Two Nobel Prize-winning economists have displayed their ignorance of cryptocurrency and fin-tech by demanding a ban on Bitcoin.
Columbia University Economics Professor Joseph Stiglitz told Bloomberg Television that Bitcoin “ought to be outlawed” on 29 November 2017.
“So it seems to me it ought to be outlawed,” Stiglitz said Wednesday in a Bloomberg Television interview with Francine Lacqua and Tom Keene. “It doesn’t serve any socially useful function.”
Yale University Professor Robert J. Shiller dismissed Bitcoin as a fantasy at a conference in Lithuania, CNN Money reported on December 1, 2017.
“It’s such a wonderful story,” Shiller said of Bitcoin. “If it were only true.”
Nobel Prize Winners Display their Ignorance
What is truly disturbing here is the ignorance of the Nobel Prize winners or the journalists covering them. Somebody either the reporters; or the professors, is making the horrendous and common error of confusing Bitcoin with all cryptocurrency or worse assuming Bitcoin is the only altcoin.
Either way, it is inexcusable for both parties; journalists should at least make an effort to get their facts straight. Those claiming to be experts in economics should at least do some research into cryptocurrency, or have their research assistants do the research. This is particularly bothersome because the only research needed to refute the error would be a simple Google search that would take less than a minute.
Shiller received the 2013 Nobel Prize in Economics for his work on Bubbles. He also predicted a stock market crash that did not occur in 2015. He currently serves as Sterling Professor of Economics at Yale.
Stiglitz is a former Chief Economist of the World Bank and Chairman of the Presidential Council of Economic Advisors. He received the Nobel Prize for Economics in 2001 and was named the fourth-most influential economist in the world in 2013.
Why are Nobel Laureates afraid of Cryptocurrency?
What is truly disturbing is these two professors are making public policy recommendations on a subject of which they are ignorant.
“Bitcoin is successful only because of its potential for circumvention,” Stiglitz said; Ignoring Bitcoin’s use as a hedging and wealth protection mechanism. One has to wonder what a Venezuelan that wants something to buy food for her family with besides El Presidente’s toilet paper would say to Stiglitz.
I wonder how Stiglitz would react if somebody were to announce plans to convert his bank account into Venezuelan Bolivars. The Bolivar was worth less than the currency in the World of Warcraft because of government policies and hyperinflation on 1 August 2017, Fortune reported. My guess is Stiglitz would be at the computer buying Bitcoin within minutes of the announcement.
What’s truly disturbing is that Stiglitz is the genius who demands abolition of the Euro and the “reinvestment” of the savings of Italians and Greeks into worthless dead paper currencies such as Drachmas and Lira. As a U.S. citizen with a bank account full of dollars, Stiglitz would not need to worry about the hyperinflation; and destruction of wealth, working Europeans would suffer if his imbecilic policy was adopted.
One reason why Stiglitz opposes cryptocurrency is that it might enable average people to thwart his economic policy prescriptions. Shiller was bothered by what he considers Bitcoin’s “anti-government, anti-regulation feel.”
Cynics might say that what Stiglitz and Shiller really fear for is their cushy jobs at Ivy League universities. They may fear that their theories and teachings will be rendered meaningless if a new economy based on cryptocurrency rather than the government printing press appears.
Is Economics a Science?
Shiller and Stiglitz’s statements on Bitcoin lend credence to philosopher and Black Swan author Nassim Nicholas Taleb’s contention that Economics is not a science and the Nobel Prize in Economics should be abolished.
Taleb said that investors should sue the Nobel Prize committee for its role in the great economic crisis of 2007–2008, in 2010, Reuters reported. He thinks that the bad economics promoted by some of the prize winners contributed to the crisis.
Something to remember is that Economics was not considered a “science” back when Alfred Nobel created the Prizes. Instead, the Nobel Memorial Prize in Economics was established in 1968 with money from Sweden’s central bank as a publicity stunt. Since then it has been widely criticized, for a wide variety of reasons.
It remains to be seen if ignorance about and hostility to cryptocurrency will be the final nail in the coffin of economics. One person who is ignoring Shiller and Stiglitz is Mr. Market.
The Coin Price of Bitcoin on 5 December 2017 was $11,700 (€9,897.38), Coinbase reported. Bitcoin’s Coin Price grew by $1,578.85 (€1,335.60) or 15.83% in the week that ended on December 5, 2017.
Perhaps investors should buy Bitcoin next time a Nobel Prize-winning economist bad mouths it. The hostility of the Nobel winners seems to increase its value.
This story originally appeared at Market Mad House.