Josef Tětek is a SatoshiLabs and Trezor Brand Ambassador.
It’s a tulip mania, a Ponzi scheme, a bubble about to burst. You’ve heard it all before. And not just from your nocoiner friends: This narrative has been pushed for years by many famous economists with a Nobel on their shelf. Why do renowned economists fail to see the value in bitcoin? It’s not a failure of understanding; it’s a difference of worldview.
The influence of mainstream economics cannot be underestimated. As John Maynard Keynes said, “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” This fits current economic policy perfectly. So, let’s see how the madmen and scribblers view the current economy — and, therefore, society itself.
So What Is Mainstream Economics, Anyway?
Mainstream economics is mostly a mixture of two dominant schools of economic thought.
Keynesianism in its various forms (i.e., post-Keynesianism, new Keynesianism) is heavily focused on the economic aggregates: GDP, unemployment rate, consumer spending, inflation measured through consumer price index (CPI) and such. Market forces are viewed as chronically inadequate due to various alleged market failures. Society is in constant need of public goods supplied by the government. Public spending is a panacea in the eyes of Keynesian economists and should be done even at the cost of heavy budget deficits, if need be. Interestingly, Keynes himself prescribed public deficits only in the downturns; but the U.S. budget has been in a deficit in 46 out of the past 50 years, even in the times of strong economic growth.
Monetarism also focuses on the economic aggregates, but its prescriptions are, well, monetarist in nature: Instead of fiscal measures, the economy should be aided by the central bank’s actions….