Enter The Financial Matrix

Memes, Machines, Man, and Manufactured Reality—And A $5 Trillion Game of Digital Telephone

Trump creates chaos, and then he curates it as if it were precious art.

—Bill Clinton

A single Tweet added $2.4 trillion to the U.S. stock market on Monday—only for that value to evaporate just as quickly when it was revealed to be “fake news”. The entire episode unfolded in just over a half-hour, triggered by a digitally amplified game of telephone claiming that President Trump was considering a 90-day tariff pause.

Global equity markets—and with them, millions of retirement accounts—proved as vulnerable to virtual whispers and “rug-pulls” as any fly-by-night memecoin. The S&P 500—purportedly a bedrock of institutional stability—momentarily revealed itself as little more than a Wall Street Bets meme stock dressed in a bespoke Kiton suit.

Monday’s volatility, however, merely foreshadowed the genuine upheaval that occurred two days later. Markets staged an intraday rally on Wednesday following a quintessential Trump Tweet, echoing the market-moving communications style that became a hallmark of his first term in office:

President Trump’s “buy” Tweet preceded by several hours an official announcement of a 90-day tariff pause. What had been dismissed as “fake news” on Monday became policy by Wednesday. The S&P 500 closed up nearly 10% and added $5 trillion in value, marking the third largest daily market move since 1990.

The whiplash proved so severe that Goldman's economists retracted their recession call within 73 minutes of issuing it:

The Financial Matrix: Welcome To The Machine

We chronicle the past week’s market events not because they were underreported or for their shock value, but rather because they have become routine features of our financial landscape.

It’s clear that we are witnessing a deep fracture in our financial reality. AI sentiment analysis now rivals financial analysis in importance, and a single ChatGPT-generated “fake news” headline can unleash algorithmic cascades that move global markets with unprecedented violence and velocity.

The fusion of social media, algorithmic trading—and more recently, AI chatbots like ChatGPT—now co-authors market reality, giving rise to the Financial Matrix: a hyperreactive, hyperreal simulation of markets in which vibes, memes, and machine logic displace cash flows and productive capital.

Our digital maps no longer describe the territory—they overwrite it.

Note: The following was originally published privately on January 13, 2021. Updated, revised, and expanded for public release on April 13, 2025.

Hyperreality Unleashed: How Memes and Machines Hijacked the Market

Media represents a world that is more real than the reality that we can experience. People lose the ability to distinguish between reality and fantasy. They also begin to engage with the fantasy without realizing what it really is.

― Jean Baudrillard, Simulacra and Simulation

Decades before iPhones, Twitter, and social media existed, French philosopher Jean Baudrillard—whose work inspired the movie The Matrix—provided a framework for understanding our current predicament. According to Baudrillard, even by the 1980s we humans had become so bombarded with information that we had lost our connection to reality itself.

Media and social media don’t merely reflect reality but actively construct it, creating what Baudrillard termed "hyperreality". As we wrote in Simulations & Simulacrum:

Baudrillard warned that society was becoming so reliant on models and maps to represent reality that it had lost all contact with the real world that preceded those maps. As we develop ever more sophisticated systems to codify and divorce ourselves from reality—“screen time”, social media, Virtual Reality, TV, algorithms, and artificial intelligence—we increasingly perceive the representations themselves as real, and in turn, the less the real world pertains to the reality that we perceive. This results in “the death of the real” or “hyperreality”: a self-referential simulation of reality…like the virtual world in The Matrix.

Markets crossed that line long ago. The Financial Matrix is Baudrillard's nightmare realized.

Digital Schizophrenia: Social Media’s Splintering Of Financial Reality

I must hold it for the greatest calamity of our time…that one moment is consumed by the next, and the day spent in the day...Have we not already newspapers for every hour of the day!

