Crypto

Charlie Munger on Bitcoin, Crypto, FTX, Elon Musk, Tesla, Fed, Gold

  • Charlie Munger called out fraud and delusion in crypto, days after Sam Bankman-Fried’s FTX imploded.
  • Warren Buffett’s right-hand man said bitcoin and other crypto should never have been legal.
  • Munger praised Elon Musk and Tesla’s unlikely success, and the Fed’s focus on reducing inflation.

Charlie Munger has trashed bitcoin and other cryptocurrencies, slammed regulators for not banning them early on, and called out an epidemic of bad behavior in the crypto space.

He made the incendiary comments in a rare CNBC interview this week, just days after Sam Bankman-Fried’s FTX exchange became the latest crypto player to implode.

Warren Buffett’s business partner and the 98-year-old vice-chairman of Berkshire Hathaway also lavished praise on Elon Musk and Tesla, and supported the Federal Reserve risking a potential US recession to rein in historic inflation.

Here are Munger’s 16 best quotes, lightly edited for length and clarity:

1. “We don’t need a new, wonderful, non-traceable medium that makes it easier to commit frauds of various kinds. What is bitcoin doing for anybody?” (Munger gave the example of ransomware attackers demanding bitcoin as payment.)

2. “It pains me that in my own country, I see people who once were regarded as very reputable people helping these things exist, promoting their use and so forth. This is a very, very bad thing. The country did not need a currency that’s good for kidnappers and so on.”

3. “The danger flags are wagging so clearly. A guy says, ‘I’m going to sell you plenty of nothing, and nothing’s plenty for you.’ When you hear that, you ought to think this is a big joke. But people think this is a real asset — it’s not a real asset, it’s a bunch of fraudsters and crazy people.”

4. “Nobody can invent a new thing that makes every 12-year-old kid a billionaire. It’s crazy, it’s demented. I don’t believe in magic. When I see magic, I believe somebody’s trying to fool me.”

5. “It’s partly fraud and partly delusion — that’s a bad combination. I don’t like either fraud or delusion, and the delusion may be more extreme even than the fraud.” (Munger was discussing whether crypto executives have good intentions.)

6. “There are people who think that you’ve got to be on every deal that’s hot, and they don’t care whether it’s child prostitution or bitcoin. I think that’s totally crazy. Reputation is very helpful in financial life, and to destroy your reputation by associating with scumballs and their scumball promotions is a huge mistake.”

7. “The authorities have been confused by the whole damn thing. A bunch of elderly people who have done things a certain way for a long time, now have to deal with a new standard. It’s like a mosquito catcher — they know how to smack mosquitoes, they just can’t handle gnats. It’s just insane, none of this stuff should ever have been allowed.”

8. “Gold has been around for 2,000 years. If you were a Jewish guy living in Vienna in 1939, gold would be very useful. I don’t equate bitcoin with gold.” (Munger was commenting on whether bitcoin can serve as “digital gold.”)

9. “I was certainly surprised that Tesla did as well as it did. But I do not equate Tesla with bitcoin. Tesla has made some real contributions to civilization. Elon Musk has done some good things that other people couldn’t do.”

10. “We haven’t had a successful new auto company in a long, long time. It’s difficult to enter the car business successfully. What Tesla has done in the car business is a minor miracle.”

11. “I’m not against everything that’s new. I’m just against everything that’s new that is kind of magic with a kind of chain-letter delusion carrying it along. These things do enormous damage. These big collapses, they can trigger bigger recessions and depressions.” (Munger was commenting on FTX filing for bankruptcy.)

12. “I think the Fed is willing to have a little recession in order not to have out-of-control inflation. That’s what they’re supposed to do. They’re supposed to be the one guy at the party that doesn’t hang around the punch bowl getting drunk.”

13. “We were in enough trouble when this thing started. If the Fed hadn’t done what it did — which was very aggressive — we would have had one hell of a mess, way worse than what we have now.” (Munger was defending the US central bank stimulating the economy after the pandemic struck in early 2020.)

14. “If you look at Japan today, you would find that the central bank has made our central bank look like a little mouse that hardly tries to do anything.” (The Bank of Japan has gone as far as cutting interest rates below zero to stimulate economic growth.)

Read more: Matt Quinlan’s high-dividend stock funds hold more than $20 billion in investor assets. The Franklin Templeton vet told us where he finds innovators that can deliver big returns.

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