Harsh Rhetoric: We Fire Back at Stiglitz and Smaghi on Bitcoin
Isn’t it odd that two esteemed economists like Joseph Stiglitz and Bini Smaghi — both approaching the end of supposedly exceptional careers — don’t see any issues or problems at all with the current financial system? Could it be those who’ve made their livelihoods in the traditional financial system can’t imagine life without it?
Just a Coinkydink? I Think Not.
Even if you disagree with Bitcoin or cryptocurrency; any educated person can at least see the basic value of it and the basic limitations of the current system.
It seems bizarre that any economist pretends not to see that it’s good for people to have the freedom to exchange value without 20 different middle men/corporations snagging several percent from every exchange.
However, that’s exactly what happened in recent Bloomberg discussions. 2001 Nobel Memorial Prize in Economic Sciences recipient Joseph Stiglitz stated that he felt Bitcoin should be outlawed. Societè Générale chairman Dr. Bini Smaghi called Bitcoin a scam.
Stiglitz, Pundits Spend a Lot of Time Calling Bitcoin a Bubble
This is a basic mistake I think many people are making. Yes. It’s great that the bitcoin price is skyrocketing and people are making money on their investment. However, that’s not all cryptocurrency is about.
Cryptocurrency is also about establishing platforms for people to gain or regain control of their finances and make their own financial choices; (often better choices).
However, in an awfully fortuitous turn of events, no obvious, simple truths seemed to dawn on either pundit (not even the Nobel winner), during their interviews with Fancine Lacqua and Tom Keene.
Transcription with Commentary
My comments, marked “Comment“, are interspersed with the discussion.
Francine Lacqua: If Bitcoin were to be regulated, could it be viable?
Comment: Ugh. I can’t get past the first 10 words?
Viable for what, to act just like traditional currency? Then what’s the point of having it? If they implement the types of regulations these people are calling for, the only values Bitcoin will have that slightly resemble what we know and love it for is that:
- It will be digital currency,
- Maybe businesses and individuals will be able to develop tokens and their own currencies on blockchains, and
- People can use the blockchain to develop platforms and conduct unique and more efficient transactions.
However, every value exchange will have those familiar 20 plus middle men/corporations snatching and grabbing percentages through a centralized blockchain, in addition to doing so through traditional means. Transactions will be just like fiat transactions. The blockchain will just become a form of digital fiat.
Joseph Stiglitz: I… Lookit. One of the main functions of government is to create currency. Bitcoin is successful only because of its potential for circumvention, lack of oversight. It seems to me it ought to be outlawed. It doesn’t serve any socially useful function. We ought to just go back to what we always have had.
This is just a bubble as several of your commentators have already pointed out. It’s a bubble that is going to give a lot of people a lot of exciting times as it goes up and goes down; but what I was talking about is the medium of exchange that we use for transaction.
Comment: Some people love the government and love the traditional system because they’ve never been through anything in their life. At the end of the day, someone like Stiglitz doesn’t make me as angry as people who work directly with the banking industry like Smaghi, (someone who understands what’s really going on and is part of the ongoing process of spewing rhetoric to keep your minds under control).
Stiglitz is like a kid who still believes in Santa Claus at 16 years old. He went to college, had a decent life and upbringing with parents that encouraged him to achieve his goals. He doesn’t mention any abuse or negative issues out of his control being a part of his life. Therefore, he can’t comprehend that the system that’s worked so well for him, isn’t sufficient for every other living creature on the planet. He has no other frame of reference.
However, a person like Smaghi, (Chairman of Societe Generale — an international organization based in France that focuses on financial services and banking), likely knows exactly what’s going on, which is why he starts throwing in scary conjecture like “What if Bitcoin is funding terrorism?”, etc., because the banking and finance industry’s goal is to keep their control.
The people who control the banks control the world. They don’t like Bitcoin because they feel it will cause them to lose control. However, if the lot of them had functioning in any other parts of their brains besides the stem, they would perceive that there will always be people like Stiglitz who will always love, worship and be happy to be part of their status quo and mind control. Your precious narcissistic supply will never run out.
So Much More than a Bubble
Comment: I wish the crypto community would wake up. Stop explaining stuff to these people and wishing they understood us. We’re better off with them not caring. They still don’t understand it.
They’re still hung up on the idea that it might be an investment bubble.
“Why should I invest in Bitcoin. It’s a bubble?”
Bitcoin isn’t just an investment. It’s a system that works well, whether a bubble exists, bursts or keeps making investors money.
Back to the discussion:
Stiglitz: What I was trying to say is let’s move away from–
Tom Keene: Right.
Stiglitz: …paper into the 21st century of a digital economy.
Comment: Again, the only value these pundits see in Bitcoin is if they can harness the technology behind the blockchain and turn it into a blinged out, digital form of the fiat currency we all know and love.
