<nettime> Pyramid schemes: from Albania to the US

[Felix Stalder <felix@openflows.com>]

The unraveling of large Ponzi schemes is a hugely destructive affair, 
all the more because such schemes thrive in societies were official 
institutions are either weak or captured by criminal interests and 
people are desperate. In the 1999 nettime reader, there is an account of 
the Albanian pyramid scheme which brought the country to the brink of 
collapse.

SUBJECT: PYRAMID SCHEMES:
ALBANIA 1996–98
FROM: GENC GREVA <GEGREVA@NEW-EUROPE.COM>
DATE: WED, 30 SEP 1998 11:22:29 -0400

https://www.nettime.org/nettime/DOCS/zkp5/pdf/markets.pdf

Of course, the situation today with crypto-currencies is much more 
extreme today, simply because of the size of the bubble that cannot but 
burst at some point. Below is an excerpt of a recent article that tries 
to think through the consequences for the US. And Europe is probably not 
that much behind.


------------------------------------


The Ticking Bomb of Crypto Fascism
The crypto market’s inevitable crash will pull America’s politics in an 
even scarier direction.
HAMILTON NOLAN JANUARY 4, 2022

https://inthesetimes.com/article/the-ticking-bomb-of-crypto-fascism

<....>


The crash of crypto is bound to happen for the same reason that all 
Ponzi schemes eventually crumble: There is not an infinite supply of new 
people willing to pay ever-increasing prices for the stuff that you 
currently own. The more interesting question is not whether many 
small-time investors will lose a lot of money on their crypto 
investments, but what will happen when they do?

Here is what will happen when hundreds of thousands of younger investors 
are smashed by the crypto crash: They will be radicalized. This will not 
be experienced as simply a decline in prices, because crypto represents 
much more than a simple investment to its most fervent adherents — it 
represents a way out of the American trap. It represents the existence 
of opportunity, the possibility of economic mobility, the validation of 
the idea that you, a regular, hard working person without connections, 
can go from the bottom to the top, thanks to nothing but your own savvy 
choices. When that myth is shattered, disillusionment with the American 
system will follow. Unfortunately, given the realities of the moment, 
these newly disillusioned and radicalized and angry and broke people are 
far more likely to turn to fascism than to socialism.

Crypto, a portfolio of inherently worthless online tokens, is already 
sustained almost entirely by myth. Its value proposition is so 
inscrutable that when it melts down, almost any narrative could be 
crafted to plausibly explain it. It was the Fed! The government! The 
leftists who hate entrepreneurialism! It was the dark and devious forces 
of the shadowy deep state! Anything will do. It will enforce the priors 
of those who placed their faith in crypto as a good substitute for the 
American dream — a crowd of Barstool Sports readers and tech 
libertarians and the types of people who used to buy silver bars from 
Alex Jones before they turned to Bitcoin. The crypto-evangelist 
population skews heavily towards a sort of New Age libertarian, 
anti-government right wing-ism, and when they see their financial dreams 
evaporate, they will likely set their sights for revenge on the things 
they already despise. The broad effect will lead to a large number of 
newly angry, bitter, disillusioned, hopeless people who are too steeped 
in the culture wars to turn towards working class solidarity, and 
instead turn towards hate.



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