Why the Crypto Community Needs to Support AIER

– February 7, 2018 Reading Time: 5 minutes

The crypto revolution has been brilliant at building institutions. It is only now becoming brilliant at the crucial thing: building a theory behind the practice that will make this revolution soar. This is where AIER is making the difference.

We are in the earliest stages of a massive technological upheaval, a time when money and many financial assets are porting their way from conventions dating back many centuries into new methods that users themselves control. Many institutions are feeling threatened, mostly from governments and central banks.

Along with this comes tremendous confusion. The people who are appointed to speak authoritatively on the topic, and regulate money and finance, are often the least knowledgeable. Their words often reflect fear.

For example, India’s finance minister Arun Jaitley said this on February 1, 2018: “The government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system.”

That sounds like an attempt to abolish Bitcoin and other coins, and that is how the press reported it. However, everyone knows that this is not even a remote possibility. Within the Indian crypto community, the words were treated with some optimism. At least the finance minister is recognizing that crypto has become hugely important in modern finance. At least he is setting out some parameters.

Ramping up the rhetoric is the General Manager of the Bank for International Settlements, Agustín Carstens. In a speech this week, he said that Bitcoin “has become a combination of a bubble, a Ponzi scheme and an environmental disaster. Accordingly, authorities are edging closer and closer to clamping down to contain the risks related to cryptocurrencies. There is a strong case for policy intervention.”

A contrasting tone was set the same week by the chairman of the U.S. Commodity Futures Trading Commission, J. Christopher Giancarlo. “We owe it this new generation to respect their enthusiasm about virtual currencies with a thoughtful and balanced response,” Giancarlo said, “not a dismissive one.” He celebrated blockchain tech for the hope that it can reduce counterparty risk and drive innovation in a sector that desperately needs it.

That statement was taken as evidence that regulators are warming to crypto. At the same time, many banks and credit card issuers have taken the dramatic step of blocking the use of their cards for purchasing Bitcoin at legitimate exchanges.

So which is it, a terrible threat or a brilliant opportunity?

This question will be decided within the realm of ideas. What we come to believe about this technology is as important as how people regarded past technologies like the telegraph, steel, electricity, railroads, flight, and the internet itself. None of these would have come about had people not taken the risk to create them. They thrived because people saw in them the promise of a better life.

The sector that is building crypto assets is thriving today, but in the midst of widespread intellectual confusion. This lack of understanding is the single most dangerous threat faced by the technology. We have brilliant enterprises, excited users, awesome coders and innovators at every level. Where we are lacking today, in my view, is in the realm of intellectual opinion and public education. This makes sense to some degree, simply because the whole sector only began its emergence not even a decade ago and it originated not in academia but on email lists among a small set of ‘cypherpunks.”

But make no mistake here: crypto is rooted in the serious ideas that came before. It was inspired by aspects of Austrian school monetary theory, cryptography, and computer science. It’s amazing how much the first generation got right. But we have a very long way to go, especially in the realm of the economics of money and banking. Here is where the most substantial changes to the world are likely to take place.

This is why the role of the American Institute for Economic Research is so important. For 85 years, it has been one of the most respected voices for sound economics in the world. It was founded as an independent organization not funded by governments or reliant on university support. The founder E.C. Harwood knew this was important given his time at MIT, and given the political trends of the time, which were all about making a terrible mess of the money and banking systems.

The AIER set out to explain the real cause of the Great Depression, which was not “capitalism” but rather a credit cycle brought about through central bank manipulation of credit markets. The institution fought in the realm of ideas against bank closings, devaluation, and gold confiscation. The AIER also set out to be a practical institution, helping people understand how to protect their wealth from government intervention, regulation, and confiscation.

AIER was a major reason for why the destructive policies of FDR did not have a greater effect. That generation had access to knowledge that gave them to confidence to hold on their wealth and wait for better times. Fifteen years following the initial interventions, private holders of wealth were able to put their capital to work and rebuild prosperity during the 1950s.

AIER took the lead in building a movement for sound money that grew over the decades, to the point that advocacy of the gold standard nearly became a mainstream view in the 1980s. The reform-from-the-top movement could never succeed, however, for the reason that the central bankers never wanted their power hemmed in. The deadlock finally broke in 2009 with the opening of the first blockchain.

AIER has been on the cutting edge of research and opinion on blockchain topics. It runs the Sound Money Project, which includes some of the best minds in money and banking theory today. We have the largest and most well-built network of free-enterprise professionals in the world. It is called the Bastiat Society. We run daily articles that ride the news-cycle waves.

We’ve worked to counter the negative opinions of people at once-mighty institutions like the Bank for International Settlements and on. And the research you read here truly matters. AIER is not just another Medium account; it is one of the world’s most respected voices in economics. We have both the credibility and longevity.

To win this battle requires both theory and practice. The sustainability of this revolution depends on both. So please pull out those wallets and donate today. The AIER needs you. Crypto needs you. The future of freedom needs you.