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Nobel Laureate Economist Thinks the US Govt Has ‘Shut Down’ Bitcoin

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Nobel Laureate Economist Thinks the US Govt Has ‘Shut Down’ Bitcoin

Introduction

Nobel prize winning economist Joseph Stiglitz has, in a public event at the London School of Economics, stated that bitcoin has been “effectively” shut down by the U.S. government.

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Joseph Stiglitz is, by any account, a renowned economist, an influential figure and scholar in world economics. The 73-year-old American is notably a recipient of the Nobel prize in Economic Sciences in 2001 and is currently a professor at Columbia University, New York.

Stiglitz has received over 40 honorary degrees from the likes of Harvard and Cambridge Universities while being decorated by several governments such as South Korea, Colombia, Ecuador and more. He was also the chief economist at the World Bank for three years between 1997 and 2000. The list of accolades above still does not do him justice, his Wiki article sums up an exhaustive survey of his credentials.

The Bitcoin Question

At a recent public event at London School of Economics while promoting his latest book, Stiglitz issued a public lecture before fielding questions from the audience.

It was here that Stiglitz was asked to offer his views on bitcoin. The question is notable in itself. A member of the audience asked Stiglitz:

Hi. My question is what is your opinion of bitcoin? Not necessarily on what is its impact, the trend and how it’s shaping the international system, globalization, but what is your perception of bitcoin and cryptocurrencies?

[In the way that] everyone being able to use and own their own banks and money, use it and trade it without any government regulation, authority. It is thoroughly decentralized and it’s unregulated, freely by the markets.

[My question is] It’s not about the impact of cryptocurrencies, but your personal philosophical opinion about the creation of cryptocurrencies. Thank you.

The question was sweeping in its context and summarized the-most-unique facets and functionalities of bitcoin, compared to fiat currencies. Unregulated and decentralized, a significant innovation to be sure. Wall Street seems to agree, in the way banks are flocking toward blockchain technology – the core innovation powering bitcoin.

The Response

The stage was set for Stiglitz – the 4th most influential economist in the world according to academic citations as of August 2016 – to offer what could very well be his first publicly-expressed opinion on bitcoin.

He replied:

My own view is: bitcoins have been greatly exaggerated. A common medium of exchange or a store of value is a basic public function and needs to be regulated.

Already, it is apparent that Stiglitz is, unsurprisingly, aware of bitcoin and the underlying potential that cryptocurrency observers praise it for.

For context, Stiglitz is the current Director of Graduate Summer Programs at the Brooks World Poverty Institute, an arm of the University of Manchester dedicated exclusively to research on poverty, inequality and growth around the world. One of bitcoin’s many advantages is the way in which it can help bring respite to those who remain unbanked, around the world. Mainstream media has frequently covered the very subject of bitcoin conflated with poverty.

However, Stiglitz’s comments reveal that he does not buy into the idea or notion of a borderless, unregulated world currency, free from any authority. Instead, he offers a very different take on what bitcoin, as he sees it, is meant for:

The main use of bitcoin has been to circumvent tax authorities and regulation. I think the US government did the right of thing of shutting or trying to shut it down and I think effectively…it has done that.

Stiglitz is, of course, mistaken in his view that bitcoin has been ‘shut down’ by the U.S. government. It begs the question: what was he referring to? It’s possible that the Nobel laureate could be referring to Silk Road, the darknet drug market that is prominently associated with bitcoin.

A Renegade Against the Institution

It is somewhat unfortunate that Stiglitz’s grasp of bitcoin is currently limited. This is a man who, as a Nobel prize winner and former chief economist at the World Bank, lambasted the International Monetary Fund (IMF) publicly in the past for its part in crises faced by economies around the world. His unrelenting criticism of the IMF, some say, even resulted in his departure from his role as the World Bank’s chief economist.

IMF

He once described of the IMF staff as:

“[T]hird-rate economists from first-rate universities.”

To expand on Stiglitz’s criticism of the IMF, a 2002 article from the Guardian reads:

The IMF made two big errors in the 1990s, in Mr Stiglitz’s view. The first was to bow to Wall Street’s demand for new markets, by making IMF loans conditional on countries opening up their financial sectors. The resulting rise in speculative capital flows has proved disastrous for fragile economies.

At the first sign of trouble, foreign investors pull out. At the height of the Asian crisis, some countries faced capital outflows of more than 10% of GDP.

The second error was to prescribe a mix of fiscal austerity and high-interest rates for the countries in the speculators’ firing line. Calling on countries running healthy budget surpluses to tighten their belts only intensified the recession

His stinging criticism of the IMF turned so many heads that the director of external relations at the IMF gave an entire speech that retorted the many accusations and criticisms of Stiglitz. That speech-in-response, from June 2002, is still available on IMF’s website.

As things stand, Stiglitz’s take on bitcoin is somewhat coinciding with that of Christine Lagarde, the managing director of the IMF. In a speech in late 2015, Lagarde was addressing bankers at a banking industry conference, quelling any fears that bitcoin and blockchain technology would threaten the banking industry.

