Digital, decentralized cryptocurrencies such as Bitcoin have provided millions with private, fun, and often lucrative, next-generation forms of currency and speculative assets.
Cryptocurrency has accomplished this all through a system the government, and indeed no central authority, can control. So, naturally, paternalistic big-government politicians such as Sen. Elizabeth Warren want to rain on the parade. Speaking at a Senate hearing this week, the Massachusetts Democrat railed against cryptocurrency and called on the federal government to regulate or eliminate it.
First, Warren blasted cryptocurrency as a “lousy way to buy and sell things.” In either an ignorant or dishonest fashion, the senator then cited the extremely high volatility of “dogecoin” as proof of why cryptocurrency is useless as a medium of exchange. But just one of countless cryptocurrencies, dogecoin is literally a memecoin — it’s basically an internet joke. There are many other cryptocurrencies, including “stablecoins,” whose value doesn’t fluctuate very much. These function perfectly well for buying and selling things.
Moreover, if cryptocurrency was an inherently bad way to make exchanges, then people wouldn’t choose to use it. Warren also decries cryptocurrency as a “lousy investment” with “no consumer protection.” Those who use cryptocurrency might disagree! Regardless, Warren paints with far too broad a brush. It’s clear that while some cryptocurrencies might be sensible investments, others are highly risky. Either way, whether a given cryptocurrency is a good investment or not relies on many details.
It’s not a black-or-white thing. It’s a decision that adults can make for themselves. When Warren calls for “consumer protection,” what she really means is government paternalism.
It’s become a widespread joke on the internet to refer to bossy, demanding people (both men and women) as “Karens.” You know, the kind of people who throw a fit and demand to speak to a manager whenever things don’t go exactly their way. Unfortunately, this aptly describes how Warren wants the government to micromanage our lives and personal finances.
Senator Karen believes that average people are too stupid to evaluate risks and make their own decisions, so they need the benevolent, intelligent “experts” such as herself, experts in the government, to decide for them.
“The threats posed by crypto show that Congress and federal regulators can’t continue to hide out, hoping that crypto will go away,” Warren concluded. “It won’t. It’s time to confront these issues head on.”
We should reject this argument for the obnoxious paternalism it is. Cryptocurrency won’t “go away” on its own because people want to use it. In a free society, people should be able to lead emerging markets where they want them to go, not have bureaucratic tastes superimposed by our supposed betters.
Of course, Warren isn’t opposed to all digital currencies — just the ones she can’t control. The senator used the hearing not just to attack cryptocurrency but to push her idea for a government-backed digital currency. “Central bank digital currency has great promise,” Warren said. “Legitimate digital public money could help drive out bogus digital private money while improving financial inclusion, efficiency, and the safety of our financial system.”
But such a government currency, presumably controlled by the Federal Reserve, would have all the same problems as the dollar. Chiefly, the government would still have the ability and incentive to inflate away the currency in order to boost its own spending power without having to directly raise taxes. Therefore, a government-backed digital currency would never have the main appeal of decentralized cryptocurrency.
The real reason Warren and other politicians favor a government-run digital currency is because it would allow them to retain control. That’s it. Elizabeth Warren may be a high-profile senator. But when it comes to cryptocurrency, she’s just another Karen telling you what to do.
Brad Polumbo (@Brad_Polumbo) is a Washington Examiner contributor and host of the Breaking Boundaries podcast.
