Is This Why The Status Quo Disdains Bitcoin? – The “Wrong People Are Getting Rich”
by Charles Hugh Smith via OfTwoMinds blog,
ZeroHedge.com
Wed, 12/27/2017
The wrong people–rebels, outsiders, nerds and techies– got on the cryptocurrency boat while their insider/rentier “betters” blew it and are now raging bitterly onshore.
The psychology of money, wealth and speculative manias is endlessly fascinating. Most of what’s written on these subjects focus on the process of building wealth as if it were a quasi-science rather than a psychologically driven process. Only speculative manias attract a psychology-based analysis, usually characterized as some variant of the madness of the herd running off the cliff en masse.
But money and wealth are nothing but more sedate reflections of the same dynamics that drive speculative manias. Much has been written about cognitive biases and thinking fast and slow, but these explorations do not exhaust the psychology underpinning money, wealth and speculative manias.
Few things have unleashed the Monster Id of wealth and money quite like bitcoin and the cryptocurrencies. Compare the speculative manias of the dot-com era (1995 – 2000) and the housing bubble (2002 – 2007) with the crypto-mania: in the first two manias, the status quo embraced the mania as rational and justified: the Internet would continue growing for decades, housing never goes down, etc.
But the status quo has not embraced cryptocurrencies with the same ardor–why? Instead of endless justifications for valuations, the status quo is filled with reports that 97% of all economists view bitcoin as a bubble, and endless articles decrying the bitcoin bubble as a fools game that will deservedly burst, and soon.
Why did the status quo embrace irrationally exuberant bubbles in the 1990s and 2000s, but views the exuberance of cryptocurrencies with disdain? I think this is a fruitful topic to explore, largely because nobody seems to be asking this question.
1. The status quo reviles cryptocurrencies because the wrong people are getting rich.
2. The status quo reviles cryptocurrencies because the usual insiders (Wall Street and its politico leeches) didn’t get on board early, and they’re deeply offended that they missed the boat.
3. Until the advent of bitcoin futures trading, the usual insiders had no means to skim profits from the exuberance.
To me, these dynamics go a long way in explaining the 97% of the status quo’s visible loathing of bitcoin and the cryptocurrencies.
In other words: why embrace some manias but not all manias? Answer: some manias make the usual insiders filthy rich, others don’t. The dot-com mania generated billions of dollars in profits for Wall Street and the rest of the financier-politico leeches (i.e. the rentier class) via IPOs (initial public offerings), insider deals and vast fees generated by trading the mania with other peoples’ money.
The Rest…HERE
