Is One Reason Why the Status Quo Disdains Bitcoin Is the “Wrong People Are Getting Rich”?

The wrong people–rebels, outsiders, nerds and techies– got on the cryptocurrency boat while their insider/rentier “betters” blew it and are now raging bitterly onshore.
The psychology of money, wealth and speculative manias is endlessly fascinating. Most of what’s written on these subjects focus on the process of building wealth as if it were a quasi-science rather than a psychologically driven process. Only speculative manias attract a psychology-based analysis, usually characterized as some variant of the madness of the herd running off the cliff en masse. But money and wealth are nothing but more sedate reflections of the same dynamics that drive speculative manias. Much has been written about cognitive biases and thinking fast and slow, but these explorations do not exhaust the psychology underpinning money, wealth and speculative manias. Few things have unleashed the Monster Id of wealth and money quite like bitcoin and the cryptocurrencies. Compare the speculative manias of the dot-com era (1995 – 2000) and the housing bubble (2002 – 2007) with the crypto-mania: in the first two manias, the status quo embraced the mania as rational and justified: the Internet would continue growing for decades, housing never goes down, etc.

This post was published at Charles Hugh Smith on WEDNESDAY, DECEMBER 27, 2017.