Is Bitcoin Really Real Money? Ontological and Epistemological Questions

 The movement to make Bitcoin into a de facto form of money has taken a step forward when Elon Musk declared that he would be purchasing over a billion btc.  Some are claiming that Musk did this to pump up an alternative asset because Tesla stock is overpriced and may fall hard soon.  But who knows? Anyway, although btc fell today, it has reached dramatic new highs well over $40,000, with various people calling for it to go to $100,000. Many respectable financial advisers seem to be changing their tune, shifting to maybe one should hold a percent or two of btc along with gold in the non-income-earning part of their portfolios. Gold has remained flat just above $1800, and btc is the “new gold.  But is it (or any other cryptocurrency) really real money?  That is the ontological question of money.

Normalizing Foreign Trade Relations

 The Biden admin has not yet made moves to undo elements of Trump’s trade war, and some parts of it may not get undone, perhaps especially some directed at China.  But at least one move towards normalization with the rest of the world has just happened as the Biden admin has agreed to let the individual nominated to lead the World Trade Organization (WTO) take office. This is Ngosi Okunjo-Iweala, not only a woman, but a former Finance Minister from Nigeria.  She had previously been blocked by the Trump admin, with Trade rep Robert Lighthizer claiming she had “no experience in trade relatrions at all.” The Trumpers supported a former South Korean trade minister who negotiated a trade agreement with the US in 2018, but others did not do so.  The Trump admin had also blocked appointments of new judges to adjudicate trade disputes at the WTO, a more general move to essentially declare the WTO to be useless and no good in pursuit of an “America First” policy.

As it is, Okunjo-Iweala has a PhD in economics from MIT and long experience in negotiating several trade agreements along with having had a record of combating corruption in Nigeria as Finance Minister.  Aside from obvious possible sexism and racism in opposing her, according to the WaPo story on this the real reason for Lighthizer’s opposition to her was based on her supposedly being too close to former US Trade rep Robert Zoellick of the Obama admin, a pretty petty reason in the end.

Is Bitcoin Really Real Money? Ontological and Epistemological Questions

 The movement to make Bitcoin into a de facto form of money has taken a step forward when Elon Musk declared that he would be purchasing over a billion btc.  Some are claiming that Musk did this to pump up an alternative asset because Tesla stock is overpriced and may fall hard soon.  But who knows? Anyway, although btc fell today, it has reached dramatic new highs well over $40,000, with various people calling for it to go to $100,000. Many respectable financial advisers seem to be changing their tune, shifting to maybe one should hold a percent or two of btc along with gold in the non-income-earning part of their portfolios. Gold has remained flat just above $1800, and btc is the “new gold.  But is it (or any other cryptocurrency) really real money?  That is the ontological question of money.

So what is the ontological nature of money?  We know there are debates over which of the standard textbook functions is the most important, with use as a means of exchange, a unit of account, and a store of value the standard list. Some emphasize one over another. MMT advocates emphasize the unit of account function, especially when that unit of account is used to pay taxes.  In that view this is the ontological foundation is the declaration by a government that something must be used to pay taxes, with this also resolving the epistemological issue assuming the government has sufficient existing credibility and communications skills as well as enforcement capability to enforce making its citizens actually pay their taxes using the established form of money.

Pushing Back For Democracy Around The World

 Given the massive impetus the presidency of Donald Trump gave to authoritarian and anti-democratic forces around the world, it is worth seeing that his defeat in a democratic election, despite his efforts to illegally overturn it, seems to have been followed by some outbursts of pro-democratic demonstrations in parts of the world, even as we saw a major setback for democracy in Myanmar with the military coup there.

Indeed, one of those pushbacks has been in Myanmar, where various groups have gone into the streets to protest this coup. I fear they will not succeed in reversing it, at least not immediately. But the generals have not gotten away with doing this without pushback and clearly will have their hands full hanging on to power.

RIP Michael Perelman

 I have just learned that old friend Michael Perelman has “passed quietly in his sleep” (not reported of what) on September 21, 2020, having been born on October 1, 1939, so just shy of his 81st birthday.  I knew Michael for a long time and considered him a personal friend, although it has been some time since I have seen him in person.  He long had an active internet list and was officially signed on as one of the people who could post here on Econospeak when it started, and I remember him in fact posting a few times in the early days, but then stopped.  He was always insightful.

Michael received his PhD from the Agricultural Economics and Natural Resources Department at UC-Berkeley in 1971, where his major prof was George Kuznets, younger brother of Nobelist Simon Kuznets. Michael then taught for 47 years at Chico State University in California where he was widely praised as an excellent teacher.  Among his students was Mark Thoma who apparently was strongly influenced by Michael and who would later run the widely respected and busy blog, Economists View, no longer functioning unfortunately.

Is China Now Number One?

 Actually I think focusing on such questions can be a not very useful exercise, but here I am asking it anyway.  As it is, indeed the Peoples’ Republic of China (PRC) is indeed Number One on a number of important grounds, although probably the bottom line is that the world is now dominated by a G2, the US and China, with it unclear which is Number One overall.  What has happened is that up until quite recently there was no question: the US was Number One as it had been for a long time.  That is not the case now.

