In 2012, a man named Peter Turchin predicted that by 2020 the US would reach “peak instability” marked by violent unrest and major social upheaval.
Turchin is one of those “cycle guys.” That means he looks for patterns in history to help predict the future. He’s an ecologist, evolutionary biologist, and mathematician at the University of Connecticut. The technical name for his field of study is “cliodynamics” and although it’s been called pseudoscience, Turchin’s work has been published in Nature, and he insists it is a reliable model for predicting the future.
It is similar to William Strauss and Neil Howe’s Fourth Turning theory developed in the early 1990s, which said that the US would enter a time of intense instability beginning around 2008.
People like this are annoying because they tie everything back into their cyclical theory, but there’s no arguing with results.
I won’t summarize the shit-show that was 2020. We all lived it. But this month alone, we’ve seen Trump supporters raid the Capitol Building resulting in five deaths, the House of Representatives impeach the now former President (again), Joe Biden inaugurated amidst a military backdrop, and most recently, a massive financial scandal involving, of all things, GameStop.
GameStop (GME) is a troubled brick and mortar retailer mostly selling video games. It has a reputation online for shady business practices, taking advantage of both customers and employees. Perhaps because of this, and its recent push to trade in cell phones and other electronics, the company has held on, even becoming profitable, leading Reddit user DeepFuckingValue to buy $750,000 worth of the GME in 2019. Meanwhile, billion dollar hedge funds shorted the stock, or essentially bet that its price would fall. The stock became a meme on Reddit’s /r/WallStreetBets, eventually leading them to push the stock from $20 earlier this month to a peak of $469, and turned DeepFuckingValue’s $750k investment into (as of right now) $46 million.
Redditors have posted about how they can finally pay off their student debts, pay for their family members lyme disease treatments, pay for their dog’s $4,000 surgery and get to eat something other than waffles every night for dinner after losing their unemployment benefits.
So some investors made some money, so what? Well institutional investors that gambled against GME now owe billions. Trump supporters may have stormed the Capitol building for little more than social media likes, but these Reddit traders stormed capital itself. The symbolic message was clear. Inverting the same tools used to defraud the public leading to the collapse in 2008, investors got ahead of major Wall Street firms and took advantage of their greed. Even the names involved, GameStop, Robinhood, and Citadel are storybook ready.
The attempt to buy up real things, the old decaying America, to strike at speculators is a David vs Goliath story. In January, the S&P 500 was down 1 percent, but companies like Blockbuster, AMC Theaters, Bed Bath and Beyond, Express, and Blackberry were up between several hundred and several thousand percent.
But the real problem isn’t that some hedge funds were outsmarted and may go under, but rather that prime lenders who lent them the shares may suffer huge losses as well, impacting 401ks, mutual funds, and other traditional investments. Absent government intervention, it could bring down their bank holding companies as well. Could a meme stock actually take down America’s financial empire? Probably not, as brokerages, with government support, will not allow that to happen.
As expected the establishment’s reaction was swift. Multiple platforms including the popular Robinhood trading app suspended buying of the stock (but not selling) to prevent it from rising further. They banned Discord accounts to prevent buyers from communicating, and Google has scrubbed negative reviews of Robinhood from their App Store. Corporate news is calling for regulation to protect short sellers. NPR even compared people buying GME stock to gamergate because it is “harassment” of hedge funds!
Despite the mass media’s near universal hand wringing, there has been widespread delight that Wall Street lost big on its home turf. It’s been a long time since the country has felt this united. The one thing elites fear is the masses uniting against them. It’s part of why they promote so much hatred in the corporate press and media. In short (no pun intended), the elites’ over-reaction was from legitimate fear. But we aren’t done digging yet, and this whole story is exposing the incestutous nature of high finance.
One of these hedge funds is Melvin Capital Management. A big investor with them is Citadel and they are also the owners of the Robinhood app that illegally suspended trading, and its widely believed they did so to protect themselves, though Citadel insists they didn’t know about their securities business’s short position.
Citadel is a well connected firm. Former Fed Chairman Ben Bernanke is their “Senior Advisor.” What does he do there? Well, we don’t actually know. He just says “not lobbying,” as if that makes it better, but really it makes it worse because lobbying is very upfront, while Bernanke’s position is undefined. Meanwhile, leaks from the Fed to private investors is known to happen.
Biden’s new Treasury Secretary and Former Fed Chairwoman Janet Yellen took $810,000 in speaking fees from Citadel in 2019 and 2020. This is called bribery for those of you not in the know. When asked if she would recuse herself from advising the president, the White House essentially said no, that she was an expert and deserved the money. Citadel has spent on average $240k per year lobbying Congress and the Treasury Department.
Those hoping for a return to normalcy, or even the illusion of it, are going to be disappointed. When empires are in a state of collapse, they invariably do more of what worked well in the past, but has since become toxic. In the case of the US, this means more financialization, speculation, and money printing to infinity. There are currently no mechanisms in place to reverse or stabilize these trends.
The next few months offer little hope for real relief. Up on the docket is making Washington D.C. a state. This vote would be constitutional and would ensure the Senate will have two additional Democratic Senators between now and the heat death of the universe. President Biden has set up a commission to “reform” the Supreme Court, either through packing additional justices or reducing its’ authority. And of course, Joe is old, arguably senile, and even with his lengthy political experience, probably only has a rough idea what short selling even is. If your goal was to engineer widespread secession movements, you might start by installing a President like Kamala Harris. All the while, the underpinnings of society, all but invisible to the upper classes who control everything, continues to deteriorate.
But for today, we have heroes.
