Even Punk Has Become Financialized.
In 1950s America, the rock ’n’ roll generation provoked a racially divided country, manically dancing to black music, worshipping wild performers on stage and resenting the middle-class dreams of their parents.
In the 1960s, hippies rebelled by dropping out of conventional society, they grew long hair, wore tie-dyed clothes, moved out of towns into rural communes, and, yes, publicly indulged in drugs and sex.
In 1970s Britain, punks gave the middle finger to establishment of a deteriorating capitalist society mired with social issues, using angry music and fashion in an anti-everything posture.
For a good part of the 20th century, young people loved to rise in revolt, beating their fists against power structures while wearing insane fashion, being violent and enjoying sex.
We don’t get that as much anymore these days. In a society overwhelmed with information, there is no single identifiable thing, no visible force — repressive or otherwise — to fight against. There are many, but not one, and anyway how do you organize people to protest when they are scared of cancel culture?
Except that the reddit crowd did just that. The profane juvenile army of retards, apes and degenerates hit the money-loving capitalism where it hurt the most. Uniting people to go all in against hedge funds, the r/wallstreetbets has put a finger on what is this generation’s beef with the society.
The Everything bubble is real.
We’ve talked about this a little here, but still: before the 1980s, finance was regulated, utility-like, restricted and a very unsexy sector throughout. The stagflation of the 1970s was a toxic mix of slow economic growth and inflation. As a reaction, the U.S. embraced pro-market measures, deregulation, lower taxes and smaller government.
The rise of bank holding companies that could shop around for regulators, the deregulation of credit cards and lowering of collateral requirements led to massive growth of household and corporate debt. To absorb the inflow of new debt capital, the financial sector invented new and colorful financial instruments.
People and companies borrowed to buy assets, which became collateral for more debt, which was recycled back into the markets in a self-reinforcing mechanism of everything bubble that is irreversible because everything becomes a collateral for everything.
There were, of course, some theoretical reasons for why financialization should benefit the economy. In theory, increasing the depth of financial markets, expanding the states of nature spanned by financial instruments should lead to more efficient allocation of capital. This makes sense intuitively, if more of the world is represented in bets of financial instruments, you can better protect against and price risk. You can also construct a better portfolio. In theory. Opposing theories mostly argued that financialization leads to people endlessly trading things between each other, instead of using capital for productive investment.
In any case, financialization put the struggling economy on steroids; a new business cycle manically pursuing asset inflation, instead of productive creation. The macroeconomic system after financialization requires rising indebtedness and asset prices to maintain growth. It involves a new monetary policy stance that replaces concern with real wages with a concern about asset prices. Anytime asset prices go down, the FED is obliged to step in to prevent broad macroeconomic damage in the everything-is-collateral-for-everything system. FED needs to maintain a constant floor under asset prices.
This reversal of concern from real wages to asset prices slowly over decades impoverished the population. Investment in productivity and real wealth creation potential of a country must be sacrificed in exchange for ever-inflating asset prices that redistribute the wealth of society in the accounts of the owners of financial instruments and finance enterprises. This is a result of several self-reinforcing factors, but in short, the financialized economy favors financial boom with a constant trade deficit. The inflating asset bubble and consequent illusory wealth effect endorses more consumption fed by cheaper imports offsetting the effect of falling real wages and weakening social net. All the my-parents-buying-house-in-30s-vs-me-buying-cat memes are real.
The thing is that it is not easy to identify the forces behind the immiseration of this generation. You could say that throughout human history, finance is the source of confusion, and that one reason for the strange conspiracies about financial elites (Rothschilds) is that finance is complicated, opaque and just damn hard to get?
It doesn’t help that successful hedge fund managers like to write books and go on television and talk about life advice and other very non-evil things, although others are just outright clear about their privilege and advantage over retail investors.
And yet, that is precisely what r/wallstreetbets have done so masterfully. They pointed at their enemy, and then made him suffer, too. Just as punk scared the present-day establishment with anger and nihilism, the reddit crowd spooked the money power structures by rallying around stocks almost religiously in anger and defiance. The anger, the language (memes) and the solidarity mixed with intuitive intelligence and the power of simple google search put the little man on par with hedge funds