Jim Chanos on Fraud: “Cryptocurrency Is a Security Speculation Game Masquerading as a Technological Breakthrough”

The Institute For New Economic Thinking has the article Jim Chanos on Fraud: “Cryptocurrency Is a Security Speculation Game Masquerading as a Technological Breakthrough”. This has been republished by Naked Capitalism..

Law was the first person to write about the need for foreign governments to have fiat currencies and not be tethered to gold and silver. Because of the power of taxation and the power of the governments through enforcement and force of arms, they could enforce their currency to be used, and because of their ability to expand the monetary base and do all the kinds of things that central banks now do, it was in their best interest to do so.

I gave a link to both publications of this article so that you could read the comments on both of them. What Jim Chanos is saying is plenty controversial. I picked out the quote above to give you a hint at one of the controversies. To a proponent of Modern Money Theory (MMT) like me, the comments on fiat currency seem pretty devastating. At least I can say that I recognize some of what night upset MMT for the USA, see my recent post India & Iran drop dollar in oil trade to bypass US sanctions – report.

As for Jim Chanos’ comments

LP: One thing you said in “The China Hustle” is that we’ve never seen a credit build-up like the one we’ve seen in China today that hasn’t been followed by a major financial crisis. That sounds pretty worrisome.

JC: I’m always told confidently it won’t matter because they owe it to themselves. Well, if that was that were the case, then Zimbabwe would be one of the wealthiest countries in the world today!

When MMT makes this argument about the USA’s fiat currency, they say that the fiat currency allows the USA to buy whatever it wants to buy if it is for sale in the USA’s currency. What is available to buy in USA currency is a far different story from what is available to buy in Zimbabwe currency. However, the caveat that MMT states is something to take seriously. My recent post about India and Iran as linked to above demonstrates some of the things that could go wrong with the USA fiat cirrency.

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