Robert Shiller, famed Nobel Laureate, author and economics professor at Yale University, discusses the recent popularity of cryptocurrencies such as bitcoin on Fox Business Network.
A warning here against cryptocurrencies economist Robert Shiller says Bitcoin and others are following a familiar path paved by all kinds of failed monetary innovations. In other words new does not actually equal better. And he joins me right now. So good to see Professor Shawn. My pleasure thank you.
You’ve got an interesting piece on this. Walk us through your premise why in your view when so many are excited about bitcoin and the technology it offers are you saying okay you guys are getting a little carried away here.?
Yeah isn’t that kind of amazing how much enthusiasm there is for bitcoin or the other cryptocurrencies.
You know I’ve been reading history and I find that this isn’t the first time that some kind of new money was proposed and got zealous followers. I think there’s a mystique to money. You know there’s something that children will ask why.
What is the little pieces of paper. Why does people take it. Well they take it because other people will take it. And there is some kind of faith or belief that we could just as well have it worthless but somehow it isn’t. It’s worth a lot. Say you are insane right. Yeah I mean somehow currency is strong psychologically important part of our lives. It’s what nations attach their name to it. The European Union kind of created this euro currency. I think it was a bid to establish connections between the different countries make them feel like one country.
So it’s so important to our psyche that anyone who wants to produce a new idea tries to link it somehow to a new kind of money. But but you don’t you don’t get it going anywhere right. You don’t see the see Bill Clinton talking a lot because this is remarkable it’s crazy what it can do in terms of the ease of payments going forward. You know Western Union.
Goodbye. It’s going to cost tiny fractions of what it once cost to get money all over the world that could change the credit card industry. But you don’t seem to believe somehow.
Well I don’t think that the cost of doing a transaction is that exciting. What what is it that excites people and I think it has something to do with our political side. The really critical feature of bitcoin is that it doesn’t depend on government. In fact there are claims that government can’t control it. It’s like we’re establishing a new community of cosmopolitans who are just smarter than the government. The story is that it’s so hard to understand.
The only really smart people get it and then part of it is that it’s independent and free spirit. It’s creating a new. Yeah, it’s a community. So that’s the reason why people like that.
And that’s where the exciting I understand all that and there have been various times I haven’t invested in this stuff at all but you know I’ve been kind of excited about it too in terms of its potential. But where does that potential break down in terms of not becoming a reality.
ROBERT Well it is a real it’s hundreds of billions of dollars.
You know I didn’t see emphasized where we have thousands of crypto currency they’re not all going to succeed if any of them succeed. It’s possible.
But what does it say they’ve already succeeded. OK. I mean ultimately why would you say that they don’t think when the bubble that wasn’t my thing to predict how it will unravel. But I can give examples of other kinds of new currencies that have unraveled in the past.
I think that it’s kind of a loss of hope in the stability or the willingness of people. It’s still all of these currencies are still maintained largely by speculators.
If we don’t buy and sell very much in terms of crypto currency, it hasn’t happened yet. See what happened. This is how money was invented. People to trade and gold or silver turned out to be very convenient because there have a lot of value per ounce.
And then some governments in Libya remember this and in the seventh century, B.C. said why don’t we make coins so that people don’t have to measure it out and weigh them.
That was a very practical and it’s still with us. It’s possible that bitcoin will last for hundreds or thousands. And I can talk to you all day and I would love to talk about that infantry and getting a little bit of a cue here because I’m going to get it down your dollar bills ourselves.
But you know I think one of the important points you’re making though is that often the confidence of the government behind the currency is a big part of it psychologically. And the question is can you make this leap into this so-called community that has no government.
Mr. Robert Shiller professor from Yale always a pleasure. Thank you sir. Good to see you.