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Paul Krugman | Creative Commons image by Commonwealth Club
It’s no secret that famed economist Paul Krugman hates Bitcoin (as a monetary system).
He’s been talking about it since back in 2011 when the cryptocurrency was on very few peoples’ radars.
“What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that’s not at all what is happening in Bitcoin,” the economics professor wrote two years ago.
In his most recent column, “Bits and Barbarism,” Krugman has even harsher words for the cryptocurrency whose valued has soared over the past few months, reaching an all-time high of $1,240 per BTC in November.
In Krugman’s piece – a “tale of monetary regress” as he puts it – the economist identifies three “money pits” – Bitcoin being the second on his list.
Bitcoin only has value because people are willing to buy it because they think other people are willing to buy it, Krugman explains.
“It is, by design, a kind of virtual gold. And like gold, it can be mined: you can create new bitcoins, but only by solving very complex mathematical problems that require both a lot of computing power and a lot of electricity to run the computers,” Krugman writes.
“A lot of real resources are being used to create virtual objects with no clear use,” he concludes.
Interestingly, the first “money pit” on Krugman’s list is Barrick Gold’s Porgera open-pit gold mine in Papua New Guinea. The economist criticizes the mine for its reputation of human rights abuses and environmental damage.
Interested in Krugman’s third “money pit”? You should probably read it in his words.
18 Comments
Sam Spade
Krugman is a leftist socialist fool!
Mark
And just what does Krugman think the US dollar has done? Made people with early access, ie: government employees, the banks/financial people, rich. While making producers poor.
Mike Amato
I agree with him. Well, not really but I wanted to change it up a bit. Being forced to point out the homer simpson in everyone gets old. Doh.
Dominik Z
So Krugman says that bitcoin will make people who hold money rich… sounds good to me. What he really means is the interest bears to me as opposed to holding my money at a bank that pays an exciting 0.19% APR rate on my savings account while his banker buddies get fat checks from handling my money 😉
Joe T
the reason that Krugman hates bitcoin and gold is bc he is a huge advocate of printing up fiat money, and the more the better. He claims that printing up all this money will have no negative consequences. Things like bitcoin and gold, which are alternate places for people to put their wealth if the govs abuse this printing power, could potentially cause his theories to be wrong. Nothing scares Krugman more than the idea that he is wrong. Therefore, anything that would cause a person to leave the fiat printed gov currency is to be bashed. I think it is that simple as his arguments against bitcoin are ridiculous. For example, he claims bitcoin has no value. Sending money internationally at no cost and at any time is worthless? Paul, do you think the people who pay western union etc $74B per year simply to transmit money to their families would consider it worthless – it’s that much more money for their families!
Michael Cordell
I’ve never heard of Paul Krugman.
allritejack
You haven’t missed anything. Leave it like that.
Neil
Human rights abuses at Porgera? He is right but only if he is talking about the way Barrick treats its employees there!
Anthony Maw
Bitcoin will turn out to be the “shares of real estate on the moon”. It’s value in relation to the fiat-dollars is based purely on speculation and the invention of an ETF trade. Also there’s the rumour of “Chinese housewives” speculating on Bitcoin too, blelieve it or not…. Barrick is turning out to be a real screw-up of a company. Gold will ultimately prevail as the best long-term safest store of wealth but only time will tell.
jimmyjordan
Good luck sending your gold across the world for pennies instantly. How do you buy things with Gold? Do you have a pick and a scale? Do you use stamps and the post office to send it somewhere? Who accepts Gold as payment?
Mike Failla
Look what china is doing to back up their currency. Buying gold, tons of it! What are we doing? Printing up paper and bitcoins! Are you kidding? Really? Go to the store and offer to pay with bitcoins, good luck with that!
jimmyjordan
I did. I used either Gyft or Bitpay. Did all my Christmas shopping that way. You should try it.
Guest_User
I actually feel more positive about these items now that Krugman has come out against them. I think Krugman’s Nobel was exposed to be of accurate and similar achievement of “life accomplishment” by the awarding of Obama’s Nobel. It’s also appropriate that Krugman would teach at the “Woodrow Wilson” school at Princeton.
Rod M. Kerr
He is totally right . Bitcoin is a Ponzi scheme. Barrick gold is poorly managed.
Hugh Jorgen
Maybe someone should ask him what sort of value Federal Reserve Notes have?
Mike Failla
Currency backed up with nothing is still nothing.
biizii scoop
bitcoin made Paul Krugman famous
Doubtful
What does an old guy like him know about Bitcoin, let alone any currency? Has he ever traded? Does he know that dollars are paper? Does he know gold has no use? What is his solution? Typical critical intellectual snob with no solutions, or experience, just criticism.