April 13, 2021

NFT, SPAC, and the Future of Money

Illustration: Cryptical Hit This article was featured in One Great Story, New York’s reading recommendation…

Illustration: Cryptical Hit

This article was featured in One Great Story, New York’s reading recommendation newsletter. Sign up here to get it nightly.

Pity the financially literate! Imagine their email and SMS in-boxes over the past few months as friends and distant relatives seek guidance through the strange new set of acronyms that define the COVID economy. “Can I buy an NFT?” a parent wants to know. (An NFT is a “non-fungible token” — essentially, a digital asset whose uniqueness, and therefore its value, is stored cryptographically on the digital ledger known as the blockchain.) “Should I invest in GME and AMC?” a cousin wonders. (Those are the ticker symbols for GameStop and the theater chain AMC, two “meme stocks,” a.k.a. “stonks,” that were sent to inexplicably high prices earlier this year by a mass of gleefully irrational investors on Reddit.) “What is a SPAC, and why is it merging with my employer?” a friend who works at a start-up media company asks. (A “special-purpose acquisition company,” a shell corporation created to buy a private company so it can go public without the scrutiny of a traditional IPO.) “Can I SPAC GameStop with my NFTs?” an uncle emails. (Better to just ignore this one.)

Every day, some new money weirdness crosses our feeds: teenage TikTok stars apologizing for recommending a Star Wars–themed cryptocurrency that turned out to be a scam, a longhair trader best known as DeepFuckingValue and Roaring Kitty testifying before Congress, the R&B singer Akon announcing he’s building a new city in Senegal that will operate on his proprietary cryptocurrency. Naturally, the Jack Bogle of this moment is the fratty founder of Barstool Sports, Dave Portnoy, who launched an exchange-traded meme-stock fund earlier this year and whose sex tape was recently blamed for a dip in the stock of a gambling company he’s heavily invested in. His biggest rival for meme-economy influence is Elon Musk, who has the ability to tweet a single phrase — for example, “Use Signal” — and cause a defunct penny stock to rise 6,000 percent. Of course, they are not the only stars of the moment. There’s Beeple, the millennial artist whose animated-GIF NFTs sell in the tens of millions of dollars. And following a sort of nursery-rhyme logic that seems as rational as anything else about the economy, Shaq has launched a SPAC in partnership with one of Martin Luther King Jr.’s sons.

What is happening? It’s tempting to blame the money mutations of the past year on the coronavirus and to see the financial bets on Robinhood and the soaring prices of NFTs as the anguished outcries of the bored, locked down, and anhedonic — people who might otherwise be betting on the Jets to cover the spread. Hearing people discuss their goofy options plays provokes the same reaction as watching Twitter devote a day to a lecherous obsession with Lola Bunny, Bugs’s girlfriend: We need the vaccine.

For all the ways that this particular moment in the history of markets feels strangely futuristic — computer dollars buying cyberart on the digital marketplace! — the basic dynamic at work here is a recognizable one. There are a lot of suckers who want to get rich fast without much work. The economy has always been weird; it’s an aggregation of human behavior, and humans are weird.

But roiling under this familiar surface is the reverberation of a much larger, fundamental shift: Something is changing in how we think about money. Maybe the question we should have been texting our financially literate friends wasn’t “What is an NFT?” but “What is money now?”

For most of us, at least until recently, money was a way of sorting out which kind of life you could lead. Where you lived, what you ate, how much free time you had — these were all functions of how much money you had. Money was a scarce and precious resource; to amass more, you were told, you needed to be responsible. The economy’s fluctuations were difficult to predict, and to limit damage to businesses, money needed to be managed by non-political experts operating on scientific principles, like park rangers dealing with endangered animals. Otherwise, the scaremongers warned, you would get inflation, which would result in your carting wheelbarrows of cash from store to store to buy gruel for your starving children.

Recently, however, money has taken on a somewhat different cast. Some people have a lot of it (like, $150 billion of it), and even those with less are using it to do silly things involving acronyms and apps — and in the process are making more money. And while the GameStop saga might have left you feeling both exhilarated and queasy (a bit like the beginning of the Trump campaign), it didn’t seem to affect the wider economy much at all.

Meanwhile, since President Biden took office, 156 million Americans have received a sizable sum from the Treasury Department. Taken together, the checks (and debit cards and direct deposits) represent $372 billion handed out to nearly half of the people in the country with no strings attached. Some 22 million people lost their jobs during the pandemic; millions more had their livelihoods threatened. For these people, the experience of receiving these funds was something like witnessing a miracle: profoundly good, and profoundly strange: Free money? From the government? They can do that? Why haven’t they been doing it all along? You could — and people did — buy groceries, pay rent, settle loans. You could also, yes, speculate in the stock market a little bit.

