Kenneth Rogoff spoke, and the Bitcoin hornet’s nest awoke.
When the celebrated Harvard economist and former chief economist at the IMF yesterday publicly confessed that he was wrong on Bitcoin, he didn’t do so gracefully; instead, he doubled down. You see, it wasn’t that his prediction in 2018 of Bitcoin’s imminent doom and the bitcoin price to quickly collapse was wrong; it was
- Trump crypto regulation was beneficial instead of the needed crackdown
- Bitcoin was embraced and (shockingly) used by criminals, and
- Trump “brazenly hold hundreds of millions … of dollars in cryptocurrencies seemingly without consequence.”
I mean, talk about willful ignorance. Scooby-Doo called and wants his villains back (“I would have gotten away with it, too, if it weren’t for you meddling kids”). There’s no other value to this thing, no other censorship-resistance use case, no savings-outside-the-shady-banks option, no instant global payments over Lightning?
Even in that 2018 CNBC interview, Rogoff said regulation of the sector would lead to lower prices, not a catalyst for higher ones, as he now pretends. This smells like a salty rationalization, not a serious analysis.
Slay Your Heroes, Always
Rogoff’s excellent book, This Time Is Different: Eight Centuries of Financial Folly, and especially the freely available data behind the research for dozens of countries over hundreds of years, was a godsend during my university years. I learned so much from him.
When I finally met Rogoff in 2018 or so, it was a total “kill your idols” moment. He had just released his unfathomably stupid book The Curse of Cash — about how we should ban cash because criminals… and cash also makes monetary policy transmission worse and negative interest rates more difficult to impose. I was trying to explain to him the virtue of competitive note issuance and monetary freedom. To my shock, he was sputtering nonsense about free banking and falsities about U.S. banking history, let alone the past monetary arrangements of Canada, Scotland, or Sweden, of which he knew nothing.
The moment really stuck with me. I was young and not yet that disillusioned with elite knowledge and the much-revered academic establishment. But I was speechless that a famous Harvard professor didn’t know better… what, the skills and cognitive faculties and hard work that got you here have now been completely eroded?
It was around this time that I started saying,
The most important thing I learned at Oxford was that you can have a PhD and still be an idiot.
It was a wake-up call of astronaut-meme proportion: I was in the big leagues, the hallowed halls of wisdom, interacting with the big names, talking to the smartest and most celebrated of economists and economic historians in my field… and it turned out they were unread in all the things that matter. I remember a night in Oxford when I had to explain to a well-respected historian how loans in one bank end up as deposits in another, thus multiplying the (broad) money supply. Textbook stuff.
Elite university profs can be stupid…? Yeah, totally.
Bitcoin derangement syndrome, BDS, is a big, bad monster that’s taken many bright minds away from us, well before their time. Many fiat elites became too enamored by their own egos, too stuck in the status quo that, by the way, has benefited them enormously. They often become blind to the errors of their past opinions.
The correct intellectual approach when reality behaves differently from what you expected is to reassess your model. Maybe you got something wrong?
The reasonable reaction to the bitcoin price doing 13x (+1,220%) in the seven years since you loudly proclaimed its imminent death is to change your mind. (For reference: U.S. official CPI: +29%; U.S. median earnings: +38%; S&P500: +146%.)
Maybe I missed something, you ought to ask yourself. Maybe there’s something here that I couldn’t see. Maybe, just maybe, there’s true value in this worthless, speculative, technobabbling disaster?
I have lost almost all of my respect for legacy academics; we definitely need new institutions of (higher) education. Bitcoin is for anyone, but not everyone, and people get bitcoin at the price they deserve.
For all I care, Rogoff can join the likes of Elizabeth Warren at the back of the line.