Bitcoin and gold won’t protect against geopolitical turmoil, according to Yanis Varoufakis, former Finance Minister of Greece and Secretary-General of MeRA25. “Finding freedom outside of government is a dangerous fantasy,” he said.
Varoufakis is also a PhD economist and best-selling author. He spoke with David Lin, Anchor and Producer at Kitco News.
CBDCs and Blockchain
“I do not believe that the… ‘oligarchic,’ by definition, cryptocurrency like Bitcoin is ever going to replace [conventional currency],” said Varoufakis. “It shouldn’t, it can’t, and it would be a nightmare if it did.”
However, he added that blockchain technology will be useful for central banks.
“The Chinese central bank is already deploying a digital crypto-like currency for the purposes of bypassing the obstacles set in the way of fiat money by the commercial banks, which are a source of instability financially, and the ones who are actually creating a buffer zone, separating the people from their money,” Varoufakis said.
Varoufakis has long advocated a European Central Bank Digital Currency (CBDC).
Government tyranny
Responding to the concern that CBDCs may increase government tyranny, Varoufakis said, “It’s a serious worry. Concentrated power is never an auspicious moment for freedom. So, I accept it, but at the same time I reject it because there can be no apolitical money… The one thing that gives value to money is the capacity of money to extinguish taxes. So, to the extent that we live in states that do things for us, in our name, sometimes against us, but nevertheless, we are like fish that cannot live outside the water. We are citizens of states… we need those states. I mean, look at all the libertarian attempts to create floating islands in the pacific.”
He added that the solution to government tyranny is democracy and transparency. “To those who say that government can be dictatorial and freedom-limiting, I say to them, yes,” Varoufakis remarked. “So, that is why we need democracy. That is why, for instance, I am an advocate of blockchain technology being used, in the context of central bank digital currencies, to afford a degree of transparency so we all know how much money is in the system.”
Gold, Bitcoin, and Inflation
When it comes to the claim that gold and Bitcoin are hedges against government turmoil, Varoufakis responded, “[It’s] just pure idiocy… You need to control the supply of money. The idea that the supply of money should be independent of politics and of government is… very dangerous.”
He went on to explain that during times of crisis, the central bank needs to make money available to avert a depression.
Varoufakis responded to claims that loose monetary policy can lead to inflation. “Financial illiteracy,” he said. “… The reason we now have inflation is not because of QE. It’s because of two reasons. Firstly, because of the interruption of supply chains. You had the lockdown, which essentially completely dismantled the supply chains of globalized capitalism… The second reason is that you had a period during which the increase in the demand for goods… coincided with a constriction in the supply of these things due to the disruption of the supply chains. And that set off the inflationary spiral.”
To find out how Varoufakis thinks central banks should fight inflation, and how the Russia-Ukraine conflict should resolve, watch the above video.
Follow David Lin on Twitter: @davidlin_TV (https://twitter.com/davidlin_TV)
Follow Kitco News on Twitter: @KitcoNewsNOW (https://twitter.com/KitcoNewsNOW)