One of the many tricks Wall Street hedge funds use to create money, without actually producing anything, is “short selling.”
It’s a fairly simple scheme: When traders see a stock’s price dropping and are confident that it will continue to drop, they have their brokers arrange for them to borrow these stocks from their owners so they can immediately sell them for a profit. These traders wait for the stock’s price to drop further, and may even pitch in by bashing it publicly. When the stock is at its cheapest, they then buy it back for a pittance and return it to its owner, while keeping the money they made from its original sale.
Think of it as borrowing your friend’s old car for a week, selling it on Sunday when it’s worth $1,000, then buying it back on Friday when it’s worth a tenth of that original price, and returning it to your friend on Saturday. That leaves you with $900.
Stock traders have been doing this for centuries. It’s a clever trick that allows one to profit from others’ failures and cannibalize them. And for months, Melvin Capital and other hedge funds were doing this very thing with GameStop. Remember that video game store you passed by in malls and shopping centers? Wall Street decided that it was dying, and decided to pick it clean by short-selling the stock.
But an online club on Reddit, “WallStreetBets,” decided to turn the tables on the hedge funds and beat Wall Street to the punch. They started buying up GameStop stocks, and got many others to join in. They cheered each other on as they drove GameStop stock prices higher and higher. Wall Street traders watched with horror. All the stocks they had bought and sold when they were worth just $6 a share rocketed to around $400, an astonishing 700 percent rise. They would now have to buy back these borrowed stocks for much more than they could afford just to return them to their owners. It is estimated that hedge funds have lost $14 billion thanks to this merry band of small investors.
Regular people stuck it to Wall Street and won one for the rest of us. After decades of being used for Wall Street’s ends, and then bailing them out when their schemes fail, regular people showed Wall Street that they know exactly what they’re doing and are ready to take action. David beat Goliath.
But the reaction of the ruling class has been very telling. After decades of establishing themselves as the heads of the economy, they cannot believe regular people would have the gall to interfere with their dirty shenanigans. They believe that only they are entitled to screw people over for profit, that it cannot be turned around on them.
In response to their outrage, however, they did more than bang their fists. They took action. The elites immediately closed ranks to protect their own. Apps like Discord banned the WallStreetBets Reddit page, claiming they were violating community guidelines. They accused them of “hate speech, glorifying violence, and spreading misinformation.”
Many media types started spreading rumors about the group being “white supremacists” and anti-Semites. But more significantly, the Robinhood app and other online brokerages used by regular people to drive up GameStop stocks banned users from buying GameStop and a whole list of other companies that could be targeted. They are even rumored to be selling people’s stocks without their permission to help Wall Street. They acted immediately to protect Wall Street from any further interference.
This is truly outrageous and probably illegal. For Silicon Valley shamelessly to interfere with the stock market on behalf of hedge funds is an extraordinary event. The message it sends is quite clear: the economy is for hedge fund managers, not for everyone. It is a naked pledge of allegiance to the corporate leviathans that sit atop the American system. Their power is absolute, and any who dare challenge them will be crushed.
It’s Not About Money
Amazingly, this is the second time in a month that the corporate clique flexed their muscles in a brazen display of absolute power.
Just a few weeks ago, Twitter, Facebook, and the other social media giants stepped up their censorship of conservatives, including the president of the United States, after the Capitol riot. When regular people saw what was happening, many decided to join Parler, the only social media company dedicated to free speech. But the oligarchy would not stand for this. They weren’t satisfied with banning “undesirable” ideas from their own platforms; they wanted them banned everywhere. And so, Apple, Amazon, and Google—corporations with bigger GDPs than entire countries—declared war on Parler and cut off access to it. These giants destroyed Parler with ease.
Many conservative intellectuals are having a hard time with all of this. After dedicating their lives to shielding business from government interference, the people who were once their audience don’t seem to be buying it anymore.
