The Good Sons Versus GameStop

It has been a while since I saw the movie The Good Son (1993) so please do pardon my fuzzy yet necessary and ultimately beneficial recollection of the plot.

Essentially, a boy played by Macaulay Culkin has everyone tricked into believing him to be a good boy. He has all the airs of a good son: His dress approximates Culkin’s more famous character, that of Kevin McCallister in the Home Alone movies; he projects a kind of sweetness and humble intelligence, going so far as to be welcoming to a perceived problem child and project, his cousin, who is forced to stay with the family for a few months, played by Elijah Wood well before the Frodo Baggins days.

Well, as it turns out, the ostensibly virtuous son is anything but. His clement obedience to his parents is an elaborate ploy. In point of fact, he is a juvenile psychopath who wantonly maims and kills animals, speaks like a demon, and whose tears are all crocodile. He stokes fear and trepidation in his siblings and cousin and relishes in the fact that he is the cause of their tortures. He profits from it to the point of odd arousal, like Bill Ackman predicting Hilton and Herbalife stocks would be going to zero.

I’m a lover and a fighter, but never a spoiler–so if you’re interested in watching early 90’s films, I won’t ruin the ending to the film for you.

I will, however, dive into and evaluate the current fascination of the week–one of which the current administration (SHOCKER!) has no notion or understanding whatsoever–that of the short squeeze by the Reddit Wall St. Bets guys and gals on GameStop.

To summarize, individual, mostly young small investors who probably since 2008 and certainly over the last several months of lockdown mania have rightly concluded that the stock market is a rigged casino favoring the house, determined through sound research that large hedge funds were aggressively shorting GameStop stock with put options.

(For a brilliant and concise explanation of the financial mechanisms deployed here, do listen to Tom Woods and Robert Murphy podcasting about it:)

They colluded. They collaborated. They engaged in what could be rightly called a digital “idea lunch”. They bought and placed call options on the stock and as a result, wiped out major hedge funds–by some estimates to the the tune of $70 billion. New Mets owner and fund financier Steve Cohen had to, in the immediate term, bail the good sons out. Did the Wall St. Bets boys playing hardball cost the Mets star free agent pitcher Trevor Bauer? We shall see. Maybe they are Dodgers or White Sox fans?

What is so fascinating then about this play, this gambit is that the good sons lost. The Elijah Woods of the world won. The good sons got unwittingly slapped by the decrepit, spoiling hands that have fed their largesse for years; namely the Federal Government which bailed them out in 2009 and Washington’s central bank which has propped up this faux-market economy for years. What Fed monetary policy has produced is speculative fever that no tulip pollen ever could, and this glut of monopoly money emboldened young bucks to make a move against the good sons of Greenspan, Bernanke, Yellen and Powell. Because, for all of the Fed chairmen’s talk of employing Fed interventions so as to help the little guy, all those initiatives have resulted in exacerbating the gap between the uber-rich and the rest of us. Ironic then, isn’t it, that the transfer of wealth from the favored sons, which is an always emphatically-stated yet perpetually-elusive objective, was actually accomplished in the matter of days? It all makes one wonder how truly serious the Fed is about its stated goals of curing every societal ill that it, in fact, has created, from social inequality to stoked racism. Pace Rothbard: The behemoth is both the arsonist and fire department indeed.

Two prominent issues, left unwritten in the saga remain. The first is whether or not people en mass will come to recognize that it is not the unethical suspension of Robinhood trading and certainly not free financial market mechanisms that created the casino, but Monopoly money creation to the detriment of all. As the great Jeff Deist elucidated on Twitter:

Let’s hope the masses do have such an awakening.

The second issue is to what extent the malicious parents will ride to the rescue of their good sons. Ominous news has broken in the last few hours to indicate that the enablers-in-chief are ready to act:

Be sure to stay tuned. Perhaps make some popcorn.

Oh, and hug your kids–especially the real good ones.