/Nobel Prize-Winning Economist: Crypto the Latest in a Pattern of Alternative Currencies

Nobel Prize-Winning Economist: Crypto the Latest in a Pattern of Alternative Currencies

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The 2013 Nobel laureate of Economics Robert Shiller calls crypto the newest iteration of alternative currency ideas, In a May 21 article entitled “The Old Allure of New Money” .

Shiller cites John Pease Norton’s “electric dollar” and other historical parallels of rejected innovations which serve to illustrate, in his opinion, why Bitcoin and cryptocurrencies are doomed to fail. He also notes that governments are actively engaged in sounding the alarm bells, but that the devotees ignore them at their own peril.

He writes, “The cryptocurrency revolution, which started with bitcoin in 2009, claims to be inventing new kinds of money. There are now nearly 2,000 cryptocurrencies, and millions of people worldwide are excited by them. What accounts for this enthusiasm, which so far remains undampened by warnings that the revolution is a sham?”

The Yale economist also mentions Karl Marx and Friedrich Engels, who proposed that the communist condition under which private property was eliminated, would necessarily result in the “Communistic abolition of buying and selling.”

Getting closer to the modern day, Shiller references the Great Depression movement called “Technocracy,” which proposed to replace the then gold-backed US dollar with a measure of energy. Their book “The ABC of Technocracy” proposed the idea of founding an economy on the basis of energy.

Reaching the contemporary period, Shiller writes that crypto, like its predecessors, is coupled with “a deep yearning for some kind of revolution in society.” He also states that the public’s general lack of understanding of how cryptocurrencies function creates an allure:

“Practically no one, outside of computer science departments, can explain how cryptocurrencies work, and that mystery creates an aura of exclusivity, gives the new money glamor, and fills devotees with revolutionary zeal.”

Shiller recognizes that the decentralized nature of cryptocurrencies is a primary draw for those who see governments as “the drivers of a long train of inequality and war.” He concludes, however, in saying that “None of this is new, and, as with past monetary innovations, a compelling story may not be enough.”

Robert Shiller, Eugene Fama, and Lars Peter Hansen were awarded the Nobel Prize in Economics in 2013 for “their empirical analysis of asset prices.” Shiller developed the Case-Shiller index with his colleague Karl Case, that is now used by Standard and Poor’s Financial Services.

In recent weeks, cryptocurrencies have been publicly criticized by giants in the tech and finance worlds such as Bill Gates and Warren Buffet. Berkshire Hathaway Vice Chairman Charlie Munger compared trading and dealing in crypto to “freshly harvested baby brains.”

Eleven-year-old Andrew Courey explains Bitcoin and more in his new, self-published book, Early Bird Gets The Bitcoin: The Ultimate Guide To Everything About Bitcoin. Writes one reviewer, “This book does an amazing job of breaking down bit coin and crypto currency in a relatable way…I especially enjoyed the fun facts at the end of each chapter which made this ‘virtual currency’ understandable in real life–Sometimes it takes the perspective of a young author to explain the complicated!”