Why Bitcoin & Crypto Is Not The Future (Ex-Citigroup Global Chief Economist Willem Buiter)

We speak to Willem Buiter, Global Chief Economist at Citigroup (2010-2018). In contrast to our interview with Bitcoin.com founder Roger Ver, Willem Buiter argues Bitcoin and other cryptocurrencies are essentially is an environmentally unfriendly, speculative fiat currency with no use countries trying to evade Western economic sanctions. He also disputes that it can be used as a currency and discusses why there won’t be mass-scale adoption.

Moreover, recall that Hayek’s argument is meant to show why tradition’s evolved rules are likely to produce better results than a wholesale constructivist rationalism. But this argument actually depends on people making use of critical reason, which is quite different. In effect, Jonah wants to say: Look what cultural evolution has produced—great, freeze it! But evolution works because of mutation, variation, and selection, and it’s still going on. A tradition that can’t accommodate that kind of variation is unlikely to stay adaptive for long.

Live by the shrill, die by the shrill, Jonah. I like Sullivan, and his writing has many virtues, but as I’m scarcely the first to note, the sense of doubt and fallibilism he’s now advocating as central to conservatism has not always been one of them. When he was a booster for this administration and the Iraq war, Andrew was (in print, if not in person) at least as willing to suppose that people who disagreed were moral dunces at best, a threat to civilization itself at worst. He hasn’t changed styles; he’s changed sides.

As for the main argument of the book, Goldberg has two main beefs. The first is that “evil is rarely defeated by people who are unsure they are right,” which Goldberg takes to mean that a “conservatism of doubt” will be too anemic to combat the enemies of liberal modernity: He mocks the idea of a “serious political movement” founded on the slogan “We’re not sure!” But I think this misapprehends one paradoxical aspect of the relationship between doubt and confidence. I know, for example, that science proceeds haltingly, that its conclusions are always open to revision, and indeed, that many of the scientific beliefs of the past have been either rejected or developed to accommodate new facts. And this is precisely why I can be so confident in the scientific enterprise in the aggregate: Because I know there are scores of intelligent and skeptical researchers constantly testing and refining its conclusions. I can be fanatical in my defense of liberal societies, not because (like Islamists) I’m sure they have discovered the One Best Way of Life, but because they embody a process that allows fallible people to seek continual improvement.

.. Moreover, recall that Hayek’s argument is meant to show why tradition’s evolved rules are likely to produce better results than a wholesale constructivist rationalism. But this argument actually depends on people making use of critical reason, which is quite different. In effect, Jonah wants to say: Look what cultural evolution has produced—great, freeze it! But evolution works because of mutation, variation, and selection, and it’s still going on. A tradition that can’t accommodate that kind of variation is unlikely to stay adaptive for long.

If There’s a Red Wave Election in 2018, This Will Be Why

Republicans have long criticized Democrats for dividing the country into competing grievance groups. Some now realize that the Republican analogue has been to divide the country into radically autonomous individuals based on a cartoonish misreading of libertarianism that replaces the free markets and free minds of Friedrich Hayek with the greed and hubris of Gordon Gekko. But that is changing quickly. There is a renewed emphasis on addressing America and Americans as a community characterized by fraternal bonds and mutual responsibility — what Lincoln called the “mystic chords of memory.”

.. If Republicans really want to win, then their pronouns must be we, us and our, and they have to make sure that the people who hear them know that they are included in we, us and our.

Why Reinvent the Monetary Wheel?

Cryptocurrencies promise to realize Friedrich Hayek’s dream of a free market in money. But human societies have discovered no better way to keep the value of money roughly constant than by relying on central banks to exercise control over its issue.

