Article
Culture
Economics
Ethics
6 min read

The rights and wrongs of making money with meme coins

When does investing become speculating, or even addictive gambling?
A montage shows Trump with a raised fist against other images of him and the phrase 'fight fight fight'.
$Trump coin marketing image.
gettrumpmemes.com,

Donald Trump’s “liberation day” tariffs may have driven sharp swings in global financial markets, but his actions in markets a few months earlier were in some ways even more peculiar.

On the Friday before his inauguration as the 47th US President in January, the Republican surprised many with the launch of the $TRUMP memecoin, described by its website as “the only official Trump meme”. The cryptocurrency token, in which Trump’s family business owned a stake, initially soared in value to more than $14bn over that following weekend. 

Then, on the Sunday, Trump’s wife Melania launched her own memecoin, $MELANIA, which reached a value of $8.5bn. Even the pastor who spoke at the president’s inauguration subsequently launched his own memecoin. 

For those wondering what exactly a memecoin is, you are not alone. In short, they are a form of cryptocurrency - an asset class that itself has attracted plenty of questions about its substance and purpose - representing online viral moments. They have no fundamental value or business model and, according to the US securities regulator, “typically have limited or no use or functionality”. 

Donald and Melania Trump’s coins subsequently plunged in price, but still have a value of around $2.5bn and $214mn respectively, according to website CoinMarketCap. 

There are plenty of others in existence. PEPE, based on a comic frog, has a value of around $3.6bn; BONK, a cartoon dog, has a market cap of $1.5bn; and PNUT, a reference to a squirrel euthanised by authorities in New York and about which Trump was allegedly “fired up” (although doubt has since been cast on the president’s involvement in the matter), is still valued at around $174mn, despite having fallen sharply in price.  

Dogecoin, seen as the world’s first memecoin and originally created as a joke, boasts a market value of around $25bn. (There are other memecoins which may not be suitable for these pages). 

Some people’s willingness to buy an “asset” with no use or fundamental value may seem strange to more traditional investors. But it can be viewed as just one manifestation of the speculative investor behaviour evident since the onset of the coronavirus pandemic and, indeed, at times throughout history. 

The price of Bitcoin recently rose above $100,000, despite many investors still viewing it as having little or no value (in 2023 the UK’s Treasury select committee described cryptocurrencies as having “no intrinsic value, huge price volatility and no discernible social good”). In early 2021, shares in GameStop - a loss-making US video games retailer that some hedge funds were betting against - rocketed as much as 2,400 per cent, as retail investors piled in, many with the aim of inflicting pain on the hedge fund short sellers (in that respect at least, a highly successful strategy that became the subject of the film Dumb Money). The huge rise in AI and other tech stocks in recent years - until the recent tariff-driven volatility - has also been described as a bubble by some commentators. 

Whether or not such episodes can be compared to infamous bouts of speculative mania in history depends on your point of view (and often can only be judged with the benefit of hindsight) - be it the 17th century Dutch tulip bulb mania, shares in the South Sea Company in the 18th century or the dotcom boom and bust of the late 1990s and early 2000s. 

But it does give rise to the question of when investment should start to be described as speculation or even as gambling? And what are the rights and wrongs of any of those activities? 

There can be negative effects, for instance if the actions of speculators force businesses in the real economy to change their plans or divert time and resources... 

Gambling can be thought of as risking a stake on, for instance, the result of a game of chance or sport in the hope of a bigger payout. While often the result is purely down to chance, in some cases a strategy or an element of research (for instance of a horse or football team’s form) can be used. Investment, in contrast, tends to involve purported economic utility and assets believed to have some sort of underlying value, and holds the hope of future profit (although there are also plenty of bad investments or those that have gone to zero). While an investor must be prepared to lose their entire stake, in some cases such an event is relatively unlikely (for instance, if they buy a fund tracking the performance of a major stock exchange). Speculation is harder to define, but is generally seen as shorter term than investment, with more chance of a bigger gain or loss, and dependent on price fluctuations. Rightly or wrongly, the term has a more negative connotation than investment. 

One writer who explored the ethics of these activities was Oswald von Nell-Breuning, a Jesuit theologian and economist who served as an adviser to the Pope and who was banned from publishing under the Nazis. 

While he found that “one general definition cannot capture all the nuances” of speculation, he identified two different types of speculative activity - one that was purely trying to make a profit from financial market trading, and one based on trying to create a viable business. (See this article in the Catholic Social Science Review for a fuller explanation of Nell-Breuning’s views on speculation). 

As the CSSR article shows, Nell-Breuning found that there can be positive effects from speculation - one might think of better liquidity and price discovery in a market, while, in commodity futures markets, speculators allow producers to hedge risk

But he also argued that there can be negative effects, for instance if the actions of speculators force businesses in the real economy to change their plans or divert time and resources away from production. 

And whereas gambling typically takes place within a circle of players who have chosen to take part, speculation, he wrote, can affect a greater portion of society - for instance, if it affects the price of shares or bonds they hold. 

The Bible - on which Nell-Breuning’s faith and analysis was based - does not take a prescriptive approach to such activities. But it does provide some interesting guidance.  

An entrepreneurial approach to business and investment is applauded, for instance when the writer of the book of Proverbs (traditionally believed to be King Solomon) praises the virtues of “an excellent wife”. These include investing in a field and using her earnings from business to plant a vineyard, and feeding her family from her gains. 

Jesus tells a story of a master who, before going on a journey, gives his property to his servants, each according to their ability. To one he gives five “talents” (a large unit of money), to a second two and to a third servant he gives one. 

The first servant trades with his talents and makes five more talents - a 100 per cent profit - and is applauded by the master on his return. The second servant also trades and similarly makes two more talents and is again applauded. 

