This is a serious question... Is Charlie Munger being sarcastic when he says America should ban crypto?
I've read the opinion piece in the Wall Street Journal (text below) in which Charlie Munger seems to suggest that the Federal government should ban cryptocurrencies. But my honest impression—especially after reading the final paragraph—is that he believes America should NOT take this path.
He DOES start off by saying cryptocurrency is a gambling contract, and that in America, gambling contracts are regulated only by the states.
And then says, "Obviously the U.S. should now enact a new federal law that prevents this from happening."
However, this line seems to come with an tinge of sarcasm. Maybe it's just my interpretation – knowing that Munger has been an unapologetically free-market capitalist for the past 90+ years. But I believe the word "obviously" is Charlie's attempt at a verbal 😉 wink.
He then lists two historical precedents: China banning cryptocurrencies (2021), and 18th-century England banning all public trading of stocks. But these are followed by two quick gotchas...
- He reminds us that it was the oppressive actions of England during this time spawned the freedom-loving United States,
and
- After we ban crypto, he suggests we thank "the Chinese communist leader for his splendid example of uncommon sense."
That's where his brief commentary ends. Yes, I do believe Charlie Munger thinks banning crypto is NOT what America should do.
Unfortunately, because the Wall Street Journal is behind a paywall, 99.9% of the world will only read the headline.
Why America Should Ban Crypto
It isn’t currency. It’s a gambling contract with a nearly 100% edge for the house.
By Charlie Munger
In the U.S. in recent years, privately owned companies have issued thousands of new cryptocurrencies, large and small. These have later become publicly traded without any governmental pre-approval of disclosures.
In some cases, a big block of cryptocurrency has been sold to a promoter for almost nothing, after which the public buys in at much higher prices without fully understanding the pre-dilution in favor of the promoter.
All this wild and wooly capitalism is much like that described in a remark often attributed to Mark Twain, who was thought to have said that “a mine is a hole in the ground with a liar on top.”
Such wretched excess has gone on because there is a gap in regulation. A cryptocurrency is not a currency, not a commodity, and not a security. Instead, it’s a gambling contract with a nearly 100% edge for the house, entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity. Obviously the U.S. should now enact a new federal law that prevents this from happening.
Two interesting precedents may guide us into sound action. In the first precedent, the communist government of China recently banned cryptocurrencies because it wisely concluded that they would provide more harm than benefit. And, in the second precedent, from the early 1700s, England reacted to a horrible depression that followed the blow up of a promotional plan to get vast profits by using slow-moving sailing ships to trade with very poor people halfway around the world.
What the English Parliament did in its anguish when this crazy promotion blew up, was direct and simple: It banned all public trading in new common stocks and kept this ban in place for about 100 years. And, in that 100 years, England made by far the biggest national contribution to the march of civilization as it led strongly in both the Enlightenment and the Industrial Revolution and, to boot, spawned off a promising little country called the United States.
What should the U.S. do after a ban of cryptocurrencies is in place? Well, one more action might make sense: Thank the Chinese communist leader for his splendid example of uncommon sense.
Full article, published Feb. 1, 2023 6:16 pm ET