Probably the most important fact lying behind PRC moving into a possible Number One position is that it indeed does have in real PPP terms the world’s largest aggregate GDP, probably on the order of 30% higher than the US’s, with this gap continuing to grow.  Most people are unaware of this, and it is hidden by the fact that the US continues to be Number One on nominal GDP, which gets constantly reported in the US media with no commentary or recognition of the situation regarding PPP GDP.  As it is this complicated situation signals the likely current quasi-equality, because indeed nominal GDP is important as it reflects the ability of a nation to assert itself globally.  But PPP does show how much it is really producing. And, assuming current trends hold, PRC probably will surpass the US even on nominal GDP within the next several years, almost certainly before the end of the decade.

Is Biden Going To Blow Reentering The Iran Nuclear Deal?

I certainly hope not, but it is not out of the question.  There is a serious split within the new Biden administration over how to approach getting the US back into the JCPOA nuclear deal with Iran, which, just for the record, the US withdrew from even though it was the US that had violated it by not fully withdrawing economic sanctions against Iran, a decision made during the Obama administration that negotiated the deal, while Iran was not in violation and continued to adhere to it for quite some time after the US withdrew to condemnation by the other parties to the deal, which included western European nations as well as Russia and China.

Throughout the campaign Biden expressed an intention to get back into the agreement.  But some of his foreign policy appointees have raised conditions for doing so that might delay or even block doing so, with such a delay dangerous because in June there will be a presidential election in Iran where most are forecasting that current President Rouhani, who negotiated the deal and supports the US reentering will be replaced by a hardliner who may well simply oppose the deal.  There is a not very large window for doing this.  It is pretty obvious that this looks like extending the nuclear START with Russia: it should simply be done without demanding special favors or actions from Iran, just START is likely to be extended as is, with Putin apparently accepting Biden’s offer for a simple five-year extension.  But then, Russia is much more powerful than Iran is.

Why Has AMLO Delayed Congratulating Biden On His Inauguration?

 Maybe he has now done it, although I have been unable to find any reports of him doing so.  But almost alone among world leaders, I think joined only by Kim Jong Un of North Korea, Mexicos’s President known as “AMLO” did not basically immediately congratulate Joe Biden on his inauguration. Even very pro-Trump Brazilian President Bolsonaro did, expressing a hope to have good and beneficial relations between the US and Brazil, and although it was rather perfunctory and unenthusiastic, so did Russia’s President Putin.  But nothing out of AMLO, at least not right away. 

Supposedly he somehow thinks that Biden is going to be less friendly than Trump.  The one report I saw on this said that he views Trump as having taken a “hands-off” approach with him, although I remember Trump making demands that he crack on migrants passing through Mexico from Central America with threats of tariffs at odds with treaty agreements.  This is hands-off?  Anyway, somehow he supposedly thinks that Biden will interfere in Mexican affairs and try to tell him what to do, although I am completely unaware of a shred of evidence that Biden has said anything at all that would suggest that, although it is possible that he has and I simply have not been aware of it.

Extending START

 It is not a big headline story among all the other things newly inaugurated Joe Biden is doing, but it is being reported that despite a generally more hostile approach to Russia, he has agreed with what Russian President Putin has said he wants, which is to simply extend the current nuclear weapons START agreement for five more years. It is possible that out of annoyance with Biden Putin might somehow at this point create a roadblock for this very important decision, but given that the existing treaty expires on Feb. 5, there is not much time to come up with an alternative, and I think that Putin understands the importance of this matter and will hopefully agree to this, even if it might have been good to make some changes in the agreement. 

I note that when this annoucement came out, the newly no longer in office negotiator with the Russians on this issue for now former President Trump, someone named Billingslea, whom I had not previously heard of, publicly criticized this move, claiming that it showed “very poor negotiating skills” on the part of the income administration.  Of course, he had been trying to negotiate a renewal of this agreement for the last couple of years and had failed, with the deadline for renewal now only a couple of weeks away.  Apparently he had failed both by insisting that China be included, which did not wish to be, and also making various demands on the Russians that they were not willing to go along with.  So their record on this was not all that much better than their effort to get Iran to go along with a supposedly better nuclear agreement than the JCPOA that the Trump administration withdrew from without any justification, but with the claim that so withdrawing would lead to a better agreement.

Will North Korea Explode After Biden Becomes President?

 This is what was forecast in a column in the Washington Post by Victor Cha. He sees a combination of economic collapse, a massive spread of Covid-19, and a standard desire when a new US president to enter the office to be behind a possible outbreak of military assertiveness, possibly exacerbated by a much more serious collapse of the DPRK economy and society.  I suspect this is overdone, but there are definitely some major problems going on there, with much of the new attention on this coming out publicly as a result of a major address by Kim Jong Un at the 8th (only?) Korean Workers’ Party Congress, where he openly admits failures to meet Five Year Plan targets for almost everything and calls for a massive tightening of policy with a reassertion of stricter state control of the economy.

I have double checked this by checking on the North Korean Economy Watch blog, which has an extensive report on Kim’s speech, and also seems to avoid the hysterical edge that Cha takes, although with the departure of his pal, Trump, along with all his internal problems, I can imagine Kim may well be tempted to stir up some sort of trouble.  Anyway, some details.

Indeed, targets for almost everything have not been met, ag production, manufacturing, and more.  The one manufacturing sector that seems to be holding up, and was described as “the core industrial sector,” something I have not see claimed before, is the chemical industry. Apparently it is doing so well there is almost no use for some of its output, although what is useful is going to be fertilizer and other inputs to agriculture.