A man who spent 13 years on Wall Street claims that people in legacy finance do not understand the history or properties of money.
John Haar – a former member of Goldman Sachs’ Asset Management division – published an article detailing what he perceived were commonly held views about Bitcoin, sound money, and economics on Wall Street.
He listed multiple reasons for which members of traditional finance either object to or fail to appreciate Bitcoin’s potential as global money.
Ignorance of Economic History
As explained in a blog post for Swan on Monday, Haar said that “virtually no one” has spent time understanding the history or fundamentals of money. For example, they do not grasp the characteristics that made gold historically dominant money: durability, divisibility, recognizability, portability, and scarcity.
By extension, this impairs Wall Street’s understanding of Bitcoin – which is often referred to as “digital gold” for possessing these qualities even more strongly.
Haar boils the lack of understanding down to education:
“To the extent that those working in traditional finance have any opinions about the history or fundamentals of money, it’s almost entirely shaped by Keynesian economics,” he said, “and perhaps by MMT in more recent years.”
Keynesian economic theory and modern-monetary theory both advocate for centralized control of a nation’s money supply to manage the economy.
Bitcoin, by contrast, resembles a grassroots commodity money with an absolutely fixed supply that nobody can change. In fact, central bankers like Ben Bernanke and Christine Lagarde have a history of speaking poorly about the asset.
Despite their purported ignorance, Wall Street investors were likely to “pretend” to be well-versed on Bitcoin and other financial topics. As such, they’d often take strong positions against Bitcoin that “simply repeat the objections they have heard in the mainstream media.”
Closed Mindedness and Lack of Perspective
Haar also described Wall Street types as “high performing consensus followers,” unlikely to be early adopters of new technologies. “They are the people who generally followed the rules throughout their lives… and they generally trust authority and alleged experts,” he said.
Furthermore, the legacy finance worldview is generally contained in developed countries with relatively stable currencies and secure property rights. Under such circumstances, the necessity of Bitcoin is less apparent than for citizens of Argentina, Turkey, Venezuela, Nigeria, and the like, where Bitcoin adoption happens to be quite high.
Haar concludes that most people in legacy finance that oppose Bitcoin have not arrived at their position through deep research or understanding.
For the few who understand monetary history, he suspects they may be people with senior roles with a financial incentive to speak critically of the asset. Theoretically, Bitcoin could allow people to store their wealth without “investing” their money, meaning less business for investment firms.
“They would prefer the world’s capital to be forced into investments, which their companies just so happen to provide access to and earn juicy fees on,” said Haar.