—Johann Wolfgang von Goethe, circa 1800s

Baudrillard argues that constant exposure to information and imagery has transformed humans into “pure screen[s], a pure absorption and resorption surface of the influence networks”. Society indulges in an orgiastic “ecstasy of communications” yet the content of its communication is frequently devoid of meaning or reference to reality. Indeed, over the past decade in particular—as smart phones and social media have proliferated—society seems to have fully evolved into a Baudrillardian “postmodern carnival”.

Consider emblematic images of our hyperreal condition: the New Yorker’s 2020 pandemic cover depicting a woman carefully staging professional competence for her webcam while chaos lurks beyond the frame; or tourists risking their lives for the perfect wildlife selfie.

Google, Instagram, Twitter (X), Facebook, TikTok, and Netflix have come to not only define our lives, but have also spawned their own meta-realities: people now spend time watching other people play computer games on Twitch and watching other people trade stocks on Twitter, YouTube, and TikTok.

Baudrillard saw modern communication as schizophrenic—fragmented, discontinuous, and unmoored from shared reality both in structure and signal. Social media turns this fragmentation into feature, not bug: users juggle alternate accounts, curated avatars, and disjointed expressions of self across platforms. The result is digital dissociation of identity into a stream of disconnected signals, optimized for clicks but devoid of coherence.

But social media has been a pernicious enabler and amplifier of hyperreality in other less obvious ways, as well. It presents fundamentally distorted images of reality, triggering emotional responses and feeding our base instincts—such as envy when comparing one’s ordinary life to the curated perfection displayed on Instagram—that makes users more susceptible to manipulation by “influencers” and memetic contagion.

Moreover, these platforms enable us to inhabit isolated “reality” bubbles—some self-selected, others algorithmically imposed. This in turn amplifies our innate cognitive and emotional biases—including those that influence investing and financial decision-making—leading to increasingly distorted market perceptions and emotionally driven financial behaviors.

Financial markets now reflect this, as clearly evidenced by Mr. Market’s Schizophrenic Break in 2020 and the chaotic retail/algorithmic investor frenzy around meme stocks such as GameStop in early 2021 (and echoed again in 2024).

YOLO Economics: Dopamine, Meme Stocks, and Financial Anarchy

Social media also collapses our temporal perception into the perpetual now. Inflation has throughout history compressed societal time horizons and created a “YOLO” (“You Only Live Once”) mentality. This has been intensified, however, beyond any historic precedent as social media has single handedly turned much of society into ADHD-suffering dopamine addicts who constantly scroll through their timelines searching for instant gratification.

In a hyperreal meta-twist, social media turned the short time horizon mentality itself into a self-replicating meme (YOLO) replete with its own hashtag (#YOLO), brands, clothing lines, and “investing” strategies!

This shift toward short-termism hasn’t just warped individual behavior—it has rewired capital markets. Investors—both human and algorithmic—increasingly chase momentum and meme virality over value. Meme stocks, high frequency trading algorithms, and zero-day options (0DTE) now dictate the tempo of modern markets, compressing investment horizons from years to minutes and milliseconds. Founders and firms contort their business models around rapid monetization, meme fluency, and hype. We didn’t just meme YOLO: we institutionalized it and built our financial system around it.

The Influencer Industrial Complex Comes For Your Portfolio

The seismic shift from passive Web 1.0 to interactive social Web 2.0 over the past decade has dramatically accelerated the creation of virtual communities and viral meme propagation. Bloggers have evolved into social media “influencers” (think: the Kardashians) with the ability to reach millions around the world instantaneously—endorsers who create, shape, and spread audience attitudes memetically through social media.

Memetic influencers have become such a significant economic force in the Financial Matrix that we now witness surreal crossovers between influencers and the public markets. Having exhausted dodgy SPAC targets, we now IPO influencers in a trend disturbingly similar to one that occurred at the peak of the Dotcom mania:

Source: CNBC

Lest you think this a mere pipe dream, in 2020 we saw the IPOing of mansions filled with TikTok influencers through a Chinese reverse merger:

While most people think of “influencers” primarily in relation to consumer brands or products, influencers are highly active in the financial sphere as well, where they shape investment trends through memes.

