Is greed good? Gekko’s philosophy in the new millennium

“Greed is good” was a mantra for the generation that grew up in the 1980s, Wall Street, and Gordon Gekko’s myth.

The movie blamed the corrupt and greedy Wall Street system of that era, but it created a legend.

Many young people approached finance by emulating Gordon Gekko, and they all wanted to make money. Anything different today? I do not think so. Greed also plays a part in the injection of liquidity during covid.

We’ve been greedy ever since we discovered fire. It’s in our nature. The problem isn’t greed; it’s fine as long as it leads to evolution and progress. 

Greed is just part of nature. Even animals and plants show greedy behavior. Animals compete for more food, just like plants compete for more sunlight.

Greed is different from avarice. If greed means wanting to have something better or more, why do people view it negatively? Greed is an essential part of human evolution, as long as it doesn’t lead to excess.

Money and the financial world are the problems. When greed only looks at cash, it creates distortions that lead to huge problems.

We’ve created businesses that rely only on money, and we continually sell and buy inconsistent financial products to make money. In this case, greed leads to financial bubbles that ultimately leave nothing behind.

We can evaluate the gold rush of the 1850s in so many ways, but it populated parts of the United States, changed society, and created something new. The rush to buy Dogecoins is pointless, even 1000 years from now. 

Can greed be a good thing?

In “Wall Street”, Gordon Gekko’s famous speech exalted greed.

Gordon Gekko speech
Greed is good. Gordon Gekko speach
Wall Street -1987

Greed basically gives off a negative vibe because it can cause social conflicts. But is greed so bad? Do you think humanity would have evolved without greed? I’m pretty sure the answer is no. We have created many good things because of our desire to evolve.

Do you think modern technology would be available without the desire to get rich of a large or small group of entrepreneurs? We’re not gonna have drugs, food, science, or even art.

Would people work hard without wanting more things and be better than others? Maybe not.

You can’t avoid greed if you like this world and don’t want to live in a cave and fight with tigers. Greed has caused the world to evolve rapidly, perhaps too quickly, and disorderly.

The real problem is not greed itself.

Is it a bad thing that engineers worldwide are actively competing to find a way to create clean energy and get rich? Pharmaceutical companies spend money to find cures for diseases and make money out of them.

The problem isn’t greed itself, but uncontrolled greed, like any other feeling. The world is based on balance; an imbalance appears when a mood or behavior becomes predominant. In the long run, inequality will find a counter-force that will change things.

I’m writing a financial blog, so I’ll focus on the financial sector. In the modern financial world, money is used to make more money without creating anything useful for humankind. It is Mark Hanna’s Fugazi principle:

Wolf of wall street speech
Mark Hanna Fugasi Wall Street

Billions of dollars are wasted making products that don’t do anything and only help a few people get even richer. At the end of the process, no new technology or miracle drugs are found. Another bubble will start; someone will make money, someone else will lose it. 

The bigger the bubble, the more damage it will do when it bursts because it will pop sooner or later.

Is it just Wall Street’s bad guys who caused it?

People blame big banks and brokers, but they should blame themselves. Bubbles don’t just happen; they take many people to make one, and generally, it’s the middle class that feeds the bubble.

The three groups involved in a financial bubble are:

  • A group that tries to make easy money by exploiting an inefficiency in the financial system or the irresponsibility of another group of people.
  • A bunch of people who play a financial game without knowing what they’re doing, they only have the desire to make money.
  • The rest of the world that doesn’t play the game, but still suffers when the bubble bursts.

The people who start the game are always the same: the Wall Street Boys. Financial elites have the money and power to create what they want. 

They sell the dream of getting rich by selling mortgages or tech companies’ stocks. The point is, they can’t make a dollar if the second group doesn’t play the game, falling into the trap.

The problem isn’t just with the people who created the bubble; it’s also with those who invested money without knowing what they were doing.

causes of subprime crisis
Image from thebalance.com

The global financial crisis of 2007

Let’s take the subprime mortgage crisis. The guilty are only the bad guys on Wall Street, or are they also guilty who tried to speculate by buying houses they could not afford? 

I’m not talking about people who bought houses by taking advantage of easy mortgages to live in them. I’m talking about those who have bought many to rent them or sell them later at a higher price.

People who buy financial products without knowing what they’re doing are just as guilty. At first, people get rich, then more arrive, and greed grows, and the bubble inflates.

When the bubble bursts, the collateral damage hits the rest of the world that was left out, didn’t get rich, but now they’ll have to pay the consequences. 

BitCoin, another good idea corrupted by greed?

Some ideas are born for a good purpose but then get corrupted by greed. I remember the early days of BitCoin when everyone was passionate about the project. At first, it wasn’t just about the rise in the price of a cryptocurrency. People were talking about blockchain, decentralized payments, and ways to make people freer.

People talked about privacy, technologies, and thousands of enthusiasts studying ways to increase this new transaction system. What are we discussing today? We’re talking about only the price of BitCoins or other absurd cryptocurrencies that were created for speculation.

Wall Street got into the BitCoin game because it realized it could make money off people’s greed. As always, greedy investors and greedy banks go hand in hand. 

Elon Musk and others realized they could move the price of these instruments with a simple tweet, and they did it. But they’re just tweeting; the bubble’s being inflated by people rushing to buy. Cryptocurrencies are just a speculative asset these days. 

Why does this always happen? It’s just simple, mass manipulation by taking advantage of people’s greed. The desire to have more money and the fear of staying out of a winning trend exploits people. 

But I’m hopeful that cryptocurrency investments will lead to technological progress in the sector. I hope the initial project isn’t totally wrecked.

Greed is destroying the green economy

From blockchain to the green economy, we are at the same point today. The green movement was born a few years ago with the noble purpose of reducing pollution. 

People need to invest in the green economy because, without resources, companies in the sector won’t take off. But the bubble is already growing, fake greens are everywhere, and it’s getting harder to detect the deception.

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Most of the money won’t reduce pollution but will make the same rich as in previous gold rushes. How can we not blame those who invest in fake green economy stocks?

We will waste a lot of public money on fake green projects because people don’t understand the difference between green and fake green. 

It won’t be a total failure like the subprime mortgages of 2007 because we’ll still have advances in technology that reduce pollution. But the desire for money has already overcome the desire for a green world. 

Can a market exist without greed?

Without greed, the financial system probably wouldn’t exist because if people didn’t have the drive to make more money, why would they invest?

Without greed, the government wouldn’t be able to sell bonds, companies wouldn’t be able to finance themselves, and savings wouldn’t exist. There wouldn’t be any technological progress, no welfare, no modern well-being. Maybe nothing would exist.

The problem with the financial markets is not greed; it’s the ignorance and incompetence of most private investors. Of course, political corruption goes hand in hand with financial bubbles.

In other words, greed is good as long as you’re aware of it and know how to control it. Only the ignorance and stupidity of a large group of investors and voters associated with greed create imbalances, financial bubbles, and poverty.

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