GME, Doge, Supreme: How Getting Rich Went Full Internet

“This painting here, I bought it 10 years ago for $60,000,” the corporate raider says, standing before a massive canvas. “I could sell it today for $600,000. The illusion has become real, and the more real it becomes, the more desperately they want it.”

This particular raider is fictional — it is Gordon Gekko, in Oliver Stone’s 1987 movie “Wall Street.” The painting, however, is real: “Paysage,” by Joan Miró, a canvas that sold at auction in 2001 for $503,000. Gekko’s line reflects an eternal investing ethos: find a scarce or unique object that others will covet, buy it, and then hold onto it as its value soars. But in 2021, that ethos seems to have been turned on its head. In the hyper-ironized Extremely Online world we live in, the less real something becomes, the more desperately people seem to want it.

Exhibit A: the Nyan Cat GIF. You know the one: an 8-bit cat with a body that’s a cherry pop tart, flying through outer space and leaving a rainbow trail. This GIF exists all over the internet, remixed into countless videos and memes. It also exists as a unique artwork, registered on the blockchain, and sold in an online auction on February 19 for 300 ETH. Which in dollars works out to around $600,000 — almost the same as the overly-aggressive price Gordon Gekko put on his Miró.

So to the million-dollar question... is this dumb? Perhaps.

But understanding how Nyan Cat can sell for $600,000 is important because once you do that, a lot of other things start making sense, from GameStop to Dogecoin to the hypebeasts that have for years lined up around the block to buy $200 t-shirts at Supreme — a company that was itself recently bought by VF Corporation for $2.1 billion. Or 3,461 Nyan Cats.

Getting rich slowly became much harder after 2008 because the financial crisis effectively killed compound interest.

I think there’s a formula to understand what’s going on with all these things; I call it YOLO ZIRP SWAG.

Let’s start here: in the YOLO ZIRP SWAG world (I’ll explain the terms in a bit), enormous wealth can be created out of seemingly nothing. But there are three main rules of the game. Let’s call those rules Contingency, Irony, and Solidarity, in homage to the great philosophy text by Richard Rorty.

Contingency

The first concept to understand is Contingency — the idea that success is not preordained, but in large part simply a matter of luck. Duncan Watts, the theoretician of viral culture, calls this “cumulative advantage.” It’s impossible to predict what’s going to become popular, he says, because the main ingredient in determining whether you like a certain piece of popular culture is simply whether that thing is already popular. As a result, he writes, “tiny, random fluctuations can blow up, generating potentially enormous long-run differences among even indistinguishable competitors.” Success isn’t a function of anything intrinsic; instead, it’s unpredictable and contingent, reliant on factors outside any individual’s control.

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Consider certain parts of the stock market — the parts that have stopped making rational sense. One seemingly valueless stock will explode for seemingly no reason. Figuring out which one will be next has become impossible, and even trying to understand why one stock rose rather than a different stock is to ask the wrong question. The trick is: don’t look at the object itself; look at the underlying contingency and randomness.

On the Reddit message boards, the content most likely to get tens of thousands of upvotes is “loss porn” — screenshots of losses that can be multiples of the poster’s annual salary.

There are thousands of beaten-down stocks, tens of thousands of cryptocurrencies and non-fungible tokens (NFTs), and hundreds of thousands of old t-shirt designs. Trying to work out the mechanism whereby this one rather than that one became valuable is a bit like building a computer to work out the physics of a roulette wheel. Even if you could do it, it wouldn’t help you understand how roulette really works. After all, at heart, roulette isn’t a game of physics — it’s a game of chance. And the people who make money from roulette aren’t the gamblers but the casino operators.

How does that work in financial markets? Consider cryptocurrencies. When you hear about a group of insiders (our “casino operators” in this metaphor) trying to manipulate a market, there’s a good chance that they will be coordinating their actions using an app called Discord. Big Pump Signal, for instance, is a Discord server that picks an unloved cryptocurrency, more or less at random, and announces it every 48 hours. The announcement precipitates a “big pump” of buying from the server’s 250,000 members that send the price of the currency soaring — before it then, invariably, falls back to earth. It’s a dumb game and a very easy way for normal folk (our “gamblers” in this case) to lose a lot of money, even as a small group of insiders (the “casino operators”) make a fortune.

The name of the app could hardly be more on point. It comes from Discordia, the Roman goddess of randomness. And the underlying principle they seem to operate on is that there’s nothing intrinsic to valuable items that somehow destined them to become that way.

Irony

After Contingency, the second concept you need to understand is Irony. The tradition of ironic objects having great value is a long and noble one, going back at least to Marcel Duchamp exhibiting a urinal as art in 1917. Irony has alchemical properties: it can turn lead into gold or a mass-produced urinal into the most important artwork of the 20th century.

