I have been reading a lot about "crypto," recently. It's in the news. In my hometown newspaper, the Santa Cruz Sentinel, columnist Jeffrey Scharf says that the "Crypto market walks a perilous financial line." Actually, it seems to me, that observation may be way too generous.
The New York Times says that "Crypto Faces A Reckoning." That is the hard copy version of the headline on the November 10, 2022, article by Kevin Roose. Online, Roose's discussion travels with this title: "Is This Crypto’s Lehman Moment?"
Two columnists who write for The Wall Street Journal are also reporting discouraging news for those who have invested in cryptocurrencies. The James Mackintosh column on November 10th is headlined, "Crypto Has a Backing Problem." Again, that's the hard copy version. Andy Kessler, another WSJ columnist, titles his evaluation, "Another Nail in the Crypto Coffin."
Kessler's comment is pretty good:
My beef with the crypto market has always been that it is backed by nothing but air.
However, I particularly liked what Mackintosh said:
Having compressed most of the mistakes made by finance over the centuries into just over a decade, cryptocurrency speculators may finally be discovering the fundamental flaw of trying to build an alternative to government-backed finance: no government backing.
I believe that Mackintosh's appreciation for, and his salute to, "government" is exactly on target. So often, we think of ourselves as "individuals," first, last, and always. In fact, though, we are not only individuals; we are part of a greater whole, and "government" is how we establish the rules that manage our interdependence. Acting like we are not interdependent is a huge mistake.
As I look back, I find I have written thirteen blog postings about cryptocurrency, starting on June 19, 2019, mainly making the point (as Kessler does) that cryptocurrencies are backed by "nothing but air." On August 17, 2019, however, I explicitly pointed out that mistrust of government, the foundation for what many people find so attractive in cryptocurrencies, is best addressed not by trying to avoid government, but by taking charge of it. Here's a replay of what I said then:
My posting on August 16, 2019, conceded that the control that national governments exercise over the national monetary system can lead to governmental abuse. Still, I opposed the idea that we should substitute a "cryptocurrency" system, like Facebook's proposed Libra. Cryptocurrency is attractive to many because they mistrust the government; they doubt that the government will take proper care of our money. They think that a system that takes the government out of the picture might be better. I don't agree.As I have been thinking about this position, I realize that my view about the desirability of taking away governmental control over our monetary system reflects a more general view about the role of government in our lives. That general view of government is perhaps best captured by a saying attributed to Andrew Carnegie:
The advice, “Don’t put all your eggs in one basket” is all wrong. I tell you “put all your eggs in one basket, and then watch that basket.”That's the way we should think about the government in general. The idea that "government is the problem," as President Reagan said in his 1981 Inaugural Address, is just plain wrong."Individualistic" approaches to our social, economic, and political challenges might appear to guard against the "all our eggs in one basket" danger. However, we are all in this life together, and are more than just a series of unconnected individuals. Because that is true, a "government is the problem" approach is not only wrong, but is ineffective in helping us to overcome the challenges we face, and to achieve the objectives we care about most.It is true that when we set up governmental systems to deal with essential social, economic, and political problems, we are putting all our eggs in "one basket."There is a danger there, admittedly. We do need to remember that when we have government act for us, on issues affecting our economy, or on questions of war and peace, racial and social justice, transportation and health care, we do have all our eggs in that "one basket." Because that is true, we must absolutely be sure that we:Watch That Basket!
Functionally, "watching that basket" means that we can't let someone else "do government" for us. We need to get involved ourselves.
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