Krugman Remains a Crypto Skeptic

Renowned economist Paul Krugman continues to voice his skepticism about Bitcoin, particularly in light of the growing enthusiasm for the asset among Republicans. In a Monday article for the New York Times, Krugman criticized Donald Trump’s vice-presidential pick, JD Vance, describing him as a representative of “paranoid” Silicon Valley “tech bros” who share a strong affinity for cryptocurrencies.

“Bitcoin, introduced 15 years ago, remains economically useless,” Krugman wrote. “Its few uses are limited to money laundering and extortion.”

JD Vance, who has publicly supported cryptocurrencies, disclosed in 2022 that he owned between $100,000 and $250,000 in Bitcoin—an investment that would likely be worth significantly more today if retained. Vance has reportedly been working on draft legislation aimed at making crypto regulations more favorable to the industry.

The Republican Party, including Trump, has increasingly adopted a pro-crypto stance as the 2024 election approaches. At the Bitcoin 2024 conference in Nashville, Trump speculated that Bitcoin could one day surpass gold in value and pledged to create a “strategic Bitcoin stockpile” if re-elected.

Trump also echoed a common argument among Bitcoin supporters, claiming that excessive government spending and money printing are fueling inflation and posing a “threat to the dollar.”

Krugman, a proponent of Keynesian economics, which advocates for government spending and active money supply management to promote economic growth, sees little value in cryptocurrencies beyond their use in evading regulations. He described crypto as “largely a Ponzi scheme” that fails to serve as an effective hedge against inflation.

Krugman is particularly skeptical of Trump’s sudden shift to a pro-crypto position, especially given that Trump once shared Krugman’s anti-crypto views. He dismissed Trump’s Bitcoin stockpile proposal as “a government bailout for a scandal-ridden, value- and environment-destroying industry.”

Krugman also ridiculed the Republican Party’s 2024 agenda, which promises to “end Democrats’ unlawful and un-American crypto crackdown.” He remarked that most voters likely have little understanding of what this means.

Meanwhile, some Democrats are concerned about not engaging sufficiently with the crypto industry, recognizing that digital asset holders could be a crucial voting bloc. In a letter to the Democratic National Committee, two dozen Democrats emphasized the importance of adopting a forward-looking approach to digital assets and blockchain technology, noting the “outsized impact” these technologies could have in securing electoral victories.