Niall Ferguson, a renown economic historian once named as one of the most influential people in the world by TIME Magazine, said he was “very wrong” about bitcoin.
Speaking at The Australian Financial Review Business Summit on Tuesday, the British historian said he was “wrong to think there was no… use for a form of currency based on blockchain technology.”
Ferguson said his son had told him about bitcoin five years ago. This presumably would be Lachlan Ferguson who in 2014 was probably around 15 or 16.
Ferguson at the time however thought bitcoin was a “complete delusion.” He said his knowledge of the history of money led him to dismiss the idea, but now acknowledges he was very wrong.
It’s unclear whether Lachlan himself managed to get some bitcoin, but according to AFR, he watched in dismay bitcoin’s price rise from $400 to circa $20,000.
However, he is not worried about the fall to $3,000, Ferguson says, “pointing out it remains a long way from zero.”
The right-leaning historian has now joined a project that is attempting to implement Friedrich Hayek’s idea as expressed in the Denationalization of Money.
Hayek said money should try to maintain its purchasing power over the long and short term so that 1 dollar roughly buys the same amount of goods today as in say a decade.
That can’t be achieved if money is under the control of Central Banks, Hayek said, because even if they really wanted to well-manage the currency, they’d be lobbied to increase supply too much or decrease it too much and they wouldn’t have sufficient information of just what is the right amount.
Hayek thus suggested there should be free market money where there is competition between different units of account with the market then able to instantly give feedback on what money is being managed well and what not by buying and selling all these different competing currencies.
Ampleforth is now trying to implement that idea through a fairly complex system that runs on top of the blockchain with Ferguson advising.
On receiving the news, Paul Krugman, the left leaning economist who has long publicly argued with Ferguson, said:
“I’m on record as saying that crypto is a mishmash of technobabble and libertarian derp. But I guess that I should add that it’s also a giant draw for sufferers from Dunning-Kruger syndrome.”
Krugman is childless, so he has been spared a son or daughter shouting at him for not buying bitcoin in 2014, but there clearly appears to be a generational divide which Hayek described very well:
“The older generation of bankers would probably be completely unable even to imagine how the new system would operate and therefore be practically unanimous in rejecting it. But this foreseeable opposition of the established practitioners ought not to deter us.
I am also convinced that if a new generation of young bankers were given the opportunity they would rapidly develop techniques to make the new forms of banking not only safe and profitable but also much more beneficial to the whole community than the existing one.” – Hayek, Denationalization of Money.