Why Economists Are Against Cryptocurrency
Economists are an interesting bunch. Line 20 of them up, ask them about a situation, and you will get 20 different answers.
They have their different schools of thought that include Keynesian, Chicago and Austrian. Along these lines of thought, they will debate the merits of theirs as well as the demerits of the others.
All the -isms are covered such as communism, socialism, and capitalism. They intertwine their views into the conversation about each coming off as experts.
Political and business leaders listen to them. They have insight as to what is taking place according to the mantra.
No matter what school of thought an economist comes from, there is one area that one will never speak out about. They will ramble on ad nauseam about the Volker Rule, Laffler Curve and circular flow analysis, yet there is one area that is taboo to all of them.
Never will an economist discuss the merits, or more importantly, the demerits of the present monetary system.
This is the third rail of the economists' world. Never ever discuss the monetary system. It is a given that it is not only there, but unchanging. All problems are associated with something else. The monetary system is beyond reproach.
In fact, economists will tell you what money does, yet they fail to mention what it is and where it comes from.
The truth of the matter is that money is not a part of nature. It is a man-made invention. Money is ultimately created out of thin air. The only question is who is doing it.
For centuries, the crown was tasked with the benefit of creating the money. Anyone who decided to go counter to this was usually executed. The powerful learned early on that monopoly over the creation of money provided a great deal of control.
As we moved away from Monarchies, we saw governments get into the business of controlling the money. For the past 400 years, we used roughly the same monetary system. The only change really was who controlled the creation of money.
Today, we see Central Banks who have the ability to "print" it as they see fit. They also can make it scarce when the mood moves them. Sure they validate it with their charts and other theories they apply. Yet, in the end, it is often like reading tea leaves.
Cryptocurrency presents a new challenge for economists all over the world. Suddenly, there was the appearance of something that questioned that which they were unwilling to do. When Bitcoin came onto the scene, millions started the process of questioning money and our existing monetary system.
Metrics that were so important suddenly were tossed out the window. Cryptocurrency has the ability to monetize any transaction, thus provide value to it. This affects an outdated statistic such as GDP which only factors in means of production. In other words, that which is paid for is included. In this era, we see a great distortion since production saved is not accounted for.
An example of this is online shopping. The cost associated with buying something online is less than getting in one's car, driving to the mall, walking into a shop, buying what is needed, and then returning home. In fact, this adds more to GDP because fuel is used, roads require servicing, malls use electricity, and people are employed. Much of this is negated when the Amazon truck is driving down your road anyway, thus a delivery requires simply hitting the brakes.
There are many discussions as to why the economy fails or recessions take place. We also see many opine about the cause of income and wealth inequality. There are also many answers as to how to fix it. Higher taxation, redistribution, and more (or less) regulation is often tossed out there.
However, when did you see someone with credentials such as an economist state how these problems are caused by our monetary system?
It simply does not happen.
When entering the land of taboo, it is vital to keep pushing ahead, We can see why the establishment resists cryptocurrency at every turn. The idea of money scarcity is what keeps the very powerful in position. They do not have to alter how they do things since they control so much of the wealth. As long as they can hold off revolt, all is well, for them at least.
Thus, the next time you see Nouriel Roubini blasting cryptocurrency, you will see why he is doing it. To question the money supply, to him, is to question the entire premise of his belief system. It is simply something that is impossible for him to consider.
Unfortunately, a lot changed over the past few hundred years. This means that we need to innovate in all areas of our lives. The monetary system is one that is long overdue for change.
Nevertheless, there are many who will hold their established beliefs are a part of nature. Nowhere is this seen more than when it comes to the monetary system.
It is something that is never brought up as being broken.
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