Profits of Doom
Warning of hyperinflation to sell crypto is irresponsible. And dumb.
On Friday, Jack Dorsey, the Rasputin-bearded CEO of Twitter, tweeted: “Hyperinflation is going to change everything. It’s happening.”
In case there was any mystery behind what he meant, Dorsey followed that up by endorsing a pro-cryptocurrency tweet from traitor to the country Edward Snowden:
Dorsey seems to genuinely give a shit—at least relative to other tech gazillionaires. And he did eighty-six Trump from his platform, which is no small thing. But his lazy libertarian leanings, his raging Bitcoin hard-on, and his habitual promotion of bad actors like Snowden, Tulsi Gabbard, and the gaggle of rightwing bluecheck hatemongers that his company helped create are more becoming of a prep school Reddit troll than the head of a major tech company. Does he identify with John Galt, too?
Furthermore, Dorsey seems to have no clue that hyperinflation is an actual word with a specific, and very dire, meaning. To wit: a monthly rate of inflation in excess of 50 percent. People look to this guy for his take on things, and he’s walking around with a sandwich board saying THE END IS NEAR.
Hyperinflation is to inflation as genocide is to murder. “Like ‘divorce’ in a marriage this word [Jack Dorsey] tweeted should not be uttered unless you’re trying to bring it into being,” tweeted the columnist Virginia Heffernan. “No one [should] take investment advice from someone who sees himself as making markets. How insanely reckless to tweet this. Immoral. Jack, ban thyself.”
Generally speaking, hyperinflation occurs when a government’s central bank floods the market with paper money—as in Weimar Germany in 1923, Hungary in 1946, Yugoslavia in 1993, and Zimbabwe in 2008. It’s pretty to think that you can print as much cash as it takes to buy whatever you want, but real-world economics are not that simple. When the supply of money drastically expands, investors quickly catch on, and the value of the currency plummets. Banks shutter their windows. Life savings vanish overnight. Fixed incomes become meaningless. Even the transport of money becomes an arduous process. In Germany in 1923, wheelbarrows were used to carry the necessary banknotes to the store to buy a loaf of bread—but the shelves were usually empty (actually empty, not fake empty, like the anti-Biden MAGA memes of 2021 purport to show). Food riots erupt. The economy falls apart, and the social order begins to collapse with it.
That’s what hyperinflation heralds, and Jack Dorsey says it’s coming. Which is quite a bold prediction, because in the history of the United States, this has never happened. Not even close. Even during the Continental currency crisis of 1779, the inflation rate for the year was just over 30 percent—scary bad, for sure, but not hyperinflation.
To the contrary, while there have been short periods where inflation rose into the 20 percent range—during the Revolutionary War, the War of 1812, the lead-up to the Civil War, and the First World War—the U.S. rate of inflation has generally been comfortably in the single digits for the last quarter millennium (if not a negative number). In 1980, after a few years of constant worry about rising inflation, the rate was 13.5—too high, a cause for concern. Then Carter lost the election, and the changes implemented by the Fed chair he’d appointed in 1979, Paul Volcker, corrected the problems (it was Volcker’s machinations, and not Reagan’s stupid tax cuts, that righted the ship).
Inflation is like body temperature. Two percent inflation is 98.6 degrees on the thermometer. It signals that everything is healthy. Too high, and things get dicey. Too low, it can be fatal. Here are the rates of inflation in every year of the Great Depression, far and away the worst economic crisis in the nation’s history:
1929, 0.6%
1930, -6.4%
1931, -9.3%
1932, -10.3%
1933, 0.8%
1934, 1.5%
1935, 3.0%
1936, 1.4%
1937, 2.9%
1938, -2.8%
As you can see, hyperinflation was not the problem. It was the opposite: the economy contracted. That three-year stretch from 1930-32 was brutal. Hoover’s tax cuts were a disaster—like dumping out a few bottles of warm Dasani to stop the Dust Bowl. Only when FDR stopped trying to balance the fucking budget and instead implemented the counterintuitive deficit-spending ideas of John Maynard Keynes did the situation improve.
