As events at the stock market/internet interface have shown this week, the concept of Wall Street as a free and fair way to manage the world’s finances is a complete scam.
Non-Regulation Is a Myth
There is no such thing as a free market, just the same as there is no such thing as free speech. If everything is unregulated, you’re basically talking about the law of the jungle; might makes right and the devil take the hindmost. And since I inadvertently brought up religion, that’s one of the first structures the Powers that Be set up to keep the peasants in line. One of the next is the stock market.
When someone defends free enterprise, it means they’ve found a way to fix things so that they win. They don’t want “no rules.” They want their set of rules. You know, the ones that give them an edge over everyone else. The rules that let them cheat.
And if you don’t know what I mean, watch what happens when the little guys find a way to win. Then “they” change the rules.
Parler
Twitter threw certain people off their service because of their radical views. So they created Parler. After reports that Parler was used to coordinate the 2021 storming of the U.S. Capitol, Apple and Google pulled Parler from their app stores, and Amazon Web Services canceled its hosting services. Parler went offline in January.
Now, I’d like to go on record that this was probably a good thing for American society as a whole. But the fact is that if someone is providing a service and a lot of people are using it, if you put pressure on the service provider, you are denying those people access to that service. And it wasn’t the government that took this action. It was Big Business. Interesting.
Meanwhile, Back at the Stock Market
When the stock market was invented in the Netherlands in 1500s, it was relatively fair and completely unregulated. Over the centuries of trial and error — and there have been a couple of BIG errors — the need to regulate trading has resulted in a fairly complicated set of rules. And you better believe the main players in the game have had their influence on those rules, either through direct input or through the political influence they have bought with their stock market profits.
For example, the common idea of the stock market is that if your stock goes up, you make money, and if it goes down, you don’t, right?
Wrong. Well, if you’re a small-time investor, that’s how it goes. But somebody has invented a method, and created regulations to allow it, whereby you can “short” a stock. In other words, bet that it’s going to go down, and win that bet. Sounds like magic, right? More likely sleight-of-hand. Not to mention self-fulfilling. What happens when the world discovers that a major player is shorting the stock in your company? Curtains for you, big profit for them. Companies with enough buying power go past profiting from the effect of the price drop. They become the cause of it.
The Reddit Revolution
So this is what happened last week to GameStock and its ilk. The company was looking to lose a lot of market share. So some of the big hedge funds were shorting it, expecting to make a bundle. And then a bunch of ordinary small-time buyers used the social media site Reddit to gather a group called WallStreetBets and used their combined power to buy stocks on Robinhood, an online brokerage firm that anyone can use, to drive GameStock (and several other companies) prices up. That’s UP, as in 1600% in a few weeks.
Of course, the hedge funds that were betting stocks were going to drop in price went from a sure thing to a huge loss. They were not happy.
And suddenly, out of the blue, Robinhood (and Toronto Dominion and other brokers) slammed on the brakes. No more purchases of GameStock allowed. Sales only. Get Out of Jail Free cards for anyone who had shorted the stock.
Well, if a stock can be sold but not bought, it sort of puts the whole idea of fair and unregulated play into question, doesn’t it? As expected, the news started a run on the stock, which closed the day at only 50% of the price it had been earning.
Why?
Well, nobody can really say. The Robinhood CEO went on national TV to deny that any pressure had caused him to make the move. However, when pushed, he didn’t really have any reason. According to him, it was “trading as normal.” But it was also “a very difficult decision to make,” which sounds like a rather abnormal situation. The WallStreetBets people are suing Robinhood, and it will now all fade into the court system, where news will dribble out in third-page mentions in the financial papers. We’ll be back to business as usual. (Anyone remember “Occupy Wallstreet?”)
The reason given for halting trading? Those poor little investors don’t know what trouble they’re getting into and how much money they could lose. Well, when Wall Street starts telling you “It’s for your own good,” start checking your wallet. What they really meant is, “You’re playing against the big boys. Get lost.”
And that’s where it sits. Except for the fact that WallStreetBets is now targeting the silver markets. We’ll see how that goes.
Is This Real?
In case you think I’m just peddling a line about stock market manipulation, here’s a fact for you from the Vancouver Sun on Tuesday, February 2. Last September, JP Morgan Chase & Co was fined almost a billion dollars for manipulating the futures market in precious metals. They admitted it and paid up. And they were just the ones that got caught.
The Bottom Line
The juggernaut rolls on, with the rich and influential creating the rules that allow them an advantage over the rest of us. And so it will continue, as long as we’re stupid enough to let them. Joseph de la Maistre said that every nation gets the government they deserve. Well, we get the economic system we deserve as well. Deal with it or put up with it.