No matter how many times people like Ben Shapiro and Charlie Kirk explain why “income inequality” doesn’t matter, the people of the United States are still complaining about the top one percent. This is because the people understand what these “intellectuals” clearly do not: It’s not about money, it’s about power. It’s not about somebody making more money than I do; it’s about someone else having the power to control me.
We see clearly that a few giant companies own and have total power over 21st-century society. Access to society is owned by private corporations. They are the gatekeepers and can banish anyone they choose.
This also explains another puzzling trend. For generations, corporations have bent over backward to avoid being publicly involved with politics and alienating potential customers. Why take a public stand on an issue when half the country disagrees with that position and it may cause the company to lose business? In the words of Michael Jordan, when asked why he wouldn’t take a public stand on politics: “Republicans buy sneakers, too!”
But that’s mysteriously changed. Major corporations today are obsessed with politics and are bending over backward to prove their “wokeness” and progressivism. From Calvin Klein’s “body positivity” billboards to Gillette and Axe “challenging toxic masculinity,” to nearly every major corporation publicly aligning with BLM, corporations have embraced advertising their commitment to leftist politics even to the point of directly insulting their customers.
Wokeness Is a Shield
Obviously, megacorporations guilty of some of the worst human rights abuses on earth don’t go woke out of an altruistic impulse to do what they think is right. Presumably, if companies like Apple really cared about the evils of slavery, they’d stop using Chinese slave labor instead of lecturing America about “the legacy of slavery in America.” When companies go woke, they do it for profit.
In the past, companies sold to people. They tried to make goods and services that people would want and tried to persuade people that their product was right for them. But things have changed.
This new market dynamic can be best understood in the YouTube economy. When YouTube creators make videos, they aren’t trying to make content that people will like, they are trying to make content that YouTube’s algorithm will like. When a video fits what YouTube likes, the algorithm promotes it, and the video goes viral. But if a video does not fit YouTube’s priorities, it will get nowhere no matter how good it is.
Of course, what YouTube wants and what people want is often the same, but not always. For example, people generally like shorter videos while the YouTube algorithm likes longer videos. This is why YouTubers will make longer videos, to the point of padding the video length with a blank screen, even though it’s not what people want.
This same dynamic now rules the whole economy. Sellers no longer advertise their products for people; they are shaping their products to please those who can promote and protect them. In other words, when megacorporations that are part of the elite circle sell products, they aren’t selling to us; they are selling to each other. Advertisers no longer try to impress regular people; they are trying to impress the masters of the universe who run the economy by appealing to their values and desires. This is why companies like Robinhood and Twitter act as they do with impunity. In this economy, once you reach the top it doesn’t matter what the customer thinks.
When companies first started going woke, conservatives scoffed at their stupidity. Like good free-marketers they predicted that those companies would regret it when they lost all their customers. But they were wrong. Twitter and Apple know that conservatives have nowhere else to go for essential social networks, and with the help of the rest of the aristocracy, they never will.
But this aristocracy isn’t a dynamic engine of creativity and competition. Those running the mainstream media, Silicon Valley, Wall Street, Hollywood, and the Democratic Party are all part of the same circle. They are a class unto themselves. A ruling class.
The ruling class holds the same values. They vote for the same people. They support each other, they know each other, they even marry each other. This aristocracy has more power than the federal government and it’s not even close. They aren’t bound by any Constitution or Bill of Rights, they have no electorate to answer to, their power is absolute.
I would ask old-school conservatives who are skeptical of government interference to imagine a world where every single one of our rights is violated. Imagine a world without freedom of speech, without freedom of religion, without the right to privacy, without property rights, without due process, but where the government has nothing to do with those violations. It sounds horrifying, but a corporate tyranny is in fact much more likely to happen in America than a tyrannical government. Conservatives must ask themselves: Would I be OK with a police state, so long as it isn’t the government running it?
Answering that question and figuring out what to do about it is the biggest challenge of our time.