Well this is sure to bring out the tomato throwers and cat calls from the peanut gallery.
You can add Alan Greenspan to the list of folks who have either implicitly or explicitly suggested that Bitcoin is inherently worthless.
“Humans buy all sorts of things that aren’t worth anything,” Greenspan told CNBC on Wednesday, in an interview that found the former Fed chair comparing Bitcoin to Continental currency which ultimately became worthless by 1782.
What you’ll note in the video below is that Greenspan doesn’t explicitly rule out the possibility that Bitcoin can retain some of its value and he does note that in the interim period between being worth something and being worth basically nothing, actual real goods and services can be financed. But I think you’ll agree that this doesn’t amount to a glowing endorsement:
This of course comes hot on the heels of another elderly luminary warning investors that Bitcoin is dangerous. Recall the following from the father of indexing Jack Bogle:
Bitcoin has no underlying rate of return. You know bonds have an interest coupon, stocks have earnings and dividends, gold has nothing.
There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it.
It’s crazy to invest in the digital asset. Bitcoin may well go to $20,000 but that won’t prove I’m wrong. When it gets back to $100, we’ll talk.
As usual, we would remind the Bitcoin crowd (some of whom may be newcomers to Heisenberg Report), that we are the furthest thing from fans of unbridled money printing and central bank largesse. Anyone who knows our work knows that we spend all day, everyday lampooning DM central banks for persisting in the type of irresponsible policies that should, were it not for the impact of structural deflationary forces, lead to hyperinflation (see: “The End Of Money“). Further, we are not fans of gold either.
So there is no inherent anti-Bitcoin bias here. All we know is that Bitcoin does not possess the characteristics of currencies, it is subject to all manner of risks (not the least of which is regulatory in nature), and it currently trades solely on the greater fool theory.
Of course we don’t expect anyone reading this to take Greenspan seriously – especially not in a world where everyone has been conditioned to believe that experts are not in fact experts just because they have at one time or another been wrong.
Finally, note what else Greenspan says in the video embedded above:
People gamble in casinos when the odds are against them. It has never stopped anybody.
Now think back to Wall Street Journal’s recent feature story on Bitcoin. Specifically, to this bit:
Rita Scott’s grandson convinced her in mid-November to get in on the latest investing sensation and buy bitcoin. “I thought it was a big coin,” the 70-year-old said. “I didn’t even know what it was, a piece of coin? Why would I invest in a piece of coin?”
With a few hundred dollars of her money invested in it, Ms. Scott quickly caught on and started checking the price several times a day, even while playing poker at a casino in her hometown of Las Vegas.