Want to guess what the monthly rate of inflation has been for 2021? Reading Dorsey’s tweet, and watching the undeniable increase in the price of food, gas, and real estate, you might be inclined to guess in the double digits. Nope:
Jan: 1.4%
Feb: 1.7%
Mar: 2.6%
Apr: 4.2%
May: 5.0%
Jun: 5.4%
Jul: 5.4%
Aug: 5.3%
Sep: 5.4%
Trending up, for sure, but in line with the rate in 2008, 1991, and 1982. Maybe we’re in for a recession—which, given the fact that 750,000 Americans have died of covid-19 the last two years, would not be a big surprise. But hyperinflation? That is, a monthly rate of inflation ten times worse than it is right now? That’s what Jack thinks is coming? Really?
Forget about history, though. Just because something has never happened before doesn’t mean it can’t happen now. We never elected a mob money launderer to the White House, either, and here we are. But there are compelling reasons to believe that, at least on the inflation front, things will be just fine.
Hyperinflation is painful for everyone, without exception, but who it really screws is the mega-wealthy. Specifically, creditors. My $250,000 mortgage is not so onerous if the dollar I borrowed ten years ago is now worth a fraction of a penny. So here’s who would move heaven and earth to avoid hyperinflation: the U.S. government, because duh; China, because they hold so much of our debt; big banks, because their job is to make loans; venture capitalists, same reason. I’m not even sure organized crime wants hyperinflation, because it means their dragon’s hoard of cash isn’t worth as much in real terms.
The United States, China, the global banking system, VC, organized crime: That is a fuck-ton of power, and it would be used to stave off actual hyperinflation—not the five and a quarter percent Jack Dorsey is clutching his pearls about.
Finally, the notion that crypto will save us from hyperinflation is LMAO ROFL. If the global financial system collapsed, do we really believe the coin of the realm would be one that required both parties to have a computer, and electricity, and internet access, and was too complicated for most Americans to use? In Weimar Germany in 1923, wealthy people bought grand pianos, because they knew objects like that would always have value, and could be sold when the panic ended. Does Dorsey really think people in his fantastical hyperinflationary dystopia will look to NFTs of his first tweet for currency? Because, um, they will not. That shit is tulip mania. If you’re really afraid of hyperinflation, you buy gold, not bitcoin.
Don’t believe the hype—or the prophesies of doom. The only thing being hyperinflated here is Dorsey’s enthusiasm for crypto.
Photo credit: Jack Dorsey speaks at TED2019: Bigger Than Us. April 15 - 19, 2019, Vancouver, BC, Canada. Photo: Bret Hartman / TED. Inset: Zimbabwe 100 trillion dollar banknote.
Astonishing. Perhaps someone has been whispering in his ear? And, he's banged his head really hard on a door? And, he's taken too many pain-killers? And, he's fallen asleep for a couple of hours with his head in the freezer? And, tried to warm up by pouring hot coffee onto his beard? And, his staff have tried to shoot him and dump him in the river? But, that didn’t kill him and the first news paper he saw was actually a sales brochure for Bit Dodgers? I mean, we expect this kind of crap from #MangoWanker... but Dorsey? Let's just hope he doesn’t use his billions to screw up the markets.
Here's what I know: bitcoin is not different in any way, shape, or form from regular money, and in fact, is usually more volatile. The minute I hear "the sky is falling" crap like this from crap like Jack Dorsey, I completely tune out. He's going after the financial world equivalent of Trump supporters -- the people who are afraid of their own shadows and always think they know more than the rest of us because they *get in on the ground floor* of the latest and greatest bullshit.
And Dorsey only pretended to ban Trump from Twitter. Liz Harrington, Trump's sock puppet, still posts his "statements," which are just long-winded tweets on a letterhead. Twitter's rules are supposed to cover this, and although pointed out thousands of times, Dorsey ignores it.
The picture above should tell anyone all they need to know: THAT is the picture I expect to see first when typing "douchebag" into Google Image Search.