Tulips and Bitcoin

In the 17^th century, the Netherlands experienced an economic boom when the tulip became a hot commodity for barter and spending. Rare tulip bulbs were traded for goods and services. People spent their wages on bulbs they could sell for higher prices. The rarest bulbs “traded for as much as 6 times the average person’s annual salary at the market’s peak,” according to Investopedia. It was like the gold rush, everybody wanted to get rich quick. It was a “market bubble” that took the Dutch by storm. People who got into the trade early, likely did get rich.

 “Tulip-mania” was short-lived. As risky speculation was met with reality, the tulip was not a strong or lasting currency. When the boom crashed, many were left penniless. Tulip-mania is the stuff of history, story and myth. But like all myth, it illustrates a point.

 President Trump once called cryptocurrency “a scam.” He has since done a 180 degree about face. Having created his own crypto coin, $Trump, he now has signed an executive order creating a Strategic Bitcoin Reserve and a Digital Asset Stockpile.

 His “Golden Age” will be built in highly speculative, risky, and costly crypto, touting, “never sell your bitcoin.” The memo from the White House states, “President Trump is fulfilling his promise to position America as the global leader in cryptocurrency.” Trump further stated, “I am very positive and open minded to crypto companies and all things related to this new and burgeoning industry. Our country must be the leader in the field.”

 Ben Walsh, in The Atlantic, says, “Donald Trump wants to get back into the casino business. He is set on a new kind of gambling: crypto.” Trump is essentially building the “Fort Knox” of crypto. This time he is gambling by using our dime.

 The Wall Street Journal editorialists write, “President Trump regaled a group of high rollers about all he was doing for the cryptocurrency industry.” Then he bragged about all the crypto money he was making as president. “The success of $Trump is one of the starkest examples of the president benefiting from an industry his administration regulates.”

 Apparently, there is not much appetite for regulating this industry.

 Now the crypto craze is hitting North Carolina. House Speaker Destin Hall has proposed that the state allow the state treasurer to use retirement funds to invest in crypto. State Employees Association lobbyist, Flint Benson told the members of the house committee that, “the cryptocurrency craze may turn out to be like previous alternative-investment fads that some believe have damaged other state pensions.”

 Sometimes you invest in stocks, and sometimes you invest in bonds. It depends on the level of risk with which you are comfortable. To risk the retirements of thousands of state employees is reckless. Play the game with your own money; you take the risk. Keep your hands off ours.

 Harlan Boyles is rolling over in his grave.

 The opportunity for corruption in the crypto industry is well documented in the case of Sam Bankman-Fried, a young gun who built a lot of quick wealth through his business FTX. He was the “poster boy for crypto.” The securities and commodities fraud he committed in FTX landed him in prison for 25-years.

 Unregulated monopoly money is not a wise investment, especially for public funds.

 As Trump drums up support for his new crypto reserve, it is a good time to remember his track record in business. He blusters about his “art of the deal,” but students lost a lot of money and time in Trump University. There are other examples of business failure and fraud throughout his life. The Taj Mahal Casino was a colossal failure. I guess the house does not always win. Who fails in the casino business?

 Trump makes everything commodity, from sneakers to watches to steaks, cheapening the position and privilege of his office as President of the United States. He used his position last term to enrich himself and his family. He’s doing that in spades this term.

 At least in the tulip-mania of the 1640s, even if you lost your money, you had bulbs that would yield beautiful flowers. 

 If crypto-mania crashes, all that will be left is bits of paper and plastic, likely not even recyclable. We are foolish in our propensity for gambling and Ponzi schemes. Our folly goes on and on. We have trouble thinking things through.

 Lib Campbell is a retired Methodist pastor, retreat leader, columnist and host of the blogsite www.avirtualchurch.com. She can be contacted at libcam05@gmail.com