But the third servant, being afraid and believing the master to be “a hard man”, hides the money in a hole in the ground. He is condemned as “wicked and slothful”, and told that he should at least have put the money in the bank. 

While Jesus’s story may primarily be about how we view God’s nature, how we use our God-given abilities and whether or not we can take risks in faith for Him, it is also hard not to see investment and indeed wise speculation as being virtuous activities here. Putting the money into a bank account is, in this story anyway, more of a fallback option. 

But the Bible also warns us against putting money above all else in our lives. The love of money is, famously, a root of all sorts of evil, while we are also told to be content with what we have, and that “wealth gained hastily will dwindle”. 

Nell-Breuning similarly warns that a “get-rich-quick” mindset, when this is placed above all else, can be harmful, and advises caution in situations where the lure of big profits can lead the speculator into market manipulation or fraud. 

After all, both gambling and crypto trading have the potential to become dangerous and damaging addictions needing treatment

Ultimately, Nell-Breuning struggled to come to a simple conclusion on the question of whether speculation, in and of itself, is morally wrong. It is, he wrote, a judgment call for those involved. 

When making such decisions ourselves, his - and the Bible’s - warnings may be worth bearing in mind. 

Article
Comment
Economics
Nationalism
Politics
4 min read

Millions of children go hungry in a country that dares to call itself godly

The gospel of national greatness is less about grace and more about political grit

George is a visiting fellow at the London School of Economics and an Anglican priest.

A sand drawing shows an unhappy child's face with the tide coming in from below
A sand drawing for a child poverty campaign.
Barnardos.

If anything, the UK – and more specifically England – is becoming a Christian country again. But not necessarily in a good way. The rise of Christian nationalism mirrors the American experience, with Christian symbols such as the cross weaponised against asylum seekers and the knuckle-draggers under them, marching as to war. 

But there are still many non-belligerents who would stake a claim to our Christian nationhood. Wiser counsels such as the historian Tom Holland. Or Danny Kruger MP, who spoke to a near-empty chamber in parliament recently, before defecting from the Conservatives to Reform UK, about a Christian restoration, envisioning a "re-founding of this nation on the teachings that Alfred made the basis of the common law of England." He may need to explain that slowly to Nigel Farage. 

But by what measure do we claim to be a Christian country? Here’s one: Child poverty. It’s very hard to make a case for a state being foundationally Christian in principle if significant numbers of its children go hungry. And the UK shamefully ranks among the worst of the world’s richest countries in this regard, with our children’s poverty rates rising by 20 per cent over the past decade – defined as those living in a household with less than 60 per cent of the national median income, so currently less than about £19,000 a year.  

That’s some 4.5 million living in poverty, or 9 in a typical classroom of 30. Unless action is taken the number will push five million by 2030. Anecdotal evidence from teachers is truly shocking. Children arrive hungry at school with empty lunchboxes to fill and feed family at home. The UK ranks below poorer countries such as Poland and Slovenia, which are currently cutting their child-poverty rates, and well ahead of other wealthy nations such as Finland and Denmark.  

It’s a national disgrace. Christologically, it also fails the minimum threshold for a nation that supposedly holds that the kingdom of heaven belongs to children. In damp and sub-standard housing this winter, lacking nutritious diet and prone to ill-health, heaven will have to wait for these British children. 

The same gospel tells us that the poor are always with us, which may make us resigned to it. But political complacency won’t do. If there is always relative poverty against great riches, then the true measure must be what we’re trying to do about it. The damning answer to that seems to be very little. 

It’s actually worse than that. The circumstance is one of our own deliberate, political making, exacerbated by the then chancellor George Osborne, who introduced the two-child benefit cap in 2017. That limited benefit payments for families claiming Child Tax Credit or Universal Credit for more than two children. It was part of Osborne’s pantomime wicked-squire act, as he repeatedly told us with a straight face that “we’re all in this together”. It was also borderline eugenics, because one of its effects was to limit the breeding of “lower orders”, the benefit cap disproportionately hitting the budgets of working and ethnic-minority families. 

With Osborne’s selective austerity and social-engineering drive long gone, it’s well past time for a Labour government to do something to rectify such social injustice. Current chancellor Rachel Reeves must abolish the two-child benefit cap in her November Budget. With other welfare cuts prevented by Labour’s summer backbench rebellion, the question inevitably squawked by right-wingers is how that will be paid for. 

 Opposition parties relish the prospect of Reeves welching on pre-election promises not to raise taxes on working families. And abolishing the two-child welfare cap could cost £3.5 billion a year. 

There are creative ways and means. Veteran chancellor and former prime minister Gordon Brown – the unsung hero of the 2008 worldwide financial meltdown, without whom we wouldn’t have an economy to do anything with – proposes fairly taxing the excess profits of the £11.5 billion gambling industry, which enjoys VAT exemptions and pays just 21 per cent tax, compared with 35-57 per cent in other industrialised  countries. And if more money is needed then remove some of the interest-rate subsidy enjoyed by commercial banks when they deposit money at the Bank of England. That is what social justice looks like (gambling also costs the NHS £1 billion-plus in harms, so it’s time for the industry to pay up). 

That points to some fiscal answers. There are other actions that must be taken this autumn, at political conferences and on any platform available to those with a public voice and conscience. It’s good to see Stephen Cottrell, Archbishop of York and stand-in primate of England in the absence of Canterbury, laying into the two-child limit and benefit cap. 

Both Cottrell and Brown tell heart-breaking stories of children’s poverty in the UK. We must fight it and ensure that Reeves’ forthcoming Budget does so. As the children’s commissioner for England, Dame Rachel de Souza said recently that millions of children are living in “almost Dickensian levels of poverty”. The irony is that in Dickens’ time we were called a Christian country. 

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