American Consequences - July 2021

that has proven to be not very useful at all. And yet, it has gone up in price. And now, other buyers are buying... because it is NOT a good currency. That is, they are buying because they think it is going up in price even more. All of which makes our head spin. But what a delightful confusion. If you are buying a crypto, remember... Nassim Taleb could be right. It may have no value. Zero. And the more it goes up, the less value it will have.

A dollar may be used to start a fire. A funny bunny crypto coin can be an amusing joke. A gold coin can serve as a paperweight. But the only real usefulness of money is as money, nothing more. Money helps us keep track of what other things are worth. And if it is to be valuable, it must be truthful. If it gives us a false report, on the other hand, it is as dangerous as a double agent in wartime, giving out misinformation so that we will make a mistake. A year ago, bitcoin said it was worth about a third the cost of a Ford F-150 pickup. Two months ago, it said it was worth two of them. Now, it says it is worth only one. Which is it? And here’s the thing: When money can’t keep its story straight, it loses its value as an informant. Take bitcoin, ethereum, dogecoin, et al. People buy them because – they say – they are superior forms of money. Then, if they go down, they sell them... because they have proved to not be superior forms of money, after all. But if they go up, they have proved to be untrue and unreliable. DELIGHTFUL CONFUSION This puts the thinking speculator, if there were any, in an awkward situation. He has taken a flyer on a new form of money...

American Consequences


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