Everything That’s Wrong With Roubini’s Central Bank Crypto Love Letter
Whenever Nouriel Roubini talks smack about Bitcoin, it’s hard to know how to respond. Do you ignore “Dr. Doom,” mindful of the mantra to not feed the trolls? Or do you tackle him head on, shooting down his fallacies, but granting the attention he so desperately craves? It’s a conundrum, but in the case of the doc’s provocative new piece, a paean to central bank coins, the only option is to shoot for the heart. Here’s everything that’s wrong with Roubini’s latest brain dump.
Oops He Did It Again
Those of us who were raised in the internet trenches, on the sort of forums where trolls like to troll trolls, know that giving attention-whores the oxygen they crave is generally a bad idea. Sometimes, though, your bête noire comes out with something so asinine the only option is to take the bait. From the title alone — “Why Central Bank Digital Currencies Will Destroy Cryptocurrencies” — you can tell that the author of the hit piece is faded economist Nouriel Roubini. You can also tell that at the end of each sentence, the excitable Dr. Doom had to pause to wipe the spittle from his screen.
The career of the Stern School of Business lecturer has been on a downward trajectory ever since BTC was changing hands for 40 bucks. Having been wrong about cryptocurrency for six years straight, Roubini isn’t going to change his tune now. Stubbornness is one of his many attributes. It’s a shame, because if it were only possible to see past his Trumpian bluster, Roubini occasionally has some good points to make.
Our subject begins his tirade by acknowledging that we’re transitioning to a cashless society and explaining that central bank digital currencies (CBDCs) are on the horizon. Up until now, Roubini is on solid ground. Unfortunately, he then ruins it by going full Dr. Doom:
Starry-eyed crypto-fanatics have seized on policymakers’ consideration of CBDCs as proof that even central banks need blockchain or crypto to enter the digital-currency game. This is nonsense. If anything, CBDCs would likely replace all private digital payment systems, regardless of whether they are connected to traditional bank accounts or cryptocurrencies.
Somebody Call a Doctor
As is often the case with Roubini’s unhinged rants, there are grains of truth scattered in there, such as the observation that central banks won’t use conventional blockchains to issue their digital currencies. That much can be safely assumed. But then our protagonist’s argument starts to rapidly unfold with the assertion that “If a CBDC were to be issued, it would immediately displace cryptocurrencies, which are not scalable, cheap, secure, or actually decentralized.”
It’s hard to know where to start with this sentence, which is filled with more logical fallacies and doublethink than the notion that “XRP was gifted to Ripple.” Apparently:
- CBDCs will “immediately displace” cryptos – citation needed
- Cryptos are “not cheap” – explanation needed
- “Not secure” – citation needed
- “Not actually decentralized” – and CBDCs are?
“Yes. Everyone will love using backdoored central bank digital currencies and no one would ever want to use anything else ever,” read one sarcastic response to Dr. Doom’s word salad.
If you can stomach more sensible chuckles, let’s read on to where Roubini claims “Enthusiasts will argue that cryptocurrencies would remain attractive to those who wish to remain anonymous. But, like private bank deposits today, CBDC transactions could also be made anonymous, with access to account-holder information available, when necessary, only to law-enforcement authorities or regulators, as already happens with private banks.”
Moving on from sensible chuckles to sides leaving orbit, Roubini continues: “By transferring payments from private to central banks, a CBDC-based system would be a boon for financial inclusion. Millions of unbanked people would have access to a near-free, efficient payment system through their cell phones.” Cos, you know, the only thing preventing impoverished Somalis from accessing banking services is the lack of a central bank cryptocurrency. The global financial system totally wants to include the downtrodden; it was just waiting to invent a centralized cryptocurrency before inviting them to the party.
Bitcoin could drop to $50 and it would still be a better investment than any CBDC. Whatever happens to central bank digital currencies, they will never displace decentralized cryptocurrencies, just as Roubini will never displace the gnawing pain that tells him he should have bought bitcoin in 2013.
Days without Nouriel Roubini being wrong.