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Snake oil sellers in the stablecoin world
It's been evident for some years now that those selling risky crypto products to risk-averse investors like to have federal branding on their snake oil. Tetherclaimed to have 100% actual dollar backingfor its stablecoin. Various exchanges and platforms claimed that customer deposits were FDIC insure
There's no such thing as a safe stablecoin
Stablecoins aren't stable. So-called algorithmic stablecoins crash and burn when people behave in ways the algorithm didn't expect. And reserved stablecoins fall off their pegs - in either direction. A stablecoin that does not stay on its peg is unstable. Not one of the stablecoins currently in circ
Why Celsius Network's depositors won't get their money back
The crypto lender Celsius has filed for Chapter 11 bankruptcy. This should come as a surprise to absolutely no-one, though the grief and pain on Twitter and Reddit suggests that quite a few "Celsians" didn't want to believe what was staring them in the face. Celsius suspended withdrawals nearly a mo
The SEC's Bitcoin ETF Standoff
Another day, another application for a spot Bitcoin exchange-traded fund (ETF) rejected. Yesterday, the SEC rejected an application from Fidelity's Wise Origin Bitcoin Trust, the fifth such rejection in three months. Back in November, the SEC rejected an application from Van Eck Bitcoin Trust, and
Bank capital and cryptocurrencies
The BIS'sdraft proposalsfor capital regulation of stablecoins and cryptocurrencies have just been released. The headline proposal was a risk weighting of 1250% for what the BIS called "Group 2 cryptoassets", which includes all cryptocurrencies, all algorithmic stablecoins, and reserved stablecoins
The ones who stay in Omelas
Ursula Le Guin's short story "The Ones Who Walk Away From Omelas" contains a terrible moral conundrum. Many people have agonised over it: to my knowledge, no-one has solved it. Attempts that I have seen all in some way change the framing of the story, whether byjustifying blood sacrifice, insisting
Sleepwalking into war
In a broad-ranging discussion the other day about the path of political and economic policy over the last decade, I found myself returning again and again to events in 2014. Events that were apparently unrelated:Bulgaria's banking crisis,Moldova's banking fraud, the collapse ofBanco Espirito Santo,
The tangled web of sex and gender
As many of you probably know, I have had to take a break from writing recently because of a broken wrist. But I did manage to write responses tothis Twitter threadfrom Shaun Lawson.I was uncomfortable about responding on Twitter to Shaun's questions, so decided to write them in a Word document and s
What was the real reason for the Bank of England's gilt market intervention?
Why did the Bank of England intervene in the gilt market this week? The answer that has been doing the rounds is that it was protecting the solvency of pension funds. But this doesn't make sense to me. The Bank doesn't have any mandate to prevent pension funds going bust. And anyway, the type of pen
The Great Unemployment Fudge
In the U.S., we are told, the post-World War II period was a golden age of full employment. High wartime government spending had brought to an end the double-digit unemployment and misery of the Depression, and as war gave way to peace, unemployment settled at a non-inflationary level of 3-5%. It's
When populism fails
At the Battle of Ideas last Saturday, a panel on "populism" spent an hour and a half discussing everything except economics. Sherelle Jacobs of the Telegraph called for the Tory party to replace what she called a "twisted morality of sacrifice and dependency" with the "Judaeo-Christian" values of th
JP Morgan's Coffee Machine
It's now widely accepted, though still not universally, that banks create money when they lend. But it seems to be much less widely known that they also create money when they spend. I don't just mean when they buy securities, which is rightly regarded as simply another form of lending. I mean when
Calculus for Economists
Gabriel Sterne complains about economists' loose use of mathematical terminology:Of course, it's not just economists who use "increase" and "accelerate" interchangeably. But economics is a mathematical discipline, and in mathematics, "increase" and "accelerate" mean different things. So is Gabriel's
Where has all the money gone?
The collapse of Terra in May sent shock waves round the crypto world, triggering domino-like collapses of crypto companies. One of those companies was the investment fund Three Arrows Capital. At the time, everyone thought 3AC was a conservatively-managed investment company that was simply the unfor
Maya Forstater's human rights problem
Maya Forstater'sEmployment Tribunal hearing comes up soon. This is her second hearing: the judge in the first hearing dismissed her case with acontroversial judgmentthat described her "gender critical" beliefs as "not worthy of respect in a democratic society". She appealed this judgment, and in Jun
How central banks can fight climate change
This is the uncut version of the final chapter of my book, "The Case for People's Quantitative Easing". It was written May/June 2018, so is slightly out of date (though I have updated it in places). But I believe its conclusions are right. So I am publishing it now to coincide with COP 26.I've also
David and Goliath
Yesterday, someone who had been watching one of my (all too frequent) Twitter arguments about money made this comment:The "unknown person with few followers" was my protagonist. And the blue tick "classical expert" was me. I am Goliath.But ten years ago, I was David. Armed only with Blogger and Twit
Crypto's Weimar
A cryptocurrency has just re-enacted the Weimar hyperinflation.Yesterday, the price of the cryptocurrency TITAN crashed to zero, and its related stablecoin IRON fell off its USD peg, trading as low as 69 cents to the dollar. It was a sudden and dramatic collapse that left investors shocked and bewil
Tether’s smoke and mirrors
Tether has issued what it calls a “breakdown of its reserves”. It actually consists of two pie charts. Here they are:Seriously, this is all Tether has seen fit to reveal. Furthermore, the pie charts only purport to show the breakdown of Tether’s reserves on the 31st March 2021. We do not know wheth
From Carbon To Metals: the Renewable Energy Transition
The world is transitioning from a carbon-intensive to a metals-intensive economy. Low-carbon technologies use much larger amounts of metal than traditional fossil fuel-based systems. Demand for metals is thus rising exponentially, fuelling a boom in mining and production.But this creates an environm
The FTX-Alameda nexus
How did it all go so wrong, so quickly? Less than a month ago, Sam Bankman-Fried was the golden boy of crypto, with a net worth in the $billions, and his exchange FTX was valued at $32bn. Now, FTX has a gaping hole in its balance sheet, thousands of people have lost their money, and Sam is facing pe