If you witnessed Bitcoin’s sudden plunge earlier in the week, you are probably aware of the fact that Jamie Dimon’s comments had everything to do with it.
As CEO of JP Morgan Chase, his comments are worth serious consideration, not necessarily for their truth-value or wisdom, but for what they reveal about JPM’s perspectives and intentions.
During a conference in which Dimon preannounced a drop of 20% in JPM’s trading revenue, he lashed out, calling Bitcoin a “fraud,” and stating that he would fire any JPMorgan trader trading bitcoin, as such an action would indicate stupidity.
Here’s a loose list of Dimon’s main points:
- Bitcoin is a “fraud” and anyone buying it is “stupid”
- Bitcoin is “not the real thing”
- Bitcoin will “eventually…be closed”
- Bitcoin is “worse than tulip bulbs”
- Unlike Bitcoin, (legitimate) “currencies have legal support.”
Whether you are for or against Bitcoin and cryptocurrencies is irrelevant in this matter. You have to read between the lines. Dimon’s statements don’t express concern about preserving a sound monetary system, they express a desire to maintain power; a desire to keep people deferential to a system that not only benefits him and his fellow banking elites, but one that also keeps the elites in a position of relative control over people’s financial privacy and transactional freedom.
If JPM’s position stemmed from a sincere interest in preserving sound money, or in people’s acquisition and maintenance of sound assets, then JPM wouldn’t have allowed its subsidiary, Chase Bank, to ban precious metals coins and bars from customer’s private safety deposit boxes while simultaneously cornering the silver market.
So whether or not you agree with the emerging trend in cryptocurrencies, the overarching message is not against digital money–rather, it is against the people’s capacity to decide and act on what they believe constitutes legitimate money. It’s a message of coercion dressed as contempt. It expresses the very essence of that which compels one to buy bitcoin or precious metals in order to escape the banking system.
So, what is Jamie Dimon really saying, and does it hold any critical merit?
Let’s take it apart, piece by piece:
Dimon: Bitcoin “is not the real thing.” (read: Bitcoin is not real money)
What constitutes “real” in Dimon’s understanding? Is it not real because it is being propped up by faith in its functionality and its general acceptance and use as a means of exchange? If that’s the case, then aren’t those the same attributes that would make the US Dollar comparably fake?
The only thing that has ever been known to reliably back any currency–making money “real” by traditional or historical standards–is gold and silver. But of course, Dimon makes no mention of that. What he considers “real” is what government and the banking system says is real. Hence his supporting statement: “currencies have legal support.”
But this would be comparable to saying: If it looks like a duck, walks like a duck, quacks like a duck, and possesses every physiological attribute that would undeniably make it a duck… it still wouldn’t be a duck unless government and banks say so. (?)
Dimon: Bitcoin will “eventually…be closed”
What does he mean by “close”? No institution can shut down a global cryptocurrency network that has no central hierarchy. People will either use it or they won’t. Bitcoin is not controlled by any one person or institution. It has no physical location. It has no central authority.
People may at one point abandon Bitcoin, or any cryptocurrency for that matter, but that doesn’t amount to “closing” it. What constitutes “money,” its essence, will flow to whatever form people decide can fulfill its functions. The essence of money is a qualitative attribute; and you can’t shut that down. It also turns out that cryptocurrencies happen to be one of the most fluid embodiments of that attribute.
Dimon: Bitcoin is “worse than tulip bulbs”
Referring to tulip mania, Dimon is conflating two sets of partially-related things: “object” with “mania,” and “function” with “speculation.” Dimon is referring to speculators whose only interest in Bitcoin is to make a “quick buck” off its rapid appreciation. That in itself may have caused a bubble, which is true. But despite the “mania” surrounding Bitcoin speculation, and perhaps its impending bubble burst, when all’s said and done, the fact remains that Bitcoin still has a functional purpose. And if its functional purpose remains intact, it will continue to serve as a valid form of money, the same way that tulips, centuries after the mania had long died, still serve a function as flowers to be harvested, sold, and appreciated.
DImon: People who buy Bitcoin are “stupid.”
Why stupid? Risky, perhaps, but why call it stupid? Why not call it what it is: a sincere attempt, perhaps born out of desperation, to escape the corruptive forces of our current monetary system?
Does DImon mean to say that cryptocurrency usage is stupid because of its comparative lack of mass use and acceptance? Wouldn’t that be too myopic or short-sighted a view? Certainly, Dimon cannot claim to “know” the future–not even the near future–as that in itself would be arrogant to the point of stupidity, or just stupidly arrogant for its near-sighted projections of a distance it cannot even begin to see.
Perhaps the word Dimon really meant was not stupid but disruptive. By not supporting cash or dollar-denominated assets, you are going against the very system that supports JPM.
JPM does not want you to own cryptocurrency. JPM does not want you to own metals. JPM wants you to own digitized cash. And if you were dumb enough to buy bitcoin when Dimon first slammed it in 2015, you would have seen a return of over 1,000%
If you were smart enough to buy precious metals, you’d still be holding on to the only form of sound money that has enough intrinsic value, unlike cash or Bitcoin, to back itself.