Former Fed Chair Ben Bernanke responded to questions about Bitcoin in an interview with CNBC that focused mostly on monetary policy, interest rates, and inflation.
Speaking with Andrew Ross Sorkin in a segment that aired on Squawk Box last week, Bernake spoke a day ahead of his latest book release, which addresses Federal Reserve policy moves during the 21st century.
During a wide-ranging answer to a question about the chances of a recession, Bernke mentioned the Fed’s attempt to tighten spending by increasing interest rates.
According to Bernake, historically, the Fed increases interest rates to minimize inflation expectations to determine confidence in monetary policy and the value of the US Dollar.
Because they were talking about inflation and the US Dollar, “we couldn’t have a conversation [about these things] without talking about Bitcoin,” said Ross-Sorkin.
At the time of the interview’s airing, Bitcoin’s price was just below $30,000, where it sits when this article was published, and which Bernake used to proclaim that, while it had been successful as a speculative asset, “until now,” perhaps it had reached its peak, alluding to this notion by adding, “you can see the consequences of that.”
But as cryptocurrency usage is growing faster than ever before, the consequences he mentioned are as much his own speculation—across all cryptocurrencies tracked by Chainalysis in a new report, total transaction volume grew to $15.8 trillion in 2021, up 567% from 2020’s totals—and in a way, Bernake contradicted himself, when, in the same interview, he said, “It will be around as long as people are believers and they want to speculate [about] this.”
“Nobody buys groceries with bitcoin because it’s too expensive and too inconvenient to do that.”
An example he gave was that it would be impossible to price something like celery in bitcoin because there’s too little stability in its value.
“The main use of bitcoin is mostly for underground economy activities and often things that are illegal or illicit,” he said. “I don’t think bitcoin is going to take over as an alternative form of money.”
Intuitively, these two statements sound like another contradiction when you consider that cryptocurrency adoption is on the rise, it’s no surprise that more cybercriminals are using cryptocurrency.
So as more people use Bitcoin, simultaneously, it could be argued that Bitcoin is already being used as an alternative form of money for legitimate purposes.
The Bitcoin market has experienced massive adoption throughout the previous year despite the drop in price and the reduction in the percentage of illicit transactions.
Interestingly enough, a recent report by Chainalysis has revealed that the legitimate usage of cryptocurrencies far outweighs their illegal use. The report concluded that only 0.15% of the total cryptocurrency transaction volume last year was for illicit activities.
According to the report, because the crypto-related illegal activity increased by only 79%, with the growth of legitimate bitcoin usage far outpacing the growth of criminal usage, illicit activity’s share of cryptocurrency transaction volume has never been lower.
Ben Bernanke must be fully aware of the fact that the largest illicit activity is that of the Federal Reserve Bank itself. The global ‘seignorage scam’ that expands the monetary supply without backing has cost billions of people around the world their future.
Bernanke has been the in the role of “Chief Cantillionaire Officer” for almost a decade (2006-2014) and oversaw the debt expansion in the U.S. in the trillions. The fiat standard ponzi scheme could be in it’s final phase before its collapse. Is Bernanke afraid of having to bear consequences like Bernie Madoff one day?
Bernie Madoff was sentenced to life in prision for having maintained a ponzi scheme worth over 60 billion USD. The FED is order of magnitudes bigger than that yet nobody has been charged for fraud.
Could the real reason why Bernanke speaks badly about Bitcoin be that he knows the time has come where the house of cards collapses?
Bernie Madoff lost control over his fund when too many investors tried to withdraw during the financial crisis of 2008. Every ponzi scheme blows up due to a withdraw rush. This is no different to fractional reserve banking. When too many people try to cash out, the system will break.
