Money Game is a 2022 American drama, written, directed, and produced by Julian Lowenthal. The movie is based on a white paper, written by Chris Galizio and Moses Grader, called “the $340 Trillion Problem,” which describes how the Federal Reserve broke the ecosystem of capitalism by intervening in bond markets. It was set in 2021, when the FED grew its balance sheet by over $6 trillion.
The movie is based on real-life pandemic-inflicted economic hardship for the average American. It emphasizes the importance of family and togetherness. The film’s plot is quite informative. Money Game intends to depict actual economic events to help explain to global citizens some basic concepts of economics and finance and the consequences of central bank intervention in markets.
The film tells the story of a widowed father, James (played by Daniel Washington), who has two daughters. He works as a medical technician during the outbreak of COVID. James plays basketball with Bryson Hill, a young hip CEO of TAPIT, which is “the next big thing”, like Snapchat, TikTok, or YouTube. Bryson is making hundreds of millions on his new app, while James struggles to make ends meet.
Eventually, James decided to take a course in finance at a community college, where he meets Professor Gardner, who explains the “money game” to him. .. In one of the classes, Gardner describes that as interest rates fall, asset prices rise. And when asset prices go negative, all assets are worth infinite. This makes no sense, but neither does negative interest rates. As who would ever buy a bond with a guaranteed loss??
While elaborating the money game, Professor Gardner turns to his white board and presents the theme of Money Game, “But here’s the problem, capitalism requires risk to allocate scarce resources.” He walks back to the whiteboard and erases the word “risk”. “What would happen if we removed risk from capitalism? He went further by giving an example, “What would happen to the ecosystem of the savannah if we slaughter every one of the lion.”
James: “The gazelle population (passive investors) would explode.”
Aimee: “But then they would be competing for scarce water resources and die off.”
Gardner: “Correct, and when the FED intervened in bond markets, they broke the ecosystem of capitalism.”
The stock market shifted from active managers (Lions) to passive (gazelle) and quant. Now the system no longer sorts winners from losers which slows the real economy.
The real economy is no longer growing, and the system is competing for scarce energy and food assets which cause inflation.
The irony of the film is that even a community college professor knows that capitalism requires risk (interest rates) to allocate scarce resources, but the FED does not see it. In fact, when the FED removed the risk, they broke the ecosystem of capitalism.
The film uses the Big 5 from the African savannah to represent the ecosystem of capitalism. The lion (active managers) is almost extinct. The cheetah (crypto) is seen as James, who is at a concert with his two girls. The wildebeest represents algorithms, as Professor Gardner describes how the “Reddit guys finally figured out how to trigger the ‘stampede’ of algorithms.” The Rhino represents gold, a coin in the CNBC commercial, encouraging everyone to “Save the rhinos as they are not dinosaurs yet.” The gazelle represent passive managers.
The only animal that is never mentioned is the elephant, because it’s the elephant in the room: the main character of Money Game, James, representing the “real” economy that is not growing.
More irony—the founder of passive investing understood that it had its limits. The closing quote from Money Game is from Jack Bogle which he quoted in in 2017. It states as,
“If passive ever gets bigger than active, there will be chaos and catastrophe, our markets will fail.”
The stock market is no longer predicting anything. It is only reacting to FED policy.
In a passive world, when a company issues shares, no analysts are left to make the much-needed dilution calculations. Market cap increases when shares are issued, which causes the trend-following quant to see the momentum and start buying, pushing it further. It’s a simple market failure.
The film parallels the real economy, which is now misallocating resources and competing for scarce resources (energy, food, etc.), causing the highest inflation in 50 years. The ecosystem shifted away from capitalism, which rewards profit, to central planning along, monetarism & Keynesian economics, which rewards companies that need “financing.”
The film displays the reality of the modern economy, which is no longer growing as the system keeps on financing losing companies. Productivity, in terms of economic expansion, significantly decreased by May 5, 2022.
Imagine re-introducing a pride of lions (thinkers) back into the Savannah after the gazelle population exploded 10x and was competing for scarce water and food?? The lions would make a killing.
The goal of the film is to produce thinkers in the world who can get the real-world economy to grow again.