And unlike nasty governments, which do things like managing the money supply or preventing de-stabilizing speculation, Bitcoin is independent of any government…Ah, but the number of Bitcoins in circulation is strictly limited to $21 million…Now in fairness, central banks and bank regulators did a pretty good job of managing the money supply for half a century after the Great Depression, and then they messed up big time. In the 1980s, regulators started getting captured by fin-tech wizards—people not unlike Bitcoin enthusiasts—who started inventing new forms of infinite leverage. It took about 20 years for this brew to become truly toxic. The result was the collapse of 2008.
We have a lot of work to do in order to return the business of financial regulation and good monetary policy to democratic control. But if you think that task can be entrusted to an algorithm, consider this. It’s an old idea—economists Milton Friedman and Friedrich Hayek advocated putting the money supply on auto-pilot.
But if that policy had been in effect when the financial collapse of 2008 occurred, and the economy had been left to the tender mercies of the invisible hand (much less the invisible cyber-hand), all of the banks would have gone bust and the economy, instead of experiencing the Great Recession, would have been in total collapse. Ben Bernanke, a Friedman enthusiast who was chairman of the Federal Reserve at the time, acknowledged that a hands-off policy was the opposite of what was needed.So the next time the wizards of speculation produce yet another financial collapse, who ya gonna call? Bitcoin? Sorry, there’s nobody home.
Eulogy made by Robert Kuttner