You are describing the dotcom era. The idea of “eyeballs” before actual revenues and cash flow. Worked for a while, then came crashing down. It wasn’t real, except for a small few like Amazon who made massive wealth in the long run. But that didn’t prevent AMZN from dropping over 90% when the dotcom bubble was pricked.
When I read essays such as this one, Kyla, it scares me into thinking we are near a major market top. The dotcom mania was followed by a bust and the U.S. stock market that went nowhere for the decade of the 00’s, but did have two 50%+ drawdowns. Are we nearing that time again? Not sure, but your piece makes me think it’s ominously close!
Of course! I came across your work back in the early pandemic days, had just finished my undergrad at the time - I love the humility, candidness and clear vision you bring to the scene. It makes fin/econ/policy much more relatable and enjoyable for the Gen Z audience.
I would argue that these coins are not value creation, but rather value extraction.
Much of finance can be described as the diversion of money away from the production of goods and services, and while it enriches some, in aggregate, this diversion of money away from production does not create value, but rather diverts value away from the "real" economy to the "speculative" economy.
This is probably the most terrifying thing I’ve seen you write or speak about. I’m deeply concerned about the ramifications of all this. Nonetheless, I appreciate you doing the work for analyzing this stuff and publishing it. Please stay safe out there.
Or the whole thing is a Ponzi scheme. Trump fleeces his most fervent supporters. He and other insiders sell while the price is high. The narrative turns and there are many angry losers. At which point Trump uses the power of the state to try to prop it up, putting the US government on the hook for the speculators’ losses.
>The implications are clear: we’re entering an era where wealth is created faster than regulation can respond, and reality itself is shaped by speculation
At risk of sounding like a pedant -- but i do believe its important -- I wouldn't say wealth is "created" in instances like Trumpcoin, more like, "redistributed".
almost all of the money invested in trumpcoin came through chinese crypto exchanges, probably all orchestrated by Justin Sun. the memecoin is basically a bribery scheme: https://cryptadamus.substack.com/p/the-trumpcoin-cometh
A mass deportation scheme should not be referred to as an "immigration crackdown". This is adopting the language of euphemism. We are talking about millions of Americans being deported.
Love this piece! Really intrigued to know how you think we can better utilise rapid/massive attention to fuel genuine innovation?
Feels as though the two don’t go together as new developments in any field are hard and take real personal & financial perseverance to achieve. Your example of the fires is a great reminder that it usually takes disaster to cause proper re-evaluation. Want to be hopeful (like you!) that it doesn’t come to that on a large scale.
The markets are already expecting a return of inflation. Mortgage rates went up soon as the election was over.
However, I wouldn't link it to the meme coin trash. While I appreciate she didn't use value creation (as there is none) I'd change wealth creation to wealth transfer.
Nothing is being created. It's just a wealth transfer between gambling degenerates and in the case of trumps meme coin a bunch of his moops along with the gamblers (the marketing language of the meme coin targeting his financially illiterate followers is clearly taking advantage of their cult adoration).
A meme coin flares up suddenly and burns bright for a bit and then dies. It doesn't create anything, it takes money from one person and gives it to another as long as the former can find the latter to pay them for the coin. Eventually there are no more buyers and it simply caves in. It might still register value but without any liquidity it's essentially valueless. Hence, you can find screenshots online of people claiming to hold millions in wealth in a meme coin but they cannot sell because there is nobody willing to buy.
The whole thing is disgraceful though. Just more fleecing of his followers while milking the office.
It’s mostly money creation because at one point the market capitalization is $70B which is way more money than the degenerate gamblers put in. Now imagine they do it for each of his kid and grandkid. Other people (celebrities and internet influencers) will also get into the act. So lots of money will get created out of the thin air with no products or services created. This is a recipe for hyperinflation.
You're ignoring liquidity and the fact meme coins are a $1|$1 exchange. No new dollars are created.
I can make a meme coin and say I created a trillion dollars worth of wealth.
But if I cannot find anyone to buy it... it is nothing.
Hence my reference to screenshots you'll find online from people claiming they have millions of dollars worth of coins. The reality is, it is worth nothing unless someone else is willing to buy it and often those large numbers disappear fast if said individual finds some to buy but not enough to support the price. No buyers = no liquidity = no value.
Banks are the main providers of liquidity in our real market. Luckily they're not dumb enough to be providing funding for meme coins.
Meme coins exist purely on creation of meme coin ---> money in to buy coins directly equals money out. Essentially its $1|$1 exchange. And anyone left after the early adopters exit are the bag holders who lost.
I think I saw somewhere that someone was bragging they turned $800 into $600,000. They someone else $800 to buy the coins. Now they have to convince someone else to buy their coins for $600,000. Say they find someone to buy their coins for $600,000... but the other person cannot find anyone to buy those coins... They're now just out $600,000.
Excellent breakdown. It’s the perfect example to demonstrate the fourth stage of simulation, pure simulacrum, as described by Baudrillard. We live in the hyperreal.
Great piece. Look forward to your continued analysis in this area. It’s been hard to wrap my head around these issues and find words to express what is happening in this area.
How quickly the two memecoins were born and quickly unravelled was truly scary. I worry about what it bodes for people getting easily swindled and the ramifications it has in terms of memecoins becoming a channel for bribes. Another great piece, Kyla!
You are describing the dotcom era. The idea of “eyeballs” before actual revenues and cash flow. Worked for a while, then came crashing down. It wasn’t real, except for a small few like Amazon who made massive wealth in the long run. But that didn’t prevent AMZN from dropping over 90% when the dotcom bubble was pricked.
