“Worthless,” says Jamie Dimon, CEO of JP Morgan Chase. A “venereal disease,” says Charlie Munger, billionaire executive of Berkshire Hathaway, and one he is “proud” to have avoided. What are they talking about? Answer—cryptocurrencies.
Considering Berkshire Hathaway stock is up 5.6% over the past six months while bitcoin is down 56%, Munger is more than on to something. What was once hailed as a bank alternative for the underserved and a possible panacea for less developed countries with shoddy currencies apparently is no more. Crypto really does resemble a casino more and more.
A New York Post article and NBC Nightly News report from this past week both describe an emerging trend that appears more than just troubling. People are not only losing their proverbial shirts to the scheme—many are losing every dime they have. Suicides are predicted to climb. Scammers and hackers are wiping out what people think are real crypto accounts. But an explanation of what crypto is, and the pros and cons of the whole concept, this article is not.
An equally bad idea that is yet to take hold but must be headed off at the pass is this — no bailouts for crypto losses. Taxpayers should not be in the business of subsidizing people’s poor decisions. But before you say, “my representatives would never vote to do that,” think again. We subsidize failures, misfortune, bad decision making, and debt all the time.
Consider bankruptcy laws. While it is a strategy that need exist in some form, experts have said for years it is often too easy to wipe away careless financial decisions. A little more than a click of the fingers and some paperwork is all one need do in many cases. Sure, you’ll lose some points on your credit score for a few years, but that is hardly a deterrent.
Then there is the whole student loan mess. Evidently the “you took out a loan, you repay it” motto that has always been a hallmark value in this country is now just something selfish and angry out of touch conservatives believe these days. A once in a century pandemic did create bipartisan support for a short moratorium on repayment of loans, but that’s not good enough for leftists. They want most loans wiped off the books altogether. Already paid off your college loans or perhaps you took out a loan to start a company? Well, apparently, it’s just “TS” for you (tough situation).
And speaking of loans, Elon Musk’s recent tweet on the matter was brilliant for how succinctly he made a key point. Paraphrasing, Musk pondered why it is that a bank will hand over $100,000 to an 18-year old who wants to go study art history but not one seeking $15,000 to start a company. Even if one jumped through the hoops and endured the mind numbing paperwork, that latter loan will never gain approval.
And don’t forget all the stimulus money sent out. Three rounds totaled $6,400 for most households of two—much more for those with kids. We were told the money was to make people whole, so they could continue meeting their housing and food expenses. Yet leftists kept extending “you don’t have to pay any rent” schemes. This destroyed small landlords, even though the tenants were given cash for this purpose.
So, essentially, we’re left to wonder whether this Congress and the Biden Administration will ever, one, encourage work, personal saving, and investment in American enterprise and two, discourage sloth, financial carelessness, and speculative schemes like crypto. If we continue signaling that the federal government will be there as a crutch for every irresponsible decision one makes, we will bankrupt the federal treasury, and discourage appropriate risk taking ventures.
Don’t hold your breath on responsibility. When today’s crypto casualties start showing up in breadlines tomorrow, taxpayers may very well be on the hook to “help out.” Translation— it’ll be another socialist taking of money from those who worked hard redistributed to those who hardly worked. Margaret Thatcher had a retort for this decades ago: “The problem with socialism is that you eventually run out of other people’s money.”
Jeff Szymanski works in political communications at AMAC, a senior benefits organization with nearly 2.4 million members. He previously taught high school economics for 15 years.