I have limited sympathy for those who lost their shirt or pride in the cryptocurrency meltdown.Crypto is nothing more than the 21st century’s version of Amway.They just substituted block chains for circles.Other than that, it’s the same old schtick.
It is a curiosity to me that people who have never taken a class in economics are sure they have a good bead on how to beat the system.They think people who play by the rules are suckers.The smart people (like them — right?) use the odd hustle that plays the system and earns them easy money.These are the same people who loudly sing the blues when the “con” turns out to be on them.
There is a saying among the sales community that people only buy for two reasons: need or greed.
(There are several sayings among the loosely affiliated fraternity of salesmen, and few of them reflect kindly on the consumer, but that does not mean they are not accurate.) When it comes to the implosion of the cryptocurrency market you can forget about “need” and concentrate simply on “greed.” Usually, I treat these emerging stories of fraud with a yawn and an eye roll.But the gaping flaw in crypto currency makes me wish that more economics was taught in our schools.
We could at least start teaching what money isn’t.You can’t eat it, you can’t wear it, you can’t dose yourself with it to get well if you are sick, and you can’t create electricity with it to cool your home.
But you can use it to acquire all those things because money is a storehouse of value.It takes about 14 cents to make a $20 bill, but it still represents $20 worth of purchasing power.
Put a picture of Ulysses Grant on it and it will be worth $50.Benjamin Franklin will buy you $100.Slap Salmon P.Chase on it and it is worth $10,000.
That power may vary with inflation or deflation, but the fact remains that the currency’s cost of production is never close to what it can purchase.
So, why can’t you or I put our picture on a well-decorated note, take it to the dealership and buy a new car? Because no matter how pretty I make my pretend money, it is not designated as legal tender.That is a critical distinction.By law, government currency must be accepted as satisfaction for a debt.Failure to accept legal tender abrogates the debt.
Money does not have to be backed by gold or anything else.In fact, there is not enough precious metal in this world to back the volume of currency in play.Money is backed by law.E-currencies are backed by hype.
Lots of hype.
Lots of expensive hype.
Crypto is widely hyped by celebrities who are paid for their endorsement.These people provide the same service for perfumes, cars, golf balls and potato chips.
In all honesty, if the touts offered me what they offered Gwyneth Paltrow to hype crypto I would be sorely tempted.But I wouldn’t; my price is a lot higher than hers.
I certainly hope the public would be smart enough to know that there are no get-rich quick schemes.I hope people would be humble enough to accept that those who are trained in economics do know more about that subject than the average person.That doesn’t make them better people, just more learned in one specific area.And I also hope that people would be wary enough to know that the flimflam man has a good patter, a smooth delivery, says what you want to hear and makes money when you to fall for his scam.
The snake oil salesman is nothing new, it is just the label on the bottle that changes.
Always ask yourself if you are buying because of “need” or “greed” — and then keep the faith.
Louise Butler is a retired educator and published author who lives in Edinburg.She writes for The Monitor’s Board of Contributors..
