This is Steve H. Hanke. He hates Bitcoin.
Does he look like a man who would respond to my email?
Not to me. He is too important.
So I will write a letter for him to you. This is in response to an article he wrote for National Review which proclaims Bitcoin a failed experiment in El Salvador.
Clearly Professor Hanke is an officer of the Empire. He has a million and one credentials. He is everything I am not. So here goes …
Dear Professor Hanke,
I am reading your recent article that proclaims Bitcoin a failure in El Salvador. Your arguments border somewhat on mania. I definitely detect a bias; but you are an economist, and, alas, I am not, so it’s possible you know much that I am not aware of.
1. You state that Bitcoin was forced upon the people of El Salvador, yet only 20% of businesses there accept Bitcoin. Accepting that as the case, how is it possible then for Bitcoin to have caused such economic travail for El Salvador?
2. You state that the cost of implementing Bitcoin was 100 million dollars, correct? You also state that the value of that Bitcoin is now 48 million dollars. Is that about right? If so, it seems a stretch to state that a 52 million dollar loss is enough to crater a country whose annual government budget is about 5.5 billion. 52 million divided by 5.5 billion is 1%. Are you stating that a 1% loss is enough to crater an economy? Applying El Salvador’s presumed loss to Archer Crosley Pediatrics, my profession, would you state that Archer Crosley’s poor choice in purchasing a fur-lined sink (Steve Martin), costing 1% of his budget, cratered Archer Crosley’s pediatric practice thus prompting his lender to panic?
3. Is it possible that the downgrade in El Salvador’s creditworthiness is in retaliation for its decision to adopt Bitcoin? Or are there other reasons for the downgrade in creditworthiness? Maybe the government is engaging in forms of corruption that is responsible for the downgrading of creditworthiness?
4. If adopting the dollar was a magic cure for an economy, then why is there massive inflation in other economies that have adopted the dollar either officially or unofficially?
5. If using Bitcoin in El Salvador is only one of many options in employing currency, then how is that bad for El Salvador? Doesn’t adopting Bitcoin give El Salvador greater flexibility? What is wrong with that?
6. Since, according to your resume, you are a currency expert and connoisseur, why do you object to Bitcoin? What precisely is your beef with Bitcoin? Shouldn’t people and governments be given the free will choice to either adopt or reject Bitcoin?
7. You state that Bitcoin is a speculative investment? You are right on the money with that. But is that the fault of Bitcoin? Or is Bitcoin’s high speculativeness the consequence of man’s desire to get rich? Who is at fault here?
8. Isn’t it true that Bitcoin’s value has risen over its short lifetime?
9. Doesn’t Bitcoin offer a greater degree of fungibility over gold and silver? How is this a bad thing?
10. I notice that you were involved in taming Argentina’s inflation decades ago. Suppose Bitcoin was used in all economies of the world in the future as a backup reserve to buffer inflation. Suppose that in this future we reach a point where all the Bitcoin that can be mined has been mined. Would such an adoption of Bitcoin be a good thing or a bad thing? If Argentina had possessed such an option during the Mexican peso devaluation, could the resurgence in hyperinflation in Argentina have been avoided?
11. Shouldn’t the addition of Bitcoin on a limited basis in El Salvador (clearly the case in El Salvador) increase people’s confidence in Team El Salvador?
12. If everyone in El Salvador kept 10% of their net worth in Bitcoin wouldn’t that give them some form of a safety net to protect themselves against hyperinflation? Wouldn’t that be a better option than sequestering one-hundred dollar bills? Wouldn’t that adoption help preserve wealth for El Slavadorans thus obviating pressure upon the government to print money? Won’t the adoption of Bitcoin help mitigate future rioting?
13. If Sri Lankans had been invested in Bitcoin to a value of 10% of their wealth, would that have been good or bad for Sri Lankans?
14. Why is El Salvador talking to the IMF? Isn’t it true that El Salvador’s decreased creditworthiness is largely due to excessive government spending and not the purchase of a measly one hundred million dollars of Bitcoin? And why is the IMF pressuring El Salvador to move away from Bitcoin? Why does the IMF care? Doesn’t Bitcoin make El Salvador more resilient and therefore more able to pay back IMF loans? Or is there some truth to what people say about the IMF: that its loans are designed to fail so that the US, CA, AU, NZ and GB can buy a country’s precious assets on the cheap? If that is the case, doesn’t Bitcoin represent a threat to the scam that the IMF has been running?
15. Were you pressured to trash Bitcoin through loss of position or prestige? Were you asked to trash Bitcoin? Do you stand to gain financially or otherwise by trashing Bitcoin?
Archer Crosley, MD
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