In a recent video release on CNBC, economist Joseph Stiglitz had some comments about cryptocurrencies and macroeconomics. Joseph Stiglitz has a very established and well respected career in economics, but clearly does not understand bitcoin, cryptocurrencies or blockchain technology. Stiglitz was a Nobel Prize Winner in Economics in 2001, Chief Economist at World Bank 1997-2000, Economics Professor at Colombia University since 2001, and as of recent the Author of “People, Power, and Profits” Published in April 2019.
While Stiglitz is clearly an established economist with many great accomplishments, he does not understand the modern technology of cryptocurrencies. In the video with CNBC, he refers to cryptocurrencies as a whole as “illicit” and states that he has problems with cryptocurrencies linking to “dark money.” While both of these are outrageous claims, Stiglitz went on to say that he has “been a great advocate of moving to an electronic payment mechanism” and that “there are a lot of efficiencies” to moving to a fully electronic payment system. Stiglitz states that he believes moving to an economic payment system could provide “better macro economic management” as a whole and the Federal Reserve could provide more accurate interest rates “if we had all the data in real time.” Stiglitz vision is moving to an entirely government controlled electronic payment system, or cryptocurrency, which is outlandish.
Stiglitz continues to state that he believes that moving to an electronic payment system would curb some illicit economic activities, but also feels that they would need to figure a “way out” of surveillance that a government controlled economic system may have. At a basic level, there is no way to have it both ways that Stiglitz suggests in the video released on CNBC. There is no way to have an electronic payment system controlled by the government and also have there be any layer of anonymity. From a use case perspective, that is why multiple cryptocurrencies exist to provide various different services, such as shielded payments, or open payments depending on the end goal or objective of use. Payment networks are a somewhat complicated issue and a government controlled solution is simply not the answer.
Continuing on this, Stiglitz made some comments about the US dollar in commenting that “we have a very good currency” and how it has been “run in a very sable way” and how “there is no need for someone to move to cryptocurrencies.” Clearly Stiglitz has outdated opinions about the financial systems and does not fully understand the capability of cryptocurrencies. Referring to his economic courses, he states in the video that “in our standard economic courses we talk about the attributes of a good currency, and the US dollar has those attributes, the cryptocurrencies do not have those attributes. I actually think we should shut down the cryptocurrencies.” While the statement about shutting cryptocurrencies down is absurd, the comment about the attributes of a good currency are interesting, as while the dollar in some cases may hold value more consistently than the volatile cryptocurrency asset class, cryptocurrencies are completely borderless, and exist on a transparent ledger, something that the dollar does not do. In terms of the better form of currency, cryptocurrencies check many more boxes than the US dollar.
Overall, the statements by economist Joseph Stiglitz seemed targeted with the overall agenda of making the dollar look logical/positive, and targeted remarks attempting to discredit cryptocurrencies by only referring to them in illegal/negative ways. The statements that Stiglitz makes throughout the video are not backed by any sort of factual support or sound logic, and are easily refuted by explaining the basic fundamentals of cryptocurrencies. Stiglitz does not understand the basics of cryptography or blockchain, which caused him to make some false statements in a video released on CNBC. His timing with CNBC being the classic counter-indicator meme is on point, as Bitcoin is up +14% already in the first week of May, and over +60% since the beginning of February. From a fundamental standpoint, Stiglitz has flawed ideas about the basics of cryptocurrencies, and CNBC continues to attempt to get clicks with stories that pop relating to cryptocurrency. While misinformation from the media is an issue in general, it is also prevalent amongst the cryptocurrency media, as seen clearly here on CNBC and multiple other major news outlets.
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