Financial Nihilism and Bitcoin Explained

1 Jun 2024

“No one is crazy… Your personal experiences with money make up maybe 0.00000001% of what’s happened in the world, but maybe 80% of how you think the world works.”

GameStop and AMC rallied again. The cryptosphere’s market cap is $2.54T at the time of writing. A majority of Americans feel frustrated that the wealthy and corporations don’t pay their fair share of taxes, and they’re probably right. Populist slogans like “tax the rich” resonate deeply across the world while inflation erodes the average person’s purchasing power, leaving younger people feeling as though homeownership isn’t for their generation. The high costs of living are causing many to delay or forgo having families, contributing to declining birth rates in the developed world.

In "The Psychology of Money," award-winning author Morgan Housel emphasizes that when it comes to investing, “No one is crazy… Your personal experiences with money make up maybe 0.00000001% of what’s happened in the world, but maybe 80% of how you think the world works.” Young adults, low-income individuals, gig-economy workers, people in economically depressed areas, and even high-income individuals aren’t crazy for investing in Bitcoin—their experiences and pain inform their actions.

Understandably, a growing number of people are feeling hopeless and desperate to do something different because the old ways of affording a home or having a family aren’t working anymore. There’s a gnawing sense that the system is broken and a need to do something bold that conventional wisdom might call reckless, nihilist, and absurd. But where nihilism suggests resignation and passivity in the face of unfolding events, Stoicism advocates taking rational action within one’s control. A kind of economic counter-movement referred to as financial nihilism offers hope in a very counter-intuitive way.

What is Financial Nihilism?

Financial nihilism is a mindset where individuals believe that the financial system, including money and investment practices, lacks any real value or meaning. This outlook stems from a profound disillusionment with traditional financial norms and a perception that financial planning is futile because of the inherent unpredictability and perceived unfairness of the system. People who subscribe to financial nihilism often reject conventional financial wisdom, such as saving for retirement or investing in the stock market, viewing these activities as pointless.

Where Did It Originate?

The erosion of public trust in traditional financial systems can be attributed to several key events and trends, which trace the roots of financial nihilism.

  1. 2008-09 Financial Crisis: The global financial crisis was a pivotal moment that shattered faith in banks, financial institutions, and the overall economic system. As people witnessed massive bailouts for banks while ordinary individuals lost their homes and jobs, skepticism about the fairness and stability of the financial system grew.
  2. Occupy Wall Street: In 2011, the Occupy Wall Street movement highlighted widespread frustration with economic inequality and corporate greed. The movement's slogan, "We are the 99%," underscored the belief that the financial system is rigged to benefit a small elite at the expense of the majority.
  3. Brexit and Political Upheavals: The Brexit vote in 2016 and the rise of populist movements like Trump's MAGA campaign reflected broader discontent with economic globalization and traditional political and economic institutions. These events demonstrated a significant portion of the population's dissatisfaction with the status quo.
  4. Economic Instability: Ongoing economic instability, including rising debt levels, job insecurity, and the gig economy's precarious nature, has contributed to feelings of financial hopelessness. Many younger people feel that the financial system does not work for them, leading to a nihilistic outlook.

Is It a Financial Counter-Movement to Traditional Investing?

Financial nihilism can indeed be considered a counter-movement to traditional investing. While it lacks formal organization, it represents a significant shift in how people perceive and interact with financial systems. Several economic vehicles and movements embody this trend:

  1. Cryptocurrencies: Bitcoin, Doge, and Pepe are just a few cryptocurrencies often seen as a rejection of traditional financial systems. They offer an alternative that operates outside of government control and banking systems, appealing to those disillusioned with conventional finance.
  2. Meme Stocks: Stocks like GameStop and AMC, which saw massive price increases driven by social media and online communities, exemplify this counter-movement. These investments are often based more on community sentiment and hype than traditional financial metrics.
  3. Decentralized Finance (DeFi): DeFi platforms aim to recreate financial services in a decentralized manner, removing intermediaries like banks. This aligns with the financial nihilist view that traditional financial institutions are untrustworthy or ineffective.
  4. Speculative Investments: Financial nihilists often favor high-risk, high-reward investments. This includes not only cryptocurrencies and meme stocks but also NFTs (Non-Fungible Tokens) and other speculative assets.

What are the Economic Implications of Financial Nihilism?

The rise of financial nihilism has several significant economic implications:

  1. Market Volatility: The popularity of speculative investments can lead to increased market volatility. Prices of assets like cryptocurrencies and meme stocks can fluctuate wildly based on social media trends and hype rather than fundamental value.
  2. Economic Inequality: The pursuit of speculative investments can exacerbate economic inequality. While some individuals may achieve significant gains, others may face substantial losses, widening the gap between the wealthy and the rest.
  3. Skepticism of Financial Institutions: As more people adopt a nihilistic view of finance, trust in traditional financial institutions and advisors may decline. This can lead to a greater reliance on alternative financial advice and community-driven investment strategies.
  4. Shift in Investment Strategies: Traditional investing strategies like those of Rockefeller or Warren Buffett may begin to lose their luster. Financial nihilists often prioritize short-term gains over long-term growth, leading to a shift away from stable, conservative investments.

The Stoic concept of "the Oobstacle is the way" aligns with financial nihilism and Bitcoin as responses to economic inequality by viewing the systemic flaws and injustices of the traditional financial system as challenges to be transformed.

How Does Bitcoin Fit into All of This?

Bitcoin holds a unique place in the narrative of financial nihilism. It can be considered the first "meme stock" of this movement and has become a symbol of financial rebellion. Like Socrates, who is often regarded as the father of philosophy, Bitcoin is seen as the original and foundational element of its category.

Bitcoin was created in 2009 in the wake of the financial crisis, explicitly designed as an alternative to traditional currencies and banking systems. Its decentralized nature and defiance of government control appealed to those disillusioned with the existing financial order. Bitcoin's rise was driven not just by its technological innovation but also by a cultural and ideological shift toward questioning and rejecting traditional financial norms.

As Bitcoin gained popularity, it paved the way for other cryptocurrencies and speculative investments that embody financial nihilism. Its success demonstrated that alternatives to the established financial system could not only exist but thrive, validating the financial nihilist perspective.

The Stoic concept and title of best-selling author Ryan' Holiday’s book of "The Obstacle Is the Way" aligns with financial nihilism and Bitcoin as responses to economic inequality by viewing the systemic flaws and injustices of the traditional financial system as challenges to be transformed. Financial nihilism and Bitcoin leverage these obstacles to innovate and create alternative financial paths, emphasizing resilience, empowerment, and ethical considerations. This mindset turns economic adversity into opportunities for developing more inclusive and equitable financial systems, embodying the Stoic principle of using difficulties as catalysts for growth and improvement.

But now the question turns to you: in the face of a financial system that often seems stacked against the average person, will you continue to trust in traditional methods that have failed many, or will you explore the uncharted paths that financial nihilism and Bitcoin offer? As you navigate your financial future, consider how you can transform the obstacles in your path into opportunities for growth and innovation. Will you take the risk to potentially reshape your financial destiny, or will you wait for the old systems to adapt? Fortunately, the choice, and the power to act, lies in our hands.

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