Thursday, May 31, 2018

"Robert Shiller Thinks Bitcoin Will Probably Go Extinct, But If You Want To Trade It During His Final Exam, Then Go Ahead And Be A Moron"

We are fans of the Professor.*
From DealBreaker:
When last I checked in on imaginary internet money, the DoJ was launching an investigation into “possible” market manipulation in Bitcoin, Ethereum and other iterations of what, on multiple levels, looks like a giant global pyramid scheme (get it? “multiple levels”, “pyramid scheme”).
While that’s all fine and good, it kind of misses the point. As I explained via a Sopranos reference, asking if there’s manipulation going on in cryptocurrencies is like asking if there’s prostitution going on at the Bada Bing! . That is, of course there’s manipulation in that market. But the larger issue is that the whole damn thing is suspect. Going after Bitcoin spoofers is like arresting hookers at the Bing. You’re missing the forest for the trees.
I joke a lot about the absurdity inherent in Bitcoin and cryptocurrencies and proponents of the market don’t do themselves any favors by doing shit that reinforces stereotypes (see here and here, for instance). But in all seriousness, there is virtually no chance these “assets” survive in their current form. That doesn’t mean the concept of cryptocurrencies and/or the theoretical underpinnings of the market are going away, but it does mean that if you’re betting on, say, Bitcoin in its current form to rally unimpeded to infinity on the way to supplanting traditional currencies printed by developed market central banks, you are a moron. Plain and simple. It ain’t gonna happen.
One person who agrees is Nobel Prize-winning economist Robert Shiller (and really I don’t even know why I bother because citing mainstream economists in an effort to convince cryptocurrency acolytes they’re wrong is an exercise in futility by definition), who earlier this week chatted with CNBC about what the future is likely to look like for Bitcoin.
His overarching message was that it might well just go the way of the dinosaurs, but he couched it in friendlier terms than that. To wit:
Bitcoin won’t look anything like it is today. It will have a different name, if it exists. There will have been many hard forks changing it and changing it. And, it’ll be a matter of dispute whether it exists or not.
Yes, “a matter of dispute whether it exists or not.” Of course that assumes it still exists in one form or another and while, as alluded to above, it’s likely the concept isn’t going away, it’s possible that it will, in which case there will be no “dispute” and the only people claiming it’s still around will be the people who swear to Christ that Megalodon is still swimming around out there somewhere.
In any event, the punchline to the whole Shiller video comes when he describes an exchange he had with a student who insisted on keeping his laptop open during finals so he could ensure he didn’t miss an “opportunity” to trade fucking Bitcoin....MORE, including video.
*As noted, kind of fond of old Doc Shiller.

Here's his his September 4, 2007 call:
Some U.S. Housing Markets could drop 50%- Shiller

In addition to publishing "Irrational Exuberance" in March, 2000 with the NASDAQ hitting its all time closing high of 5048 (subsequent low 1114, how's a 78% decline grab ya?) he is the keeper of the Cowles Commission records.* From one of our Forecasting Equity Returns posts: 
A subject near and dear to my heart. I may be the only person I've ever met who read every page of "The Cowles Commission's Common Stock Indexes 1871-1937".
[you must be a blast at parties -ed]
Here's his Yale homepage.

And Irrational Exuberance.

Here's Common Stock Indexes...
....My favorite tidbit is the listing, among the pre-1871 industrials, of New York Guano.
Some things never change.

Here’s Yale’s (and my) gift:
It leads to a big ‘ol hog of a PDF.
Here's "New York Guano".

Over the years Professor Shiller has also picked up some tchotchkes, including an Econ. Nobel.
The Cowles connection probably has more utility and a few other folks have thought so as well.
In addition to Shiller several other Cowles associates have won Nobel prizes for research done while at the Cowles Commission.

These include Tjalling Koopmans, Kenneth Arrow, Gerard Debreu, James Tobin, Franco Modigliani, Herbert Simon, Lawrence Klein, Trygve Haavelmo and Harry Markowitz". -Marginal Revolution

See also Professor Cowen's "What do I think of the Cowles Commission?".

Which I put in:
"Robert Shiller's Favorite Financial Innovation: An IPO For The USA"