oh, boy
I fundamentally disagree with most things Greeley says/writes about money, but I do appreciate his writings.
...so here I am, ranting.
Mr. Greeley is out rallying in the FT against "crypto dads" -- those few-and-far-between people that will actually talk to him about his field at dinner parties.
But he's upset with them: they have a bad epistemeological approach, and they don't know enough about the monetary past. (Ironic, I would say, because Mr. Greeley doesn't know enough about the monetary present; wonder what's worse...)
In the past, he says, deflationary money was bad for the masses. Democracy killed it in 1914 or the 1930s, which Greeley thinks means that it was bad for the masses.
Let's sidestep the ironies and stupidities with the rational voter and get to the juicy bits:
"over the long run you can’t force people to use a deflationary currency; they either come up with a local workaround or they revolt”.
Right off the bat you should ask the economist's question: compared to what?
Under fiat, people find a workaround — and store economic value in houses and stocks, gold and paintings etc, absolutely anything else but money -- or they revolt.
So now we're back to even; forced to argue the merits of monetary standards.
It's a weird thing to claim that deflationary money has been bad for the plebs, when the greatest economic miracle of the past happened under the 19th-century gold standard. Yes, definitely not the only cause — and probs not even the most important cause — but deflation didn't make the masses poor. THAT much is clear empirically (e.g., Atkeson and Kehoe, AER 2004).
The examples he uses — medieval Italy, colonial America — suffered from too little money... which is to say the money was not divisible enough to serve its monetary functions. The mis-analogy to bitcoin should be obvious.
Here's another unstated epistemological assumption Mr Greeley makes: What happened in a past devoid of modern communication, modern economic growth and wealth, tech, cryptography, still has much to say about the present. That's not obvious. To the extent that bitcoin is a before/after event -- zero-to-one -- most studies of the monetary past become illustrative and interesting at best — irrelevant, at worst. (Having spent years in that field myself, I don't say that lightly.)
bitcoin does seem to work as a currency for some international transactions, particularly in developing countries. That could be good, but it’s hard to tell which transactions are wealth preservation, which ones are tax evasion and which ones are capital flight.
Ok yes, and? All of those things are good. Fuck you, establishment democrat pisshead.
He invokes Taleb and the "don't tell me your opinion, show me your portfolio" approach... and laments that he can't reasonably short "crypto" and get away with it.
He finished cheekely with
I don’t have the capital to wait out a long-term bet like a reinsurer and then laugh at the chancers. I’m just a dad, worried, standing in front of another dad, who is not.
The other option available is to dig deeper... and change your goddamn mind. The future is bright; hope to see you there:
IN SUM:
there is a way for Mr. Greeley to express his stated preference for the incumbent monetary regime ("all I want is for bitcoin to stay the hell away from the dollar"); and he is doing it. Keep holding dollars, physical and in bank accounts that will be debased and the purchasing power of which will flow ever faster into hard, orange-tinted assets. Thanks for being the sucker at the monetary table!
archived: https://archive.md/ZCGxu