Charlie Munger's Op-Ed: Why the United States Should Ban Cryptocurrencies

Charlie Munger, Warren Buffett's right-hand man, who is known as the stock god, published a commentary in The Wall Street Journal yesterday with the title "Why the United States Should Ban Cryptocurrencies?" elaborating on his reasons for opposing cryptocurrencies.

Why the United States Should Ban Cryptocurrency?

In recent years, numerous cryptocurrencies of various sizes have been issued by private companies in the United States, allowing these cryptocurrencies to be publicly traded without prior government disclosure or approval.

In some cases, a significant portion of these cryptocurrencies are sold to promoters almost for free, and the public, unaware that the promoters have already benefited and gained advantages, then purchases them at higher prices.

This wild and chaotic capitalism is reminiscent of a quote attributed to Mark Twain: "A gold mine is a hole in the ground with a liar standing on top of it." Note: This was said to satirize the gold rush at that time.

Due to regulatory loopholes, this dismal excessive behavior continues. Cryptocurrency is not money, not a commodity, and not a security.

Instead, it is a gambling contract with a house edge close to 100%, and it has entered states traditionally regulated by states with less competitive gambling contracts. Clearly, the United States should now enact a new federal law to prevent this situation.

There are two precedents that the United States can refer to in making the right decision. The first precedent is that China recently imposed a ban on cryptocurrency because the Communist Party of China is very wise and has long concluded that cryptocurrency does more harm than good.

The second precedent dates back to 1700 when the UK took action to address a terrible economic depression. At that time, some British merchants were making huge profits by trading with impoverished countries on the other side of the world using slow sailboats.

When this frenzy of profiteering erupted, the British Parliament's policy was simple and direct, it immediately banned all new common stock public trading and maintained the ban for about 100 years.

During this period of 100 years, the decision made by the UK at that time made the greatest contribution to the advancement of civilization in history, leading to significant roles in the Enlightenment and the Industrial Revolution, and giving birth to the promising United States.

What should the United States do after imposing a ban on cryptocurrency? There is another reasonable course of action: "Thank the leaders of the Communist Party of China for their extraordinary judgment."