When I read essays such as this one, Kyla, it scares me into thinking we are near a major market top. The dotcom mania was followed by a bust and the U.S. stock market that went nowhere for the decade of the 00’s, but did have two 50%+ drawdowns. Are we nearing that time again? Not sure, but your piece makes me think it’s ominously close!
You've definitely got a knack for clarity! Excellent read and analysis. Thanks for sharing this out, Kyla.
thank you!
Of course! I came across your work back in the early pandemic days, had just finished my undergrad at the time - I love the humility, candidness and clear vision you bring to the scene. It makes fin/econ/policy much more relatable and enjoyable for the Gen Z audience.
I would argue that these coins are not value creation, but rather value extraction.
Much of finance can be described as the diversion of money away from the production of goods and services, and while it enriches some, in aggregate, this diversion of money away from production does not create value, but rather diverts value away from the "real" economy to the "speculative" economy.
💯- even WORSE than lottery tickets
This is probably the most terrifying thing I’ve seen you write or speak about. I’m deeply concerned about the ramifications of all this. Nonetheless, I appreciate you doing the work for analyzing this stuff and publishing it. Please stay safe out there.
thanks - it's a heavy and confusing thing. i hope writing these helps to make a bit of sense of it all
Seriously. What is going on right now.
Or the whole thing is a Ponzi scheme. Trump fleeces his most fervent supporters. He and other insiders sell while the price is high. The narrative turns and there are many angry losers. At which point Trump uses the power of the state to try to prop it up, putting the US government on the hook for the speculators’ losses.
that's an option too!
He'll just blame it on democrats and they'll forgive him after he robs them.
>The implications are clear: we’re entering an era where wealth is created faster than regulation can respond, and reality itself is shaped by speculation
At risk of sounding like a pedant -- but i do believe its important -- I wouldn't say wealth is "created" in instances like Trumpcoin, more like, "redistributed".
almost all of the money invested in trumpcoin came through chinese crypto exchanges, probably all orchestrated by Justin Sun. the memecoin is basically a bribery scheme: https://cryptadamus.substack.com/p/the-trumpcoin-cometh
‘everything could all go amazingly well’ ? Surely You’re Joking, Kyla Scanlon
A mass deportation scheme should not be referred to as an "immigration crackdown". This is adopting the language of euphemism. We are talking about millions of Americans being deported.
actually, they are not Americans, that is the point
Love this piece! Really intrigued to know how you think we can better utilise rapid/massive attention to fuel genuine innovation?
Feels as though the two don’t go together as new developments in any field are hard and take real personal & financial perseverance to achieve. Your example of the fires is a great reminder that it usually takes disaster to cause proper re-evaluation. Want to be hopeful (like you!) that it doesn’t come to that on a large scale.
Inflation will go higher because piles of funny money can be created out of thin air.
The markets are already expecting a return of inflation. Mortgage rates went up soon as the election was over.
However, I wouldn't link it to the meme coin trash. While I appreciate she didn't use value creation (as there is none) I'd change wealth creation to wealth transfer.
Nothing is being created. It's just a wealth transfer between gambling degenerates and in the case of trumps meme coin a bunch of his moops along with the gamblers (the marketing language of the meme coin targeting his financially illiterate followers is clearly taking advantage of their cult adoration).
A meme coin flares up suddenly and burns bright for a bit and then dies. It doesn't create anything, it takes money from one person and gives it to another as long as the former can find the latter to pay them for the coin. Eventually there are no more buyers and it simply caves in. It might still register value but without any liquidity it's essentially valueless. Hence, you can find screenshots online of people claiming to hold millions in wealth in a meme coin but they cannot sell because there is nobody willing to buy.
The whole thing is disgraceful though. Just more fleecing of his followers while milking the office.
It’s mostly money creation because at one point the market capitalization is $70B which is way more money than the degenerate gamblers put in. Now imagine they do it for each of his kid and grandkid. Other people (celebrities and internet influencers) will also get into the act. So lots of money will get created out of the thin air with no products or services created. This is a recipe for hyperinflation.
You're ignoring liquidity and the fact meme coins are a $1|$1 exchange. No new dollars are created.
I can make a meme coin and say I created a trillion dollars worth of wealth.
But if I cannot find anyone to buy it... it is nothing.
Hence my reference to screenshots you'll find online from people claiming they have millions of dollars worth of coins. The reality is, it is worth nothing unless someone else is willing to buy it and often those large numbers disappear fast if said individual finds some to buy but not enough to support the price. No buyers = no liquidity = no value.
Banks are the main providers of liquidity in our real market. Luckily they're not dumb enough to be providing funding for meme coins.
Meme coins exist purely on creation of meme coin ---> money in to buy coins directly equals money out. Essentially its $1|$1 exchange. And anyone left after the early adopters exit are the bag holders who lost.
I think I saw somewhere that someone was bragging they turned $800 into $600,000. They someone else $800 to buy the coins. Now they have to convince someone else to buy their coins for $600,000. Say they find someone to buy their coins for $600,000... but the other person cannot find anyone to buy those coins... They're now just out $600,000.
Excellent breakdown. It’s the perfect example to demonstrate the fourth stage of simulation, pure simulacrum, as described by Baudrillard. We live in the hyperreal.
“You can’t fire fires with attention.” 😁 I love how crisply you present your arguments.
Great piece. Look forward to your continued analysis in this area. It’s been hard to wrap my head around these issues and find words to express what is happening in this area.
Attention impact on the American public predicted in 2004 by Green Day in their song American Idiot https://www.youtube.com/watch?v=Ee_uujKuJMI
Heads up I got followed by a bot trying to pretend to be you! Username was kylascan
How quickly the two memecoins were born and quickly unravelled was truly scary. I worry about what it bodes for people getting easily swindled and the ramifications it has in terms of memecoins becoming a channel for bribes. Another great piece, Kyla!