Surely, there are a few students at Columbia University refreshing their pinned bitcoin price tabs while attending Stiglitz’s courses. It would be prudent to inform the professor that bitcoin is not only not-shut-down by the government, the cryptocurrency is also gaining in value recently.

Images from Shutterstock and Wikimedia.

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Samburaj Das

Samburaj Das

Samburaj is the contributing editor at Hacked and keeps tabs on science, technology and cyber security.

Comments
  • user

    AUTHOR Douglas Crets

    Posted on 3:14 pm September 7, 2016.

    Ha. Love how the headline is supposed to milk the conspiracy theorists for all their attention, but the first quote from Stiglitz is pretty much the real headline: IT AIN’T MUCH TO WORRY ABOUT!

  • user

    AUTHOR grahvity

    Posted on 3:21 pm September 7, 2016.

    Yet another bitcoin obituary.

  • user

    AUTHOR Giulio Prisco

    Posted on 4:48 pm September 7, 2016.

    I remember that in 1986 late unlamented Colonel claimed that he “destroyed” the Italian island Lampedusa. Actually, they fired a missile that went very much off-target and didn’t do any damage. This claim that the US Gov “shut down” Bitcoin looks similar to me.

  • user

    AUTHOR ViP Berbigao

    Posted on 5:16 pm September 7, 2016.

    The Bitcoin is transparent, very transparent and very public. Another academic four walls. The correct for him are corrupt governments who steal the savings of people with inflation.

  • user

    AUTHOR 한재영

    Posted on 8:40 pm September 7, 2016.

    How ? And i think if US gov want kill the Bitcoin, they need Internet Shutdown. But lot of business melted within internet. that opinion is very stupid thinks.

  • user

    AUTHOR smd

    Posted on 11:00 pm September 7, 2016.

    It will be an insult for Nakamoto to get Nobel prize while Stiglitz has one.

  • user

    AUTHOR Claudio Levrini

    Posted on 9:50 am September 8, 2016.

    Ignorant and pretentious as you would expect from a former chief economist at the World Bank

    • user

      AUTHOR Alexander Kopriwa

      Posted on 2:41 pm September 25, 2016.

      And the IMF follows suite with Ms Lagarde… Transparency is NOT wanted.

      • user

        AUTHOR Orchideric

        Posted on 5:59 am September 27, 2016.

        Exactly… They are terrified of the Bitcoin blockchain, which is why Banking Cartel’s like R3 instantly formed. They’re scrambling to catch up so they can say Bitcoin has no advantage on speed; but transparency and decentralization will bite them in the butt. My prediction is that the moment they launch private chains, they will get hacked bigtime.

  • user

    AUTHOR Elwar

    Posted on 2:27 pm September 8, 2016.

    Reminds me of Iraq’s Information Minister, Muhammed Saeed al-Sahaf, standing in front of his own media talking about how Iraq has defeated the US army while in a split screen it shows US troops downtown Baghdad.
    Nothing to see here. Everything is ok with the banks. Keep your money there.

  • user

    AUTHOR Ade

    Posted on 4:50 pm September 8, 2016.

    40 Honorary Degrees in economics and still doesn’t know that the current centralised fiat ponzi scheme the world operates under is….a 200+ yr old get rich quick Scam for the 0.000001%

  • user

    AUTHOR Michael Bailey

    Posted on 6:52 pm September 10, 2016.

    This has to be one of the most hilarious claims I’ve ever heard. It serves to demonstrate that “credentials” signify only one thing . . . that the holder is a top-notch pawn and mouthpiece of those who are really in control . . for now. Utter and complete ignorance doesn’t begin to describe the condition of this man’s mind. He hasn’t learned anything since studying Keynes in the 1960’s.

  • user

    AUTHOR Orchideric

    Posted on 4:15 am September 19, 2016.

    Haha, as an American, I can assure you that Bitcoin has been welcomed with rolling out the red carpet and with open arms. The formation of the NYDFS and several other new regulations = nothing but loving adoption. Even in Florida where the Local Bitcoins fiasco happened the case was overturned.

    • user

      AUTHOR WNDRKND

      Posted on 3:21 am September 24, 2016.

      Even here in North Carolina, P2P sales are legal. Id say that’s about as open as it gets as far as making money legally.

  • user

    AUTHOR tracy lane

    Posted on 5:57 am September 27, 2016.

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  • user

    AUTHOR Gimmel Yod

    Posted on 8:02 pm October 3, 2016.

    Have you looked at “Noble-Prize recipients” over the last decade? Seriously. No, SERIOUSLY. Have you looked at the list? Because the “Noble Prize” has essentially been “shut down by the US Government”. Oh, they still have a “thing” called the “Noble Prize”, – but it has the same value as a “PreApproved Credit card” notice: NONE. ZER0. ZILTCH. NADA. From those who push JUNK-SCIENCE – to WAR-MONGERS who win “Peace prizes” — the “Noble Prize” means NOTHING other than the recipient is some sort of political whore.

  • user

    AUTHOR Gimmel Yod

    Posted on 8:12 pm October 3, 2016.

    “God is dead” – Nietzsche
    “Nietzsche is dead.” – God

    Which statement has been PROVEN true?
    Bitcoin is trading at over $600/per. What was the value of the “Dollar” again?

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