Oh wait. You don’t love traditional fiat?
That’s why you’re into crypto in the first place? That’s why you think crypto is so cool.
Ohh… Well, if it’s not broke, then why are we trying to fix it?!
Keene: This is away from your Nobel Prize, and it’s away from your acclaim in economics; but I’m going to go there anyway. Charles Mackay 1841 talks about our Peculiar Follies and the behavioral component that makes for these bubbles; whether it’s 1637 in Tulip Bulbs, 1840 [intelligible].
Bring up the chart here. Here’s a bubble in the making. Here is the [law of?] Bitcoin. I can’t stand the arithmetic charts. This is all you need to know. This is massive convexity. I haven’t seen that chart since the Tulip Bulbs when we were doing surveillance by [semi fort?].
Professor Stiglitz, they’re relying on a Marxist theory of value. They’re going back to middle Marx and looking at the value of exchange. It’s smoke and mirrors, isn’t it?
Stiglitz: Precisely. It’s smoke and mi—
Keene: Thank you. Why?
Stiglitz: The value of a Bitcoin today is expectations of what the bitcoin is going to be tomorrow. If the government says, “Lookit. The reason bitcoin is being used is this circumvention.” They could close it down any moment and then it collapses.
Comment: Again, bitcoin is not only about investment value. It’s about letting people make their own financial choices. The current system puts so many middle men in the midst of every transaction.
Most people will agree that the way the music industry shortchanges the actual artist is unfair. Well, in reality, the traditional financial system shortchanges everyone in much the same way. When a musician releases an album on the Ethereum blockchain, he or she chooses who gets paid royalties, performance payments and things like that. When you use cryptocurrency for your transactions, you can make your own financial choices. Pay who you want, when you want, in any country you want.
Keene: Dr. Bini Smaghi, should Bitcoin be outlawed as the laureate from Columbia suggests?
Bini Smaghi: Well, if you think what’s behind that? Probably it’s an attempt by some people to try to make payments or use currency with a view to evade taxes, to evade legislation on money laundering; maybe anti-terrorist financing.
Comment: People have been evading taxes, evading legislation and laundering money with fiat for centuries.
People use oil, bank scams; ransoms; donations and the sale of valuables like antiques, diamonds, gold, silver, guns and other things to fund terrorism. Even if they find that cryptocurrency funded some sort of terrorism, it isn’t the only thing that terrorists use to fund their activity. Give me a break.
Smaghi: I have the impression that policy authorities at the global level have not yet focused on the dangers of the development of this scam. When they will, I think some people will get hurt; all those who thought this was a new invention will lose money.
It makes me think a bit about former Chuck Prince, the Chairman of CitiGroup said before the crisis. As long as the music plays, we dance. As long as the prices go up, people think it’s fantastic, but somebody will get hurt.
Comment: Okay. Even if bitcoin turns out to be a bubble, that’s not all it is. It’s a system in addition to being an investment. People can get hurt in any investment. When it comes to investment, there’s always risk. That’s why investment sucks. It’s like gambling.
There’s a moment of truth when you fork over your money based on a guess. However, even without the investment aspect of bitcoin, bitcoin and crypto still hold value.
Lacqua: When do you think regulators will start looking at this?
Smaghi: Well, you need international cooperation. Unfortunately, we are living in times where international cooperation is not really at its best, huh?
Comment: Thank goodness. I’m so done. I seriously don’t care if these people ever pay anymore attention to crypto. I don’t.
Without the United States, without China, it’s difficult to move on this area. I think this will happen for some reason or others. We will discover that behind this bitcoin scam some funds were channeled maybe to finance terrorism.
At that point, then we’ll wake up and realize that this is not appropriate.
Now Where Do You See the Smoke and Mirrors?
Anyway, he’s right. All this Bitcoin talk is really inappropriate for these educated, privileged people who love the status quo. We need to stop disturbing their dinners with words like “bubbles,” and “crypto,” and “decentralized.” What’s it all mean?
Let them continue to sit in their living rooms and dine on their chosen variety of conservative or liberal spoon-fed news. Let them all call indignantly for Trump’s impeachment while he Tweets from the oval office day in and day out.
Once you recognize that the banking industry literally controls the world, you have to accept that you’re on a different level than these people. Their acceptance of your ideas is frivolous. Their thoughts and ideas on topics like this are usually meaningless. Once they put their hands to something valuable they don’t understand like cryptocurrency, they will ultimately damage or destroy it.
Two of the main types of people criticizing crypto are the people who are part of the banking industry controlling the world like Smaghi and drones like Stiglitz who are happy with the status quo.
Do you think bitcoin is more than just a bubble? Why or why not? Do you want bitcoin to be part of our every day economy? Do you care what the pundits think? Chime in below.