(Sending this one out early because by Monday morning it might be ancient history, the way things are going…)
Just something I had to get off my chest while watching the insanity of this weekend unfold (sincere condolences to Detroit Lions fans, it wasn’t supposed to end like this).
Something even more insane is going on this weekend, and it’s not going to end well.
To set the stage, this was Donald Trump about 5 years ago:
And this was Trump on Friday:
What is the Trump “meme?” Does it do anything? No. Does it entitle the holder to any rights? No. Does it have any intrinsic value at all? No!
“Have fun!” he signs off. See, this is just for fun. Don’t go blaming him if you lose money, this is just for fun.
Except it isn’t. Real money is at stake. I don’t even think Trump had any idea how this thing would take off.
As I write this on Sunday afternoon, the Trump “meme” coin-type-thing has a total value of over $74 Billion dollars. Someone on Twitter estimated that in 36 hours, a Trump-meme “investor” could have made a return equivalent to an investor in the S&P 500 since 1970.
This is dangerous. The President of the United States is promoting a Ponzi scheme. But what’s even more dangerous is that Trump legitimizing this ridiculous bullshit could lead to more and more crooks taking advantage of hopeless punters looking for life-changing wealth.
The finance textbooks would politely call this a “misallocation of resources.” The problem is that the example described above isn’t an isolated one… it has been repeated over and over in so many crypt-adjacent areas in the past few years (does anyone remember ICO’s? NFTs?) A misallocation of resources means that we are wasting the future productive capacity of invested capital by evaporating it in stupid crypto scams, only serving to enrich predatory promoters.
If this particular scam wasn’t being run by the frikkin’ President, the Securities and Exchange Commission might have another word for it. (In case you weren’t sure, Ponzi schemes are illegal in the United States.)
Sadly, Trump soared to power calling himself the “Crypto President,” and so he’s not going to be the one to put out the fire. Instead, he’s pouring gasoline on it and fanning the flames.
His friends, including guys like “Crypto Czar,” billionaire VC investor David Sacks are certainly going to get rich(er) off the mania they are stoking. I urge everyone else to keep their distance. While these guys are pumping this shit, they are almost certainly liquidating and selling their worthless “coins” to you. Don’t be fooled into believing this crap is real. Even if the scammer peddling it to you is the President of the United States.
Addendum: hours after writing the above, we have a $MELANIA meme-coin-type-thing hitting the market. The $TRUMP coin is down 60% from the peak earlier this afternoon. Everyone involved in this should be ashamed of themselves, and anyone who loses money in it deserves what they get. Perhaps this will finally expose the crypto grift for what it is.
(I can’t wait ‘till the customary Monday morning to send this out, because by then I’ll probably have to update it to write about the $BARRON meme-coin-type-thing, and I’m not going to do that.)