Price Controls Are Back In Style
And Major Names In The Bitcoin Space Are Either Rationalizing Or Ignoring It
[Editor’s note: Click on images to be taken to the tweets or articles they represent. Also, if you’re new to bitcoin and are worried about how its price is “crashing,” scroll down to the “Why Is Bitcoin’s Price Crashing?” section.]
Yesterday, a video of the President of El Salvador, Nayib Bukele, telling food vendors to lower prices “or else” went viral on social media.
He told businesspeople in the country to take note of what he did to the gang members who didn’t listen to him when he told them to stop killing people, insinuating that these businesspeople, too, might end up in supermax prisons without trial if they don’t lower the prices of groceries.
Not good.
Really bad, actually.
Before I continue, though, I’d like to ask the Americans who commented on Bukele’s rhetoric (including myself) to check yourself, as we have politicians with authoritarian tendencies like Senator Elizabeth Warren who push for price controls in the US, as well, and we don’t do enough to rail against them.
Plus, there’s now notable public support in the US for price controls. (We’re really toying with that end-of-empire-type shit here in the good ol’ US of A.)
We should be more worried about what’s happening in our own backyard (and that’s in regard to much more than price controls) than what’s happening in El Salvador or elsewhere.
If you’d like to know why price controls lead to lower quality of life and shortages of everything from food to medicine, I’d advise you to read the following articles:
Why did the Soviet Union collapse? (Encyclopedia Britannica)
How the Soviets “Fixed” Inflation, but Ruined the Economy (Mises Institute)
Price Controls: Still A Bad Idea (Hoover Institution)
What we really need to do if we want to see prices come down is move to a bitcoin standard and/or abolish the Federal Reserve, because the Fed is the number one driver of inequality in the United States.
Before moving on from the topic of Bukele’s rhetoric though, though, we must address the fact that there are some Americans who advise President Bukele who are either rationalizing Bukele’s rhetoric or ignoring it, and they deserve to be called out.
Kill Your Bitcoin Idols (Not Literally — Just In Your Mind)
Let’s start with Max Keiser, Senior Bitcoin Advisor to Bukele.
Here he is doing rhetorical gymnastics, likely because I assume that he knows that the repercussions of speaking out against his boss wouldn’t be pretty:
He also posted the following tweet about how the price gouging was happening the grocery store sector. So, I posed a question to him about this (see below his tweet):
Didn’t get a response. Wasn’t surprised.
Speaking of not getting a response, let’s shift our gaze to Saifedean Ammous, author of The Bitcoin Standard, advisor to President Bukele and a hardcore Austrian economist who’s generally held in the regard of a high priest of sorts in the Bitcoin space.
Many people, including myself, tagged him in comments last night and today, asking for his opinion on what Bukele said.
And what we got from Saifedean was radio silence.
IF YOU’RE GOING TO EXTOL THE VIRTUES OF AUSTRIAN ECONOMICS TO SELL BOOKS AND THEN NOT DEFEND THEM WHEN THEY’RE UNDER ATTACK BECAUSE YOU’RE ON THE STATE’S PAYROLL, THERE’S A PROBLEM.
I’m willing to give Max and Saifedean the benefit of the doubt that, as advisors, they offered sound advice to President Bukele on the dangers of price controls behind the scenes. However, we have no evidence of this being the case.
And so what’s transpired here falls in line with something I generally find to hold true: people are more opportunistic than they are ideological (I mean, just look at how many “libertarians” are now adamantly pro-Trump, someone who did little to nothing to decrease the size of “the swamp” while in office and who printed over 25% of the US dollars in existence today.)
This is a good time to remind yourself that there are no rulers in bitcoin — only rules. Your heroes will likely let you down.
Bitcoin isn’t about heroes. It’s a tool that enables people to be heroes in their own story — it’s better money and a permissionless network that empowers the individual.
So, by all means, continue to listen to the Bitcoin “thought leaders” out there, but take what they say with a grain of salt and not as gospel truth. And apply that same filter to what you read in this newsletter.
When you think of Bitcoin + El Salvador, please don’t just think of some of the names I just mentioned. Instead, think of organizations based in the country like Mi Primer Bitcoin, which provides open-source Bitcoin educational information to the whole world at no cost. The people at MPB embody the true spirit of Bitcoin.
On that note, I’m excited to share this very cool video that someone made of an article I wrote about the founder of Mi Primer Bitcoin.
Why Is Bitcoin’s Price Crashing?
Short answer: Because more people are selling it than buying it.
Longer answer: The German government sold about 5,000 bitcoins. Why would a government sell 5,000 units of the most pristine collateral that ever existed — a strategic reserve asset? That’s a much easier question answer. It’s because the German government is filled with morons, like most governments.
But also like most governments, not everyone in the German government is a moron. One German MP, Joana Cotar, spoke up and asked the German government to reconsider its strategy, seemingly causing the German government to stop selling its bitcoin. God Bless your enlightened soul, Joana Cotar.
Another reason the price is dumping is because people think those who will be receiving their Mt. Gox bitcoin payout will likely dump the bitcoin they get back on the market.
It’s Sunday at 9:40 PM EST, and I don’t feel like explaining what Mt. Gox is, so if you don’t know what it is and want to learn more, please read this article:
Lastly, the market is dumping because markets are reflexive. What does that mean? Well, George Soros, the most hated Democrat financier in the world, was once a hedge fund manager, and he coined this term.
What is means is that when people see the price of an asset dropping, they sell it, which triggers others to do the same, and so on and so on and so on. If you’d like to learn more about market reflexivity and other capitalistic musings from Soros, he wrote an excellent book called The Alchemy of Finance, which I highly recommend.
Okay, that’s all for this week.
Big love. Big hugs. Take it ease. (And think for yourself. No heroes!)
Best,
Frank
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