Joseph Stiglitz, the Nobel Prize winning economist who last year called for the world to “shut down the cryptocurrencies”, may not quite be the authority on world affairs that he feels. As a dive into the past reveals, his judgement on key matters of geopolitics can be spectacularly off, and his vision for a financial future for consumers is worrying at best.
Stiglitz Bemoans Cryptocurrency Growth
Stiglitz appeared on CNBC in May last year to complain that cryptocurrencies were “moving things off of a transparent platform into a dark platform” and as a result they should be shut down. Stiglitz favored moving to an open financial system:
I actually think we could have a better regulated economy if we had all the data in real time, knowing what people are spending, it would enable the Federal Reserve to actually set interest rates in a much more efficient way.
Such a radical call, to have all purchases viewable by the authorities in real time, is a simply terrifying prospect, and one that should only be put forward by someone with an impeccable reputation in economic circles.
A Reliable Source?
Despite earning a Nobel Prize for economics in 2001, Stiglitz has since shown that he is perhaps not the right person for this task – in 2007 he heaped praise on Venezuela’s economic growth and social policies, despite inflation being pushed up to 15.3% at the time.
This, according to Stiglitz, was not necessarily a bad thing because the citizens were benefitting, stating that the policies were “bringing health and education to the people in the poor neighborhoods of Caracas, to those who previously saw few benefits of the country’s oil wealth.” Quite where he was looking when he made these predictions is unclear, as this wasn’t exactly what the citizens themselves were seeing.
We All Know What Happened Next
What happened in Venezuela is, of course, well known – the oil price dived, causing the government to play even more fast and loose with the interest rate, destroying the banking sector and the country’s economy in the process.
Within six years Venezuela ranked bottom in the worldwide index of economic freedom and 181st out of 189 in the ‘ease of doing business’ rankings. In 2018 a piece in the New York Review of Books called the situation in Venezuela, which by now had seen president Nicolas Maduro force his Petro cryptocurrency on the people, a “humanitarian crisis of immense proportions.”
The Right Man for the Job?
With all this in mind, do we really want to take advice from a man who didn’t think that double digit interest rates were a problem in a South American dictatorship and who is an advocate of the government getting their hands on the live spending data of its citizens?
We’d rather listen to Nouriel Roubhini. And that’s saying something.