Roaring Kitty and Dave Portney (Davey Day Trader)—known for picking stock tickers out of a scrabble bag—are perhaps the most high-profile examples, but there is a Twitter investment community known as “FinTwit”, Reddit’s WallStreetBets forum, as well as countless private chat rooms on Slack and Discord devoted to day-trading, ETFs, options, and various get-rich-quick investment schemes.

When President Trump Tweets, Algos Listen—And Trade

The explosion of social media has real-world consequences for professional investors: social media and “investing” have become increasingly closely interwoven in recent years, most notably when markets have risen or fallen in response to President Trump’s “Tweets” on Twitter.

Twitter Rewired Wall Street

The biggest thing that changed is that opinions became decentralized. We no longer have these curators of information, the six TV channels and then the 12 TV channels and then the 15 news outlets. Now information can come from a random anonymous account from some random corner of the Internet, become a meme and then spread with more ferocity and momentum and speed than if it had come from CNN.

—

Lulu Cheng Meservey

, How to Spread a Message in 2025

Among its other achievements, Twitter revolutionized investing by democratizing and decentralizing access to financial news and analysis. Before Twitter, many market participants lacked any way to verify breaking news “reality” until mainstream media outlets such as Bloomberg or the Wall Street Journal published the story—usually behind pay walls and after delays. But in today’s environment, that model is increasingly unworkable: by the time an article is written, edited, and vetted, it’s already obsolete.

The past week’s Tariff Tweet incidents—which triggered multitrillion-dollar intraday market swings—demonstrates Twitter's role as an unprecedented real-time clearinghouse through which investors globally can directly create, disseminate, and engage with breaking news.

This democratization enabled global information sharing, crowdsourced research and due diligence, direct access to leading investors and CEOs, product feedback channels, and even whistleblower access—fundamentally leveling the playing field in financial markets.

Skynet’s Stock Picks: How Algos Amplify Social Media Madness

But Twitter was equally revolutionary because it presented all of this information in a text format that easily lent itself to algorithmic scraping and parsing. Now NLP (Natural Language Processing) algorithms parse the news, memes, and indicators of interactive “investor sentiment”—as well as additional types of social media data—in real time to apply in their trading strategies [Editor’s Note—this was originally written prior to the release of ChatGPT, when NLP-based sentiment scraping still seemed cutting-edge].

Twitter and social media have become powerful market-moving forces—not only because of the ways in which they connect people to one another and generate new modes of human interactivity, but also because they have opened a new communication portal between humans and algorithms. In other words, Twitter allows for the passage of memes and messages between humans-humans, humans-machines, machines-humans, and machines-machines in ways that are both exceedingly contagious and highly volatile.

When Trump Tweets, therefore, the market responses are driven not only by humans but also by algorithms which “read” the President’s tweets nearly instantaneously and then initiate a buy or sell position in response. Prior to the 2016 election this market behavior essentially didn’t exist; over the past several years Twitter and social media have become an integrally enmeshed part of the market itself—for humans and algos alike. The hyperreality and self-referentiality engendered by social media use among humans is amplified by algorithmic trading based on social media, and more recently the generation of social media by large language models (LLMs) such as ChatGPT.

Fake News, Real Crashes: The AP Hack That Erased $140 Billion

Disturbingly, as we saw this past week, the circulating messages and memes on social media–even those posted by “official” channels and that become “trending” topics—have no assurance of being grounded in any sort of reality let alone that they represent “truth”.

In light of the recently disclosed [Ed: 2020] SolarWinds hacking mega-scandal, it is worth underscoring that social media is also the perfect medium through which to engage in memetic warfare—including disinformation, “fake news”, and false flags—which propagate instantaneously through communications channels and algorithms.

Through social media, bad actors (or even algorithmic bots themselves) can spread false or misleading information about a stock or news event to large numbers of people with minimum effort and at a low cost. When necessary, they are able to conceal their true identities by using fake profiles or even impersonating credible sources of information.

