Josh Barro shares my viewpoint, but far more articulately, on cryptocurrencies:
While I hate the aesthetics of crypto, my complaint here is not principally aesthetic. As someone who is in general more favorable to the social value of finance than a lot of commentators these days — especially on the left but sometimes on the right too — I want finance to be useful, serious, and furthering the production of useful products and services in the real economy.
I want banks lending for the construction of new buildings; equity markets making it possible for the most promising companies to raise funds to build useful products; bond markets making cheap and efficient financing available for public and private activities that will support payment of interest on the bonds. I was a big champion of the Fed’s actions to rescue the financial system in spring 2020 because I know a robust and liquid financial system isn’t just something people on Wall Street like — it’s something that makes it possible to get a mortgage, use a credit card, remain employed at a company, and generally enjoy all the things made possible by a modern economy.
And I am concerned that tens of millions of Americans investing in a stupid market with no such thing as fundamental value — and where prices should not keep going up and up and up, though I’ve grown weary of saying that and watching them do so anyway — is likely to lead to significant financial dislocation and reduced trust in the financial system when a lot of them lose their shirts.
Which sort of reminds me of the bursting of the Internet bubble in 2000. Or 2001. Whenever. A lot of people lost money when that pus-filled balloon finely finally blew up, including me.
Barro knows more about finance than I do. Go read him.