Irony is the dominant mode of Extremely Online culture, which regularly alights upon a random found object — a picture of a Shiba Inu, perhaps, or an obscure sea shanty — and reifies it through remixes and memeification. The less sense a value proposition makes, the more ironic it becomes, and the more ironic it becomes, the more attractive it becomes — until, in the self-fulfilling manner of all popular culture, it finally starts making sense. Nyan Cat is valuable not despite the fact that it’s dumb, but because of it. Supreme sold out of bricks.

A seemingly valueless stock will explode for no reason. Figuring out which one is next has become impossible and trying to understand why one stock rose rather than another is the wrong question.

Solidarity

The final concept in our trio. To be online is to be part of a community and be part of a world where attention is a commodity. Communities, therefore, become defined by the objects of their attention, and a degree of loyalty to those objects becomes a defining feature of what it means to be part of the community — even if that loyalty is mixed with, of course, irony.

To create value in an object is just to create shared agreement about that object’s value. The larger the community in agreement, the more value that can be created. The communities that can be built online are almost limitless in size, which means they can create value at will — just by collectively agreeing on where the value lies.

None of these ingredients — Contingency, Irony, and Solidarity — are new. They’ve been around for decades, or centuries. So why have they managed to combine now to create a powerful source of value? That’s where YOLO ZIRP SWAG comes in.

YOLO

YOLO ZIRP SWAG is an artifact of a radically new world, one that was formed in the crucible of the financial crisis of 2008-9, and how it changed the way the economy works for an entire generation.

That crisis showed how quickly, and how devastatingly, everything can fall apart. (The arrival of the coronavirus pandemic in the winter of 2020 was a stark reminder, for anybody who needed it.) Up until 2008, people got rich slowly, over decades. Perhaps they’d save up a down payment for a house, pay their mortgage assiduously over 30 years, and sock whatever excess money they could cobble together into a retirement account. But then, in the financial crisis, the idea of long-term savings and asset accumulation as a road to wealth lost credibility with a lot of people. Home values cratered into negative-equity territory; the stock market crashed. The idea of slow and methodical wealth accumulation started to look like a sick joke played by Wall Street on unwitting chumps.

The get-rich-quick culture has always existed. But it took on a new form in the aftermath of the great recession.

The more Extremely Online you are, the better placed you are to identify what’s going to be the new hotness. To be able to jump on the pump and exit before the dump.

After all, that’s what the world discovered Wall Street was doing, pre-crisis. The finance industry wasn’t “long-term greedy,” in the famous formulation of former Goldman Sachs chairman Gus Levy, but rather the opposite: “short-term greedy.” What’s more, that short-term greediness was the very thing that caused the humble Main Street Americans to lose their homes, their jobs, their wealth.

The lesson learned by a whole generation was simple: if you want to get rich, don’t be a chump. Instead, take a leaf out of Wall Street’s book, take big risks, and try to score that home run. If you assholes get to do it, we get to do it, too. YOLO: You Only Live Once.

ZIRP

The other important development is that getting rich slowly became much harder after 2008 because the financial crisis effectively killed compound interest. Taking a modest nest egg and watching it grow as it earns interest, year in and year out — that used to work fantastically well. Some people called compound interest the eighth wonder of the world. But the crisis forced central banks around the world to bring interest rates down to zero, in a desperate attempt to prevent the global economy from imploding. They’ve stayed there, more or less, ever since, in what is known as the global zero interest rate policy, or ZIRP. Central banks have been keeping interest rates at or near zero for well over a decade now in order to try to get economic activity back to its pre-great-recession potential; and now, in the wake of the coronavirus pandemic, it seems certain that rates are going to remain this low for the foreseeable future. Increasingly, rates are actually negative after accounting for inflation, which means that a savings account is likely shrinking your money instead of growing it. Compound interest works wonders if interest rates are at 10%, but it gets you absolutely nowhere if they’re at zero.

In a world of ZIRP, the dream of becoming a rentier — of living on the income generated by your assets — is out of reach for all but a fraction of the top 1%. If a millionaire invested $1 million in 1-year Treasury bills paying 0.08%, for instance, that would give her a princely income of about $65 per month. To obtain an annual income of $60,000, she’d need to invest $75 million. Compare that to March 1989, when 1-year Treasury bills yielded 9.64%. $1 million in those bills would throw off $8,000 per month, and an annual income of $60,000 required just $622,000 invested in T-bills.

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SWAG

Faced with a ZIRP world, the natural reaction is simple: thanks, I hate it. So forget all the assets that generate income — bonds, houses, dividend stocks. Leave them to the boomers. What remains is the world of capital appreciation: acquire something, watch it go up in value, sell it at a massive profit. The faster it appreciates, the richer you get. Enter the realm of SWAG.

