band together and launch a coordinated attack on stock, as The Wolves of Reddit did. This superficial reading misses a crucial point. The share market is moved by money, and hedge funds have a lot of it. These big traders wield just as much power on their own, if not more, than a cluster of tiny Reddit users. The outcome of both activities is exactly the same. If big fish can do something, little fish should be able to do it as well. Conversely, if Wall Street now believes that what Reddit did was an illegal manipulation of the market – then their behaviour and that of their powerful friends is also illegal.
President Biden’s economic team and US Treasury Secretary Janet Yellen are watching closely to ‘ascertain the situation’.
Democrat Congresswoman and all-round lunatic better known for Periscope than politics, Alexandria Ocasio-Cortez, said perhaps the only sensible thing in her short political history. ‘This is unacceptable. We now need to know more about Robinhood’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.’
Even Ted Cruz agreed with her.
The Wolves of Reddit had a victory for Capitalism. They set out to prove that hedge fund gambling is an abuse of the free market – that corporatism is the real cause of wealth disparity where one privileged group plays by a different set of rules to everyone else.
Alas, no good deed goes unpunished.
Western activists, a tediously predictable species who are known to latch onto any social event and litter it with their propaganda, came out and vandalised the #GameStop movement.
These teen Communists and Antifa progenies saw rich people losing money and said to themselves, ‘Uh ha! A proletarian revolution!’
There are two problems with this.
First of all, these kids are not the working class. They are the spoilt offspring of hedge fund managers, politicians, and corporate CEOs that slum it during protests so that they can Instagram about how ‘woke’ they are. Their idea of ‘working’ equates to a few shifts at Starbucks before demanding that the middle class cover the cost of their arts degree because, like, ‘work is slavery’ and ‘money from the government is free’.
The second problem is that what happened to GameStop had nothing to do with Capitalism and everything to do with the ultra-rich gambling with stocks. Plenty of Reddit users got rich demonstrating their point. No one was trying to stop people getting wealthy, they were proving that a small group of people had corrupted the market. The ultimate point was to restore Capitalism.
This mistake by the activists stems from a general political illiteracy among modern activists. Raised by Communists, their activism is driven by superficial jealousy. Their world is nothing like the late 1700s-early 1900s. In reality, they are the most wealthy and privileged generation in Earth’s history and yet a decade of indoctrination has left them believing as if they are a victim of class oppression because they can only afford three Nike shoes instead of a whole Nike store. Basically, their lecturers told them that Capitalism was the cause of all their problems. The activists at the top of this structure need these kids to cause mayhem so that they can seize political power, but the kids have been promised free stuff and no rules. In other words, a teenage fantasy.
Twitter user Kaya Oldaker (she/her #BLM #TransRights) put up a ‘Power to the People – ACAB – F*ck Capitalism – make racists afraid again’ image on the #EatTheRich #GameStop hashtags and then linked to videos by Richard Wolff to back herself up. Wolff is a Marxist economist who uses Capitalism to sell his books about how much he hates Capitalism. His wealth is approximated between $US1-5 million while his other book Rethinking Marxism demonstrates that you can rethink Marxism as much as you like, but it will still amount to a really shitty idea. The worst thing about Kaya’s attempt to connect GameStop to a separatist Marxist revolution, was how many kids online believed her. All it takes these days to indoctrinate someone is one emotive image, a trendy sounding hashtag, and an old dude masquerading as an authoritative source.
Allowing Antifa and Black Lives Matter to hijack social movements further spreads their toxic ideology, adding to the confusion of an already politically poor generation. It used to be the job of the press to pull up these glaring errors, but with the press hedging their bets on these radicalised activists to pump up their clicks (and thus their profits) they are reluctant to print anything that might offend them. (And let’s be honest, everything offends these children.)
Mark Ruffalo, with a net worth somewhere around US$35 million, tweeted out, ‘It’s time for an economic revolution. Capitalism today is failing us, killing us, and robbing from our children’s future.’ There is no word yet on whether his films will be free to watch and when he plans to return his pay cheques because they are outrageously out of step with the rest of America.
The hilarious irony is that there really is a class of ultra-rich, privileged elite that do not want a fair market. They view their wealth as a sign of superiority and go out of their way to pull the ladder up behind them, ensuring that common-folk cannot join them in luxury. These are not the men and women of the middle class, running small family businesses who the activists viciously attack. No. They are the CEOs of the activists’ favourite corporations. The Tech Giants of Amazon, Twitter, and Facebook. Global banking institutions. Sprawling bureaucracies. Mining conglomerates who have found a way to increase their operations through the ‘green revolution’. Chemical and pharmaceutical corporations. Technology manufacturers and logistics giants. And yes, the hedge funds.
These are the groups who commit the sins that activists level at the middle class. These are also the people funding the activists, who in turn, the activists support – all while shouting, ‘eat the rich!’
The only thing that activists have in common with the ultra rich is that they hate the middle class, who use hard work and the fair rules of Capitalism to get ahead in life. An honest day’s work invalidates the collective narrative and shames those who make money rather than earning it.
I swear, Communist kids borrowing slogans they don’t understand will be the death of us.
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Alexandra Marshall (@ellymelly on social media) is The Good Sauce's Editor-At-Large, as well as the host of "Curtain Call", a Good Sauce show exploring the leading personalities in the culture war. She writes on liberty, philosophy and geopolitics. You can find her on Twitter or read her articles over at her blog.
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