.. Underlying this recurrence is the instinctive feeling that economic calamities must have monetary causes, and therefore monetary remedies.
.. If monetary fluctuations are the main cause of economic fluctuations, and if one can ensure the right quantity of money to support normal business activity, there will be no need for government interference. This has been the main teaching of economists wedded to free markets.
.. Few remember that quantitative easing (QE) marked the start of US President Franklin D. Roosevelt’s New Deal. With the US on the gold standard, the Treasury purchased gold to lift its price and thus augment the buying power of heavily indebted farmers. FDR’s gold-buying spree, described at the time by John Maynard Keynes as “the gold standard on the booze,” has been generally dismissed as ineffective.
.. In other words, there is no elasticity in the currency. This means that long before the mine is exhausted, the currency will run into the same problem as the gold standard: not providing enough money to support a growing economy and population. This would be exacerbated by any tendency to hoard bitcoins.
.. At the same time, cryptocurrencies provide no security against inflation. Hayek thought that a competitive currency system would eventually lead to a monopoly of the one that kept its value best. But we have, of course, been through exactly this process of weeding out inflationary currencies throughout history, and we ended up with central banks. It is amazing that anyone should consider it necessary to retrace these steps, only to end up in the same place.
.. The Hayekian diagnosis of the last crisis – excessive creation of credit by the banks – is correct as far as it goes. But one has only to ask why this happened to understand that there are no mechanical answers to the question or solutions to the problem. It’s not quite true to say, “Look after the economy and money will look after itself.” But it is nearer the truth than the belief that monetary reform on its own will cure the problems of a sick economy.

It’s up to us to kill false information. Good luck.

Individuals bear much of the blame for fake news. The study found that false rumors travel the Internet much more rapidly and widely than facts. These untruths get their velocity and reach not from celebrity influencers but from ordinary citizens sharing among their networks.

Evidently, we humans have a strong preference for novelty and sensationalism over scrupulous reality.

.. “Falsehood diffused significantly farther, faster, deeper, and more broadly than the truth in all categories of information,” the MIT scientists concluded after examining more than 125,000 stories shared by more than 3 million Twitter users. The most viral lies, they found, involved “false political news.”

.. Politics is tribal. It is a way of organizing conflict.

.. We are inclined to credit anything we hear from our allies and to believe the worst of our foes. In politics we see information as potential ammunition; we evaluate it for its potency and lethality rather than its strict veracity.

.. the Internet smokes out our self-deceptions and shows us as we really are.

Gambling and porn flourish on the Internet. Reasoned civil discourse, not so much.

.. This is a profound blow to idealists of the marketplace of ideas. From Adam Smith to Friedrich Hayek to James Surowiecki, the author of “The Wisdom of Crowds,” wise thinkers have emphasized the positive economic effects of dispersed power. A great many people, free to pursue the wisdom of their experiences and the perspectives from their vantage points, will arrive — as if moved by an invisible hand — at better results than any single mind or central planning bureaucracy could achieve.

.. But it turns out that the crowd is wise only when it is asking the right questions. A crowd determined to get the best value on flat-screen televisions will soon discover the proper price; but a crowd swept up by tulips or cryptocurrency may find itself pricing euphoria instead of value.

 What we see from Twitter and other platforms clearly signals that too many people are asking the wrong questions
.. our ability to spread our careless and malign thinking is brand-new. Of all the digital-age jargon, perhaps none is more apt than “going viral,” because the contagion of bad information is a matter of individuals passing germs from host to host with geometric speed. Only disciplined digital hygiene can halt the epidemic.

Jonah Goldberg: Politics as the Crow Flies

The benefit of ideology is that it provides time-tested rules to rely upon during the inevitable chaos of everyday life.

gun-control advocates assume that if Republicans oppose “gun free” workplace rules, it’s because they think gunplay at work is okay — and not because such laws don’t work on people keen on shooting up their office

.. I have no doubt that Porter was good at his job. One hears reports about how he was a stabilizing presence in the White House and a reliable ally of the Gang of Grown-Ups in the West Wing. But it tells you something about the bunker mentality inside the White House that these allegations were simply too bad to check.

