Hailed for years as experts, roaming the halls of power, architecting the current world, and now seemingly living in the cuckoo clouds.
Paul Krugman and Warren Buffett are a bit of an old story for this space. Krugman, especially, has been yelling at clouds since 2013. Had he just bought one bitcoin, he might now be less grumpy and may have spent a minute to wonder whether his theories are just wrong.
Buffett too is hailed as some sort of investment genius, yet he has underperformed S&P500 for the past decade. Nor is it clear what good his billions have done. He knows a competitor however when he sees one, and bitcoin competes with the rigged stock market.
Buffett stands out for the vileness of his language. As bitcoin’s shine grows, so does his language drop to the gutter. This, the role model for the young.
As for Nouriel Roubini, we may yet see a uturn. He came to this space like a bull in a china shop, but we’ve seen that story before now many times.
Unlike the other two, Roubini went forth and engaged, and by doing so, he saw. Or that’s what we suspect.
In a debate with Vitalik Buterin, there were moments when Roubini seemed to wear an expression that suggested he was learning something extremely interesting.
He was surprised, at times, while at other times it seemed to go over his head and he appeared to think he was out of place. Maybe that has led him to look without bias and see whether there is something worth looking.
Bitcoin, for some reason, seems to do this to people. As a very new thing, one is more easily inclined to dismiss it. Some of the current bitcoin protocol developers did so at first. Arguably almost everyone collectively dismissed it in 2011.
This dismissal out of hand can lead to much ignorance. One feels they know all there is to know, and thus hastily reach a conclusion.
Joseph Stiglitz displayed such ignorance in a video where he said “we should shut down the cryptocurrencies.”
The cryptos indicates he is not familiar at all with any part of this space. Why he thus thought to make such statement, is not very clear. Maybe he was jealous of the attention Krugman or Roubini got. Perhaps dissing what the cool young kids like, is one way to introduce yourself to them.
Stiglitz, however, has been “appointed to the British Labour Party’s Economic Advisory Committee, convened by Shadow Chancellor John McDonnell and reporting to Labour Party Leader Jeremy Corbyn.”
His words, therefore, should be taken seriously because while Labour remains behind conservatives in polls, a Labour government can potentially take power in the next election.
Presumably the British civil service would never allow them to go so far as banning cryptos for it would effectively amount to dismantling the City, and combined with Brexit it would very quickly make London irrelevant both in finance and tech.
Yet that this man who walks among the halls of power thinks it right to take the microphone and call for cryptos to be banned is a reason of concern, not about cryptos, but about what kind of elite do we have that runs the world.
His main argument appears to be that cryptos are basically an offshore tax heaven. That the wealthy park their money there, and the government doesn’t know, so they can’t tax them.
Why the wealthy would engage in tax evasion, which is a criminal offence, instead of using one of the many loopholes to legally avoid taxes, is not very clear.
You see, people like Stiglitz kind of write the laws or significantly influence them. He was, for example, member of the cabinet in the Clinton Administration. He also served as vice president at the World Bank.
We live in a democracy, at least ostensibly, so he presumably can’t be blamed for everything that went wrong, but he does share part of the blame.
It is no wonder, thus, he doesn’t come up with actual solutions and rather focuses on undermining proposed potential solutions.
At his age of 76, time for learning has long gone by as has the time for considering the schemata he has built all his life.
Thus his prescriptions are more of the same. We have to close these loopholes, we have to shut down these new things, we have to implement total financial surveillance, and so on.
The problem for Stiglitz is that while he looks back to the past, this generation looks forward to the future because we too will hopefully enjoy his old age.
And the future can’t be more of the same because it hasn’t worked. There have to be new proposed solutions that require consideration and there perhaps even have to be some structural changes.
Here are some questions for the economist. Why is inheritance for anyone over $1 billion not taxed at 90%? For those at $1-10 million it can perhaps be 10% or 20%. For those at $100 million, why not 70%?
The current inheritance tax is 40% for anything above $300,000, but why so flat? Why not ladder it? Why should Bezos pay the same inheritance tax on his $100 billion as an ordinary person? Isn’t that facilitating aristocracy? His children will have $60 billion when $99 of that billion can be used to remove other taxes and his children should still be very happy with $1 billion.
Same goes for income taxes. It’s 40% for anything above $40,000. So someone earning $10 million pays same tax as someone earning $40,000. Same for someone earning $200,000. When arguably they can be taxed 50%-60% with that used to take anyone earning less than $25,000 out of taxes all together.
The top band for property taxes in London stops at a property worth about $500,000. Why does it stop there? Why do properties worth $10 million pay the same as those worth half a million?
Why is our bread being taxed Stiglitz? That’s the most regressive tax in existence and yet Labour for some reason seems to like raising Value Added Taxes or sales taxes as they call them elsewhere.
How on earth do you justify taxing pasta or fuel? And why are there no homes being built? It is probable maybe 1%-5% of Britain or USA is built upon, so there’s plenty of space. Yet no one is building homes.
This artificial scarcity of properties is forcing everyone to rent, making it an additional tax on everyone and a credit tax on the rich property owners.
Might one suggest that banks have an incentive to limit the mortgages they give because the scarcity inflates home prices and thus they are more likely to get the lent money back?
Thus we have a situation where mortgage installments to buy an entire house are less than rent for one room, and yet mortgages are not advanced unless you’re already relatively wealthy.
You see, to diagnose some simple problems is not rocket science and it’s obviously not bitcoin that is causing these problems. To the contrary, these problems are caused by a lack of proper representation.
Most of parliamentarians or congressmen are rich, so they’d never suggest rebalancing taxes, for example, hence why we need a Citizens Assembly. In addition, there’s a skewed incentive for the government too and it goes like this.
The more people that rely on the government for handouts, rebates, credits, free services, or employment, the more the support for the government in charge.
Obviously at some point that goes too far, but taxing people – either directly or indirectly through forcing them to rent – and doing so to the point they barely have any savings left, means they are more reliant on the government.
So we have this completely skewed legal system that preposterously prohibits investment in start-ups, unless you are rich. Then you can invest in whatever you like, you can get free money from banks and charge rent, you can legally avoid taxes, and you can do whatever you want.
It’s not bitcoin that has led to now just six people owning half of the world. It’s not bitcoin that has led to six corporations owning most of the media and most of what we buy. It’s not bitcoin that created the banking collapse. It’s not bitcoin that had $40 billion in cash disappear.
The current elite is so incompetent you can’t even fund a war with printed money without having your cash stolen, let alone rebuild a country.
And these are the people we should listen to! Thanks for the endorsement Stiglitz. You coming out against bitcoin and so slopingly is all bitcoin needed to now almost cross $6,000.
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