If you were going to choose a moment when money became unstuck in the popular imagination — when it stopped being entirely serious and started being, at least a little, funny — you could do worse than an interview that then–Federal Reserve chair Ben Bernanke gave to 60 Minutes in 2009. Asked if the money the Fed was injecting into banks in the wake of the global financial crisis was “taxpayer money,” Bernanke shook his head and grinned sheepishly. “To lend to a bank,” he said, “we simply use the computer to mark up the size of the account that they have with the Fed.”

So if money wasn’t just a neutral, quasi-natural unit of account that corresponded in some way to the real word, what was it? In the years since the global financial crisis, new and revitalized theories of money have marched from the fringes of discourse to the center. Bitcoin and the cryptocurrencies that followed have promised a money that relies neither on banks nor on governments but instead on multiple overlapping private money regimes, all backed by cryptographic trust systems — a return to a premodern, hard-metal past by way of a carbon-intensive server-farm future. Elsewhere on the political spectrum, a new economic synthesis called Modern Monetary Theory, sounding a bit like Keynesian economics explained by Morpheus from The Matrix (“What if I told you … that taxes don’t pay for spending?”), came to prominence, promising an abundant future of lavish spending and full employment. Liberals and conservatives alike became enamored of the idea of universal basic income, or direct cash payments, over the Byzantine and often cruel benefits systems. Even Marxists began to return to Das Kapital to read it as a text about money and value.

What these widely diverging cults of money were responding to was a sense that money had come alive again — that, given the global financial crisis and the Fed’s “using a computer to mark up the size of the account,” money had been reanimated from the suspension of settled policy consensus. After 30 years of broad political and academic agreement on the correct path for monetary policy, the institutional crisis of banks and governments in 2008 (not to mention the collapse of a gatekeeping news media) had opened up space for a new theory of money — or a dozen.

If crisis had opened the door to a new way of thinking about money, the checks closed the door on the old: Gone was an understanding of money as a scarce, quasi-natural resource to be managed disinterestedly by apolitical experts. The question was: What was replacing it? Would MMT’s chartalist view of money as a tool of state power prevail? (The undeniable success of the pandemic cash drop seemed to be a point in its favor.) Or could the crypto-millenarians’ anarchic vision of money backed by cybermetal take the upper hand? (Cryptocurrency had a boom year, perhaps driven by the existential fear that accompanies a global pandemic.) Maybe the Marxists would finally figure out how to abolish the value form? (Don’t hold your breath.)

In the absence of a hegemonic answer to the question of what money is to us, strangeness reigns. Even as money has been injected with new political vitality, its actual life has become more baroque. NFTs and meme stocks and cryptocivilizations aren’t just the products of new technologies run amok or old financial dynamics dressed up in new clothes; they are the morbid symptoms of an interregnum during which the role and identity of money in our lives and politics are shifting.

Activists, cranks, and cultists may wage pitched battles over monetary policy, but so far in the 21st century, “money,” for most people, has been defined by Silicon Valley, where truckloads of it are lined up and set on fire in a quest for the next multibillion-dollar IPO. The underlying premise of the software industry is that everything is, or can be, money if it’s viewed on our phones: “Sharing economy” platforms convert “assets” like apartment and car leases into supposedly easy cash; social-media platforms do the same with “eyeballs,” “experiences,” cute children, and covetable lives. In practice, however, this world of unleashed value is at best distorting and at worst miserable. Gig-app drivers find their wages squeezed as users digitally hail ultracheap private cabs.

It was into this world — built by venture-capitalist speculators with ludicrous piles of wealth, structured by opaque and arbitrary metrics, and focused on attention and reward — that the pandemic checks arrived last year. No wonder they felt both more precious than ever and somehow fake. On the one hand, pandemic payments are running out and your rent is due; on the other, last year the U.S. government pulled 13 million people out of poverty with a few million strokes of the autopens.

In an era defined by slow growth and flatlined productivity (if not outright economic stagnation) and marked by widening inequality and underemployment, “money” feels at once deadly serious and stupidly silly. Seen from this viewpoint, the pandemic economy isn’t an anomaly but a heightened version of one possible future: a world where money is abundant but safe long-term investments are rare and where “getting rich quick” is less an American pathology and more the best bet for a stable life — assuming you think such a thing is possible with ecological catastrophe looming. If you’re supposed to buy stocks as a bet on the future condition of a business, why would you buy stock in a brick-and-mortar retail video-game chain unless you didn’t really believe in any future at all? How different is the stock market from betting on soccer? What’s the point of investing safely when Elon Musk can create and destroy millions of dollars of value with a couple of tweets?

Maybe Bernanke was more prescient than even he knew: For all the esoteric philosophizing of MMT and crypto, for all the big money piling into new financial products and spending bills being announced, for many of us, money is only experienced through our phones, as a number on a screen. You pay your rent with one app, you buy put options with another. The number goes up, it goes down, it lives in the little portal we hold in our hands.