.. one of the great defenses of the Trump administration is its practicality and rejection of abstract theory and ideology

.. Part of my defense of ideology is that much of it isn’t abstract theory (

.. Different thinkers (Burke, Chesterton, Hayek, Polyani, et al.) have different terms for different kinds of knowledge that cannot be simply conveyed with words, such as “tacit,” “hidden,” or “embedded”

  • .. “Washington, D.C., is the capital of the United States” is explicit knowledge.
  • How to throw a curveball involves a lot of tacit knowledge;
  • all the variables that go into the price of a loaf of bed is embedded knowledge;
  • all of the arguments that go into why good manners are valuable is hidden knowledge.

.. it took hundreds of thousands of years of trial and error to come up with the ideas bound up in liberal democratic capitalism and modernity.

.. the supposedly abstract ideology that underlies Western civilization — on most of the left and most of the right and everywhere in between — is the greatest achievement of practicality in all of human history.

.. The benefit of ideology is that it provides time-tested rules to rely upon during the inevitable chaos of everyday life.

.. In politics, the worry is very often not that the government will knowingly do wrong but that it will take the shortest path to doing what it thinks is right. This is what Michael Oakeshott called “politics as the crow flies.”

.. For the last decade, at least, conservatives have insisted that they were ideologically opposed to precisely the sort of turd burger we saw getting sizzled on the congressional grill this week.

.. the tea parties were in no small way a delayed backlash against the profligate spending of George W. Bush as much as they were a backlash against Barack Obama. The psychological reasoning boiled down to: “We felt we had to put up with the crap under Bush because of the war or because he was our guy, but we’ll be damned if we’re gonna put up with it from this guy too.

.. More broadly, the president doesn’t like entitlement reform, as he has made clear many times.

Has Modern Conservatism Become A Cult?

Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance—where, in short, we deal with genuinely insurable risks—the case for the state’s helping to organize a comprehensive system of social insurance is very strong . . . . Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make the provision for the consequences, such communal action should undoubtedly be taken, . . .

No doubt they’d be shocked to find the passage is found in their favorite anti-socialist tome, F.A.Hayek’sThe Road to Serfdom.

.. Instead, as Thompson notes in his post, the rhetoric of the right reveals that we are more influenced by Ayn Rand than Hayek

.. The libertarians often prop up Hayek as their hero while we traditionalist conservatives like to trot out Edmund Burke. But the truth is the vast majority of the right subscribes to a form of libertarian populism inflected with social conservative attachments—an unholy hybrid of Ayn Rand, William Jennings Bryan, and Morton Downey, Jr.

.. One of the key concepts in this weird era—adopted from Rand’s novel Atlas Shrugged— is “Going Galt.” From Tea Party protestors to think-tank intellectuals, folks talk about Going Galt without the slightest hint of irony. The problem is not such much that it’s a silly hollow threat, but that it exemplifies a trait that is prevalent in conservative movement: The embrace of personality driven ideas that are often incompatible with some of our most basic philosophical, religious, or political beliefs.

..  People who would laugh at the absurdity of a “Christian Muslim” seem not to recognize the similar incongruity between being a follower of Christ and an acolyte of Ayn Rand.

.. Despite the fact that these well-meaning conservatives fail to exhibit any discernment about the views they are imbibing, they become terribly offended when you question how they could accept such nonsense.

.. Their defense tends to be based on a variation of a common theme: They don’t actually subscribe to those crazy views (at least not all of them), they just align themselves with a personality that does.

.. These St. Georges slaying the liberal dragons are placed beyond reproach. You are no more allowed to question the right’s preferred cult of personality—CoulterHannityBeckLimbaughPaulLevinRandPalinWhoever—than liberals can challenge Obama. Even thinking contrary thoughts about these figures is enough reason for them to question your conservatism (if not your patriotism, manhood, and love for small animals).

The result is that the conservative movement is becoming increasingly ineffective, insular, and irrational—in other words, we’re becoming the mirror image of the political left.