The first ominous harbinger of these risks emerged 2013, when the AP inadvertently caused a stock market plunge—wiping out ~$140 billion of the S&P 500 index’s value in 6 minutes—when it tweeted a “fake news” story from a hacked account regarding an attack on President Obama.

The AP hack offered a blueprint for how fragile the membrane between media and markets had already become. The AP tweet spread memetically between humans and algos, and recursively moved and adapted back and forth between the two as both human and algorithmic traders responded to what appeared to be an authoritative news story.

The AP hack revealed the fragility of an emerging ecosystem. In 2025, that ecosystem has matured into a fully recursive infrastructure—where market narratives are no longer merely tracked by algorithms, they may even be authored by them. Large language models (LLMs) can fabricate plausible headlines with near-perfect linguistic fluency, injecting “fake news” directly into the bloodstream of platforms like Twitter—platforms that are already wired into the financial system via algorithmic trading systems and NLP pipelines.

When Memes, Man, And Machines Move Markets: The Viral Feedback Loops of the Financial Matrix

The AP hack crash is perhaps even more disturbing than the Amazon fly genetics book algo price war or the 2010 Flash Crash in that it reveals the triangular interconnection between the social media communication system, algorithms, and the financial system.

Humans and algorithms now intertwine not only within the markets and social media independently; these former information silos now automatically intermingle and transform each other through algorithmic amplification. News, ideas, emotions, and market signals flow seamlessly between social platforms and the financial system, generating feedback loops that cascade through markets at unprecedented speeds. This digital enmeshment produces emergent behaviors that ripple through our hyperconnected Financial Matrix, creating volatile outcomes and ultimately reshaping real world conditions as a result.

The combination of social media’s inherent hyperreality, its catering to the basest of human instincts and biases, the dopamine addiction to short term news and gambling that it fosters in its human users, its susceptibility to memetic warfare, its vulnerability to pump-and-dump schemes, and its intertwinement with instantaneous algorithmic trading and chatbots like ChatGPT can easily snowball; this cascade effect can continue until worthless one-employee companies such as CYNK spike 36000% to a $6 billion market value, or the entire financial system is threatened by market melts up or flash crashes.

Meme Magic Meets Robinhood’s Dark Patterns: Igniting A Retail Investor Frenzy

Algorithmic “meme magic” came into sharp focus during the retail trading frenzies of 2020-2021 as algos collided head on with humans and COVID “stimmies” (stimulus checks); social media platforms’ engagement-optimizing algorithms became market movers.

Reddit's social media algorithms, for example, likely enabled “meme magic” by amplifying GameStop-related content and catalyzed a cascade of attention and trading activity. GameStop’s algorithmically-fueled price surge reflexively enabled the firm to strengthen its real-world financial position by selling new shares to raise cash.

Robinhood, a key player in the 2020-2021 stock frenzies and meme manias, ran afoul of regulators for its algorithmic practices. The firm allegedly “gamified” its user interface—employing game-like elements in order to drive engagement in speculative activities—while simultaneously wielding “dark pattern” sorcery to manipulate users into addictively gambling on stocks with leverage.

But Robinhood’s true innovation wasn’t just user interface manipulation—it was the integration of behavioral nudging with real-time market participation, creating a feedback loop where engagement itself became a market input. Robinhood didn’t just reflect the Financial Matrix—it actively helped construct it, collapsing the distinction between entertainment, speculation, and price discovery.

Meme Stock Mania Fueled By Skynet

Algorithmic trading likely played a pivotal role during the 2021 meme stock frenzy that we discussed in Mr. Market’s Schizophrenic Break. As Sam Hendel explained:

The media is missing the quantitative trading component of this…computerized algorithms can pick up on the slowly increasing trading activity and then exploit it, leading to snowballing prices. The algorithmic trading is overwhelming the human trading.

Algos designed to react to market momentum and social media signals amplified the initial price movements triggered by retail investors on r/WallStreetBets. This created a self-reinforcing cycle: as stock prices rose, more algos and retail investors joined in, further driving up prices and attracting still more attention, leading to snowballing prices.

