Oligarchs trade insults over crypto

Warren “Bitcoin is rat poison squared” Buffett got an earful from billionaire entrepreneur Peter Thiel at the recent Bitcoin Conference in Miami.

Thiel, in his keynote address, named the enemies of Bitcoin: Warren Buffett, Blackrock CEO Larry Fink and JPMorgan Chase chairman, Jamie Dimon and added that Bitcoin was a revolutionary youth movement pitted against the ‘finance gerontocracy’ running the economy.

Enemy number one is the ‘sociopathic grandpa form Omaha’ (Warren Buffett), said Thiel. “If you’re a money manager, you want to pretend it’s complicated to invest. If all you have to do is buy Bitcoin, that’s ridiculous, then you’re out of business.”

There’s an institutional and a centre-left political bias that worked relentlessly to demonise Bitcoin, added Thiel.

Large institutions need to allocate some of their money to Bitcoin. When they choose not to invest in Bitcoin, that is a deeply political choice, said Thiel.

A few days later, Buffett doubled down on his anti-Bitcoin posture, claiming he wouldn’t pay $25 for all the Bitcoin in the world. He’d rather invest in farmland or apartments, he told attendees at the Berkshire Hathaway shareholder meeting in April.

Berkshire Hathaway’s vice chair Munger weighed in with some put-downs of his own, declaring Bitcoin as ‘stupid’ and ‘evil” and which in time will be worth zero.

“In my life, I try and avoid things that are stupid, evil, and make me look bad in comparison to someone else,” said Munger. “Bitcoin does all three.”

Thiel accused the ‘gerontocracy’ of propagating anti-crypto memes, one of them being ‘pro-blockchain’ but anti-Bitcoin.

He also attacked the Bitcoin versus ESG (environmental, social and governance) debate, which was just a ‘hate factory’ for naming enemies. Carbon companies and Bitcoin are not politically popular.

“Bitcoin is the most honest market in the world, it is the most efficient market, it was the canary in the coal mine. It was telling us that the inflation was coming in the last two years,” said Thiel to a partisan crowd. “It is telling us that the central banks are bankrupt, that we are at the end of the fiat money regime. That is what it has priced in.

“The central bankers should be extremely grateful to Bitcoin. They have chosen to ignore it and they will have to pay the consequences for that in the years ahead.”

It’s a political question whether the Bitcoin movement succeeds, added Thiel.

One of biitcoin’s most outspoken proponents, Michael Saylor, CEO of MicroStrategy (which owns about 125 000 BTC) responded with the following tweet:

People who understand #bitcoin buy it. People who don’t understand #bitcoin talk about it.

— Michael Saylor⚡️ (@saylor) May 3, 2022

Crypto analyst Mark E Jeftovic, a Buffett fan, points out that Buffett avoided tech stocks during the dotcom boom of the early 2000s (and likewise avoided some of resulting train smashes to emerge form that era) because they were outside his circle of competence.

“I believe the reason for the visceral hatred toward monetary assets, like gold or Bitcoin is because on some subconscious level, Buffett knows that one of the major tailwinds of his stellar investment career has been the destruction of the monetary base layer and The Cantillon Effect,” writes Jeftovic.

The Cantillon Effect derives from Irish-French entrepreneur Richard Cantillon, who observed that expanding money supply has an uneven trickle-down effect in the economy. The elites, particularly those invested in stocks and bonds, have more direct access to new money as it is created, resulting in rising asset prices which further concentrate their wealth, while the poor experience this as a delayed effect in the form of rising inflation.

“Bitcoin, when widely adapted as money and a store of value puts an end to the Cantillon Effect. Because it is an inelastic, deflationary and asset-based money, it gains purchasing power over time (volatility aside, which I expect to smooth out over the coming years),” says Jeftovic.

The crypto analyst piled on claims by Munger and Buffett that bitcoin produces nothing and is worthless. Buffett has railed against monetary expansion, pointing out that it swindles just about everyone. Bitcoin is the fix for that problem, because its issuance is limited to 21 million coins. As more companies and countries accept Bitcoin, demand for the currency will follow. Central African Republic, El Salvador, Honduras SEZ, and the city of Lugano in Switzerland now accept BTC as legal tender.

BTC has withstood the ravages of regulatory over-reach, to the point where regulators are now adopting a more accommodating approach, recognising the rise of private monies as a means of protecting wealth against reckless monetary management cannot be swept under the carpet.