Investment advisors have always struggled to understand assets that don’t have any kind of income associated with them. They gave them a catch-all acronym — SWAG. It stands for silver, wine, art, gold — because those were the assets that boomers would invest in, mostly with very modest success. But SWAG of today is generally different: it’s Bitcoin or non-fungible tokens (NFTs) like CryptoKitties or Hashmasks. It’s Supreme skate decks or Yeezy sneakers. It’s baseball or basketball cards, be they physical or virtual. It’s prints from the hot Brooklyn artist Brian Donnelly, better known as KAWS, or rare bourbon or obscure vinyl. The common denominator is artificial scarcity — with a lot of emphasis on the artificial since a lot of these things are easily re-producible except for their blockchain watermarks. And for an online generation immersed in irony and fast-moving attention swarms, the SWAG of choice seems destined to be digital — or at least something that would accumulate cultural cachet in the digital realm of Instagram selfies and Reddit flexes.

A stock like GameStop, which isn’t turning a profit, let alone paying a dividend, is a token that’s traded with other people playing the same game, one that’s worth whatever someone’s willing to pay.

In order to identify objects that will soar in value, connoisseurship is worthless. Art, for instance, is valued not on its intrinsic qualities but on its status as a meme. To see a KAWS object online is to grok it immediately because it has achieved meme status, and that meme status translates easily into real-world value. In this new world, the juvenile digital doodlings of an artist who posts on Instagram under the handle @beeple_crap — a man whose bio reads “art shit for yer facehole” — can become worth millions, worthy of being auctioned at Christie’s.

We live, after all, in an age of artifice — a world intermediated by our phones that still feels to those who grew up in it vibrant and urgent and real, in stark contrast to our mundane pandemic-constrained physical existence. Critic Kyle Chayka has what he calls the Ragnarok Santa Hat Theory of Digital Capitalism, named after a dumb item in an early-2000s multiplayer video game. “Money is made not from salary or even slow index-fund gains,” he writes, “but identifying the right scarce digital meme at the right time.” The more Extremely Online you are, the better placed you are in identifying what’s going to be the new hotness, to be able to jump on the pump and exit before the dump.

The GameStop frenzy of early 2021 was the point at which the logic of YOLO ZIRP SWAG arrived in the spiritual home of all who dream of getting rich quick — the stock market. Instead of rejecting stocks as the avatar of boomer finance, the memelords of Reddit took unloved penny stocks, in or near bankruptcy, and transformed them into stonks — memes that could take on a SWAG-like life of their own. After all, a stock like GameStop, which isn’t even turning a profit, let alone paying a dividend, is essentially a token that can be traded with other people playing the same game on their phones, one that’s worth whatever someone else is willing to pay. Just like Dogecoin or Top Shot digital basketball cards.

The goal was to get rich, of course, and many people did. But, almost more importantly, it was also fun, shot through with in-jokes and memes. The hedge funders on the other side of the GameStop trade were grave and sober — which is why it was so joyful to beat them at their own game while laughing about it and not really taking any of it too seriously. YOLO, dude. Lulz.

The larger the community in agreement, the more value that can be created. The communities that can be built online are almost limitless.

Consider this. On the Reddit message boards, the type of content most likely to get tens of thousands of upvotes is “loss porn” — screenshots of losses that can be multiples of the poster’s annual salary. Losing money is a central means of becoming part of the community, and posting your losses is a way of showing that you can laugh at what one massively popular post called “the sadomasochistic part of the capitalistic system we are living in.” LOL, nothing matters; the only winner is irony.

If you want to understand the world we live in, look to the hypebeasts, not the Wall Street Journal. These people participate in commercial arenas carefully constructed by multinational corporations and gazillionaires — Nike, Supreme, Kanye, Drake. The cynicism with which the games are manufactured — the pace of the drops, the size of the edition, the banality of the item itself — is visible to everybody, especially the young men lining up for hours in order to get the opportunity to buy a $200 t-shirt. They’re driven by FOMO, or fear of missing out — the people who know how they’re being manipulated but who are happy to play the YOLO ZIRP SWAG game, all the same, often making real money doing so. As brand consultant Ana Andjelic says: “The joke’s on them, but they’re in on the joke.”

It’s true that the real money will be made by the market manipulators — the likes of VF Corporation, the owner of Supreme, or Dapper Labs, the owner of Cryptokitties and Top Shot, or the shadowy individuals at the heart of Big Pump Signal. Not everybody who buys a Supreme t-shirt will be able to turn around and sell it at a profit, and even the people who succeed in doing so will make hundreds rather than millions. But it’s a fun game to play, and it’s a community. And especially now, in the middle of a pandemic, what else are you going to do?

Written By

Felix Salmon

Felix Salmon, the chief financial correspondent at Axios, is an award-winning writer, editor, and podcaster. The host of the weekly Slate Money podcast, he was previously the finance blogger at Roubini Global Economics, Condé Nast Portfolio, and Reuters.