GameStop's trading volume hints at the scale of algorithmic activity. On January 26, about 179 million GameStop shares were traded, despite only 70 million shares existing. Each share changed hands more than twice on average that day; at times, GameStop's daily dollar volume rivaled giants like Tesla and Apple.

Institutional investors quickly adapted:

Managers in the US and UK have begun using algorithms to scour forums such as r/WallStreetBets or other data sources to try to spot co-ordinated buying...Tiger cub Lee Ainslie’s Maverick Capital wrote to investors in April that its quant team “now systematically monitors Wall Street Bets and other similar forums that cater to less experienced, retail investors”.

As CBS noted in a follow up article, the market “has changed:”

But while many of the meme stocks that flew high last year have fallen, their mere existence signifies an important shift in the market… Just as there are now specific indexes designed to follow stocks that make noise on social media, institutional investors are taking such buzz into account in making investment decisions for their clients running pension funds and 401(k) assets for millions of people.

"The market has changed," said Ihor Dusaniwsky, head of predictive analytics at S3 partners, a technology and data analytics firm. "We see hedge funds buying retail sentiment data — that's part of their algorithms now."

Investors a decade ago mostly zeroed in on a company's financial performance, such as past and projected profits, in assessing its stock. But recent years have underscored the importance of momentum in stock prices, Dusaniwsky said. In his definition, a stock has "momentum" when its price has changed significantly in the previous week at the same time it is attracting attention on social media and Wall Street…

Dusaniwsky concluded: "It doesn't have anything to do with technical aspects [of the company] or anything — it's really the market moving the stock.”

In other words, hyperreality and HyperPrices have long since outgrown the description offered in Jefferies’ primer "When the Market Moves The Market", which examined how computerized market structure self-referentially precipitated the hyperreal 2018 mini-crashes. The Financial Matrix has evolved into a multi-layered, recursive system where social media influences algorithms, which then influence markets, which then become social media topics—creating an unprecedented, self-referential feedback loop.

AI Hyperstitions: Reality Optional

The rise of AI and ChatGPT has taken this triangular interplay between humans, algorithms, and the financial system to dizzying new heights. In perhaps the most extreme example to date, an AI agent known as @truth_terminal began posting absurdist content centered on an obscure early-internet meme called "Goatseus Maximus".

What started as a surreal joke metastasized—through a recursive loop of ironic human engagement, algorithmic amplification, and the direct wiring of memes into financial infrastructure—into a very “real” $428 million cryptocurrency.

Goatseus Maximus wasn’t just satire. It was a test—a memetic summoning ritual—to see whether AI could conjure market value out of the digital ether via "hyperstitions": ideas that bootstrap themselves into reality through viral belief and propagation. In 2025, it turns out: it can. Beliefs can now be engineered by large language models trained on culture, tuned on virality, and rewarded by attention. It’s as if “pet rocks” got remixed by neural nets and sold back to us as a tradeable asset class; the meme is the market.

We’ve built a system where hallucinated assets can achieve significant market value, where a parody becomes a portfolio holding, and where satire is indistinguishable from signal.

Postmodern Portfolio Theory

The events and phenomena described in this piece—from the market-moving power of Trump's tweets, to the Robinhood retail trader frenzy, to the rise of AI-powered "hyperstitions" like Goatseus Maximus—all underscore the increasingly surreal and simulational nature of our financial markets. Meme virality replaces value; dopamine replaces discipline.

In the Financial Matrix, vibes override productivity and fundamentals. Social media, tradebots, and AI—operating within a medium shaped by central bank and Keynesian policies—no longer interpret the market: they script it. Together, they’ve fused into a self-referential, recursive feedback loop that erodes the essential mechanisms of capital formation and allocation—and thereby threaten the foundation of our economic system itself.

Our simulation has dissolved the difference between investing and postmodern performance art. We didn’t just build a system where markets react to fiction. We built a fiction that reacts to itself—and prices its own simulated reality in real time.

We didn’t just lose the signal—we monetized the noise.