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Todays episode is about the future of onions.
Now, Im no expert on where onions are headed, but here are my top 50 theories.
One: Wi-fi.
Two: new hairdos.
Three: gunionsonions that looks like guns.
Four: munnionsonions that look like Olivia Munn.
Five: lemons get rebranded as sour onions.
Sixoh wait sorry Im being flagged by one of my Junior Interim Executive Researchers
in Training for the EMEA region.
It seems that this video isnt about the future of onions, its about onion futures.
My bad.
Lets try again.
Meet Vincent Kasuga.
Hes known by many names: his fans call him the Onion King, onion farmers call him
a cheater, friends call him Vinny, and his wife calls him cuddlebuns, but thats only
in private.
In the 1950s, cuddlebuns had a brilliant idea: what if we took shorts, but made them longer?
It turned out that was called pants, and it had already been invented, but then he had
another idea: he was going to corner the onion market.
Now, in theory, cornering a market is simple: Step one: buy all of a commodity.
Step two: stonks.
Step three: profit.
In practice, though, cornering a market is nearly impossible: not only would Vince need
to buy almost every onion in America, he would also need to do it without anybody noticing,
because if the market realized what he was up to, prices would spike before he could
finish.
Somehow, though, by the winter of 1955, using a combination of quiet investors, ramshackle
warehouses, and the god-like high of abusing capitalism, he managed to secure 98% of Americas
smelly apples that make you cry.
But that was just the beginning.
You see, Vince wasnt content just to own all the onions that currently existedhe
also wanted to own all the onions that would be grown in the future.
While buying onions from the future may sound like ramblings of a coked-up Hamburglar, its
actually totally possible, through something called a futures contract, which is, in simple
terms, an agreement to buy something in the future at a price that you set now.
So, Vinny bought up all the onion futures, making him the owner of all current and future
onions, a position commonly called Total Onion Domination.
Now you might be wondering: okay, so what?
He owns all the onions, whats the worst he could do: make fajitas?
But the thing is, when someone owns the entire supply of a given market, they have complete
control over the price.
It all comes down to basic supply and demandif youve ever taken an Econ 101 class, youll
remember supply and demand as the system that helped determine the price of Econ 101 Exam
Answers on your unis black market.
The concept is simple: when theres less supply of something, prices go up, and when
theres more supply, prices go down.
In a well-functioning free market, supply is determined by a combination of competing
firms, but in this case, thanks to his Total Onion Domination, onion supply was set by
one person: Vincent Cuddlebuns Kasuga.
Simply by changing how many onions he was willing to sell, Vincent could make the price
whatever he wanted it to be: 4 dollars and 20 cents, sixty-nine dollars, or probably
other numbers, too.
The first part of Vinces scheme was exactly what youd expect: he artificially raised
the price of onions, and then sold them for a profit.
In late 1955, he gathered all the big players in the onion gameonion buyers, onion growers,
even Charles P. Onion himselfin a conference room in Chicago, and basically gave the following
presentation: Good afternoon, idiots.
I own all the onions.
Buy them for the price I want or have fun trying to sell grapefruits.
And it worked: he sold 9 million of his onions at the high price he had set.
But much like an onion, Kasugas plan had layersand for his second scheme, he quietly
began to short onion futures.
To explain what a short is, heres Margot RobbieI mean, Thomas Frankin a bathtub:
Hi Sam.
Basically, when Vincent Kasuga shorted onions futures, he was betting against them, meaning
that if the price of onions went down, he would make money.
But of course, it wasnt really a bet, because Vince knew the price of onions would go down,
because as the owner of all of Americas onions, he controlled the price.
Got it?
Good.
Now get out of my bathroom.
Thanks Thomas.
Once Vince had solidified his short position, he flooded the market, increasing the onion
supply so much that the prices for a 50-pound bag of onions fell from about $2.45 to 10
cents, which if my math is correct is carry the one, move the decimal, math math math
way less.
In fact, the onions cost less than the 20-cent bags they were put in.
In other words, onions became more worthless than my joke-making abilitiesthey were
valued so little that traders literally couldnt give them away, which they actually tried
to do, handing onions to orphanages, hospitals, and schools, until eventually they were forced
to dump the remaining ones in the Chicago river, finally getting rid of them while also
setting the world record for the largest and worst French onion soup ever.
Thanks to his shorts on onion futures, when prices tanked in 1956, Vincent Kasuga made
$8.5 million, which today would be $83 millionan amount accountants refer to as much.
But the onion price cut led to tears from onion farmers, who ultimately managed to lobby
then-congressman, later-president, and man who looks like an oil barren trying to steal
the Muppets theatre, Gerald Ford, to introduce the Onion Futures Act, which Congress passed
in 1958, banning onion futures from ever being sold in the United States.
Today, onions remain the only agricultural commodity on which futures are banned, which
actually has real implications for onion farmers, who can no longer sell their future crops
now at a guaranteed price, which leads to a more volatile market, and more price uncertainty.
But I do have good news for them: if theyre looking for price certainty, I can guarantee
that an HAI sticker costs three dollars now and will cost three dollars tomorrow, and
if you buy one, you can try out Nebula for free.
You probably know by now that Nebula is a streaming service that I started with my other
educational creator friends to help us make the kind of content we want, without having
to worry about the YouTube algorithm or demonetization or ads.
Plus, on Nebula, youll also be able to see exclusive Originals you cant see anywhere
else, including the HAI Original The Brick Faade, and the relaunch of my podcast Showmakers,
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