Economist Robert Shiller calls bitcoin a fad – Image courtesy of cnbc.com
Yale professor and Nobel-winning economist Robert Shiller calls bitcoin a fad, just like bimetallism before it.
Shiller mentioned bitcoin on the same breath as the 19th century bimetallism, when both gold and silver money were permitted as legal tender.
“I’ll take bitcoin, too, because I know I can sell it and get out of it. There seems to be some strange enthusiasm for it,” Shiller said on CNBC’s Closing Bell.
“People get excited about things like new monetary standards. Remember bimetallism? It went into a fad, everyone was talking about it for a while. And then it faded.”
An icon among economists, Shiller is somewhat of a bubble oracle. He famously predicted two of the biggest bubbles of all time: the dot-com bubble and the housing bubble. Both times, he published editions of his book Irrational Exuberance to describe and predict the bubbles. On top of that, Robert Shiller was one of three people to win the prestigious Sveriges Riksbank Prize in Economic Sciences (also known as the Nobel Prize in Economics), in 2013.
Shiller: Bitcoin’s “sense of empowerment”, a source of speculative behavior
This is not the first time Shiller has referred to bitcoin. In an interview with Quartz in September, Shiller said that bitcoin is the best example of a speculative bubble.
“I think that has to do with the motivating quality of the bitcoin story. And I’ve seen it in my students at Yale. You start talking about bitcoin and they’re excited,” Shiller told Quartz.
In the third edition of Irrational Exuberance, Shiller talks about “a fundamental deep angst” caused by digitization, that leaves people contemplating their place in the world in the next 10, 20, 30 years. According to Shiller, bitcoin fits that paradigm by giving people the illusion of control.
“[Satoshi Nakamoto] has this clever idea about encryption and blockchain and public ledgers, and somehow the idea is so powerful that governments can’t even stop it. You can’t regulate this. It kind of fits in with the angst of this time in history,” Shiller explained.
Somehow bitcoin fits into that and it gives a sense of empowerment: I understand what’s happening! I can speculate and I can be rich from understanding this! That kind of is a solution to the fundamental angst.”
As Shiller sees it, bitcoin is being driven by an attractive story, which makes it “not necessarily sustainable”.