Krugman on Bitcoin

[imoldernu]

A NYT link to Paul Krugman discussion on cryyptocurrencies..

https://www.nytimes.com/2018/07/31/opinion/transaction-costs-and-tethers-why-im-a-crypto-skeptic.html

Not particularly encouraging, and probably not a lot of interest here on ER, but certainly a lot of $$$ to be considered as part of the total economy... and what might happen in a worst case scenario. FWIW

 

[rwdflynavy]

Krugman has been so wrong so often, this makes me want to jump into crypto!

 

[OldShooter]

... Not particularly encouraging ...

Encouraging to whom? About what?

I have never though cryptocurrencies were anything but the current "madness of crowds." ("Extraordinary Popular Delusions and the Madness of Crowds" by Charles McKay, published 1841.) The reason is what Krugman calls "tethering." With a tulip bulb, when the market collapsed,you could still grow a tulip. With bitcoin you won't even have something you can use on the bottom of a bird cage. A bitcoin has zero intrinsic value.

 

[aja8888]

The only people that see value in bitcoin are the ones charging real money to handle the transactions.

 

[FIREmenow]

A bitcoin has zero intrinsic value.

And a piece of paper with a green-ink IOU ...... does?

 

[OldShooter]

And a piece of paper with a green-ink IOU ...... does?

Well, I guess we could quibble about the meaning of the word "intrinsic" but the value of the bills in my wallet is established by the words "This note is legal tender for all debts public and private." printed on each one. Krugman addresses this in his piece.

 

[FIREmenow]

Well, I guess we could quibble about the meaning of the word "intrinsic" but the value of the bills in my wallet is established by the words "This note is legal tender for all debts public and private." printed on each one. Krugman addresses this in his piece.

I see. Thanks.

 

[candrew]

Krugman has been so wrong so often, this makes me want to jump into crypto!

A better barometer would be DW's BIL. He's into Bitcoin and that alone is enough to make me run in the other direction.

 

[Winemaker]

I wouldn't believe Krugman if he told me the sky was blue and water was wet. He may be right about Bitcoin.

From what I heard lately it's Litecoin, man! Litecoin is the best, Bitcoin is so yesterday!

 

[Elbata]

Wasn't it Krugman, upon Trump winning the election, say something like we'll never see stock valuations go any higher, or something to that effect?

 

[USGrant1962]

And a piece of paper with a green-ink IOU ...... does?

Yes. It is backed by the power of taxation. Which is most certainly not the case with bitcoin.

 

[copyright1997reloaded]

Paul Krugman the night of the election: "It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover? A first-pass answer is never… So we are very probably looking at a global recession, with no end in sight."

Here's my take: Anyone who would make this kind of statement should not be listened to for any investment advice. Why? It's not because he didn't support or like Trump...it is because he is letting his political bias pollute economic and investment decisions.

Early in the Clinton administration, I thought he would be bad for my investments (after so many good Reagan years and after a decent H.W. Bush run). So, I was very conservative in my asset allocation. But I realized sometime in 93 that my dislike for him didn't mean there weren't fundamental technological changes that were going to drive the market higher. Fortunately for me, I started to pile into equities with each paycheck and rode the 90's wave.

ETA: The most amusing thing about Krugman's quote that night is that he didn't even realize WHY the futures market was tanking. I believe they were tanking the night of the election when it became clear that Clinton had not conceded, and there was fear of a contested election. When she later (finally) conceded, futures started to rally....and never look back.

 

[RobbieB]

I'm glad I don't know who he is. Really I've never heard of him.

 

[Teacher Terry]

My son got us into mining Bitcoin and other coins about 5 years ago. He knows what he is doing. With a small investment of 2 k we have cashed out 40k and them 100k. We each still have some coins left.

 

[Running_Man]

Krugman in 1998, internet will be the age of disapointment and no more important than the fax machine.



https://web.archive.org/web/19980610100009/www.redherring.com/mag/issue55/economics.html

 

[GravitySucks]

Krugman in 1998, internet will be the age of disapointment and no more important than the fax machine.



https://web.archive.org/web/19980610100009/www.redherring.com/mag/issue55/economics.html

I liken it more to the CB radio craze of the late 70s.
Just another fad.
NOW GETOFFMYLAWN!

I still see no need for bitcoin. I've only known one person that used it for a completly legal, not non quasi legal if not completely illegal purchase.

 

[Cessna152]

I still see no need for bitcoin.

I see no need for Euros or Swiss francs, either.

Crypto currencies have desirable properties of hard currencies (backed by something of both finite quantity and perpetual endurance) with desirable properties of soft currencies (fast electronic transactions.)

That said, I do not own any cryptocurrency yet.

 

[Totoro]

Ask Venezuela what they think of their fiat currency. Bitcoin for them is remarkably stable.

It's a complex domain, and we're slowly entering the disappointment phase. Once regulation kicks in in addition we'll see what the staying power is.

My current guess is that we'll end up with bits and pieces of the technology, and maybe one or two coin(types), everything else will disappear in a puff of logic.

Cryptokitties for example, the biggest application for ETH and a sort of Pokemon collectible card game, has collapsed in recent months. Bitcoin itself is sort of holding up, to my own surprise.

 

[traineeinvestor]

They lost me at "Krugman."

 

[bgyt]

Krugman has been so wrong so often, this makes me want to jump into crypto!

+1

This guy lost his mojo 15years ago and has spiraled downhill. Discredits his Nobel every year.

 

[NYEXPAT]

There was another thread about a month ago where I went (Hypothetically)short Bitcoin at about $6200. I think it rallied shortly after to about $8500 before heading back down to $7,000 or so.

 

[rwdflynavy]

Wasn't it Krugman, upon Trump winning the election, say something like we'll never see stock valuations go any higher, or something to that effect?

Yep: Nov 9, 2016 - "The economic fallout of a Donald Trump presidency will probably be severe and widespread enough to plunge the world into recession."

Another gem: "By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's." 1998

The former Enron adviser has been so spectacularly wrong so often that I can't imagine why anyone would waste their time reading his stuff.

 

[stepford]

Now that almost half the respondents have identified their political leanings by vilifying Krugman without addressing the substance of the article can't we just bring in Porky and end this thread?

 

[MichaelB]

Why don't we try just staying on topic, which is the virtues of bitcoin, as expressed by Mr. Krugman.

 

[Teacher Terry]

I also don’t know who he is.