Katie Haun versus Paul Krugman on Cryptocurrency
By David Henderson
Tyler Cowen recently linked to a debate between Stanford professor Katie Haun and Paul Krugman on cryptocurrency. I found myself torn but I did learn a few things and noticed a few interesting things. It starts with a 36-minute presentation by Haun. Then there’s a 25-minute presentation by Krugman and then a third 39-minute video with Q&A with the audience in Mexico City.
My noting of interesting things is not at all comprehensive; they’re simply things that I found worthy of noting.
Main highlight from the Haun presentation (for me anyway):
I had thought that cryptocurrency was anonymous. Probably many readers know better; I didn’t. Professor Haun absolutely convinced me that if I wanted to engage in illegal behavior, I should use cash, not cryptocurrency.
Main highlight (for me) from the Krugman presentation:
At the 20:14 point: $50 bills and $100 bills are effectively not money. Very few stores will accept $100 bills for a sandwich. Maybe I’m seeing a biased sample but I’m often at Safeway or Lucky in Pacific Grove when someone in front of me pays with a $100 bill. The few times I’ve had $50 bills, I’ve had no trouble. Now it’s true that the people using them have typically not been buying sandwiches, but they have sometimes bought things whose prices are roughly the same as the prices of sandwiches. So, for example, I’ve seen someone use a $100 bill, without raising the cashier’s eyebrows, to buy something whose price is $10.
Main highlights from the debate:
At the 17:42 point: A questioner points out some striking data on cryptocurrency in Mexico.
18:40: The questioner gets to his question. How is a Mexican who wants to spend $10 on a video game supposed to do it if he doesn’t have a credit card or a bank account? In Mexico today, that is a very popular kind of transaction using crypto.
19:10 to about 20:30: Paul has a good answer, I think. His gut feel is that it should be able to be done without crypto but that it’s not because of some regulation that makes that difficult. He does cartwheels to avoid saying that the regulation preventing other methods is probably bad. But still, he has the good economist’s gut feel: when you see something that seems like an elaborate way of doing something when other simpler methods would seem to be available, check for the regulations that are making those other methods too costly or not available.
37:50: Asked by the moderator if Katie Haun’s views shifted Paul’s thinking at all, Paul admits that he was surprised by the use of crypto by low-income, unbanked people, and that he wanted to do some homework on that.
Note: For the Concise Encyclopedia of Economics entry on money, see Anna J. Schwartz, “Money Supply.”