Poilievre’s Wacky, Quacky Economics

Poilievre
Pierre Poilievre — aka Skippy — loves cryptocurrency and wants to make Canada the world’s crypto capital. Crypto is a computing process, not a product, it’s well outside the capabilities of individual computer systems to “mine” so it is controlled by large crypto-mining farms owned by corporate interests, using vast amounts of energy to produce numbers (one estimate suggests crypto miners spend more than $1 billion monthly on energy costs).

In other words, crypto is a corporate service that produces no products or benefits, but has been determined by its investors to have value.

Back in February, Skippy was interviewed on a podcast by Robert Breedlove, a far-right/libertarian Bitcoin trader who, according to PressProgress, “has promoted COVID-19 conspiracies and compared central banking policies to slavery and Nazi Germany.”* The story added:

Poilievre has previously disclosed that he is a cryptocurrency investor and insisted that Bitcoin should work to undermine the Canadian government’s currency “monopoly.”

Calling on a foreign agency to undermine the national currency? That sounds ominously treasonous. Little wonder Skippy supported the truckers’ insurrection convoy in January. And that’s why, I suppose, Skippy has also turned to “Bitcoin guru and convoy backer” Greg Foss for investment advice. Foss, who was one of the organizers of the HonkHonk campaign to finance the truckers’ insurrection, told The Star he hopes Poilievre considers him his friend. The Star story also noted (emphasis added):

The HonkHonk fundraiser for the “Freedom Convoy” of truckers and supporters protesting COVID-19 restrictions and vaccine mandates was launched Feb. 2 — two days before the original GoFundMe campaign, which raised more than $10 million, was shut down following concerns raised by Ottawa police.
The fundraiser has a companion blog, which outlines how Canada’s current form of government should be replaced with “elder councils” that hold lying politicians to account and that the “legacy media” needs to be “eliminated.”

Another member of the HonkHonk group spoke at a Canada Unity news conference, claiming, “Bitcoin would free people from the “shackles” of the “legacy finance system, and fundraising websites like GoFundMe, which present “critical vulnerability through censorship.”

Which points to one reason cryptocurrencies are popular for money laundering and crime: they can escape that “censorship” that police and security agencies might use to stop them.

In March, a CBC story said Skippy boasted that “a government led by him would do more to normalize cryptocurrencies like bitcoin and ethereum in Canada to “decentralize” the economy and reduce the influence of central bankers.” The story also noted,

Poilievre said that over the course  of the COVID-19 crisis the Bank of Canada created “$400 billion in cash out of thin air” through its policy of quantitative easing — a development he blames for inflation hitting a 30-year high and housing prices reaching all-time record levels.

The CBC clarified, however, that this wasn’t true:

As a number of other central banks did during the Great Recession, the Bank of Canada has embraced quantitative easing over the past two years to boost lending and spending during a time of financial panic. That policy ended in October 2021.

Skippy, however, added another bit of his usual libertarian twaddle:

Government is ruining the Canadian dollar, so Canadians should have the freedom to use other money, such as bitcoin.

Skippy said to his audience:

Canada needs less financial control for politicians and bankers and more financial freedom for the people. That includes freedom to own and use crypto, tokens, smart contracts and decentralized finance.

He seems to think that the government doesn’t allow Canadians to buy and use cryptocurrencies, although Skippy himself has bought them and even used Bitcoin to pay for his lunch at the shop where he made these disingenuous comments.

And then he made the gobsmacking prediction that crypto would “let Canadians opt-out of inflation with the ability to opt-in to crypto currencies.” What sort of fantasy world does Skippy live in?


Small digression: While not entirely about cryptocurrencies (NFTs are included), I recommend watching Dan Olson’s lengthy YouTube documentary  — described as an “impassioned 13-part essay on cryptocurrency and its many failings” — for an in-depth explanation of how crypto functions and fails. It’s worth the two hours of your time.

The whole point of Canada’s central bank (the BoC), as Wikipedia notes, is to protect our banking system and investors. The BoC was created for

 …formulating Canada’s monetary policy, and for the promotion of a safe and sound financial system within Canada. The Bank of Canada is the sole issuing authority of Canadian banknotes, provides banking services and money management for the government, and loans money to Canadian financial institutions.

The 1934 Bank of Canada Act lays it out clearly (emphasis added):

WHEREAS it is desirable to establish a central bank in Canada to regulate credit and currency in the best interests of the economic life of the nation, to control and protect the external value of the national monetary unit and to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, so far as may be possible within the scope of monetary action, and generally to promote the economic and financial welfare of Canada.

It was our BoC regulations and policies that protected Canadians and our investments from much of the damages caused by the housing crash and recession that resulted from the mostly-unregulated American banking and finance system crash in 2008. Why on earth would Skippy want to dismantle that crucial service and the protections it offers Canadians? But he does! He actually said (emphasis added):

Government is ruining the Canadian dollar, so Canadians should have the freedom to use other money, such as bitcoin. Canada needs less financial control for politicians and bankers and more financial freedom for the people. That includes freedom to own and use crypto, tokens, smart contracts and decentralized finance.

A spokesperson for Jean Charest summed up Skippy’s message as piffle, writing,

…“opting out” of inflation isn’t a policy; it’s a slogan, (and) it makes no economic sense… Talking up Bitcoin while denigrating our strong Canadian financial institutions like the Bank of Canada is extremely irresponsible.

On ipolitics.ca, Andreas Park, a professor of finance at the University of Toronto’s Rotman School of Management, commented:

In the crypto world, there are undoubtedly scams and cybercrimes, where people try to steal money. There’s a lot of uncertainty, and there are a lot of bad actors out there, and this is where law enforcement can build up capabilities.

In the NatPost’s piece on Skippy’s speech, it quotes his press release:

A Poilievre government would welcome this new, decentralized, bottom-up economy and allow people to take control of their money from bankers and politicians. It would expand choice and lower the costs of financial products, and create thousands of jobs for engineers, programmers, coders and other entrepreneurs…If elected prime minister, Poilievre would not only keep cryptocurrency legal in Canada, but would also work with provinces on a voluntary basis to align rules and definitions across jurisdictions to make it easy for blockchain companies to operate across Canadian jurisdictions at the same time without a cobweb of contradictory rules.

Well, no matter how he self-aggrandizes, Skippy is only running for party leader at the moment, and despite his promises, he won’t get his chance at the PM’s chair until 2025. Given the Cons’ habit of turning against leaders at the drop of an ideological hat, even if he wins the leadership race, he may not hold the position that long if his caucus turns against him. And a PM is NOT a president: he will have very limited legislative powers (little more than every other member of parliament: the PM’s authority is mostly in making appointments).

But the prospect of upsetting Canada’s entire financial and banking systems, with the potential to destabilize our actual currency and wipe out the savings of millions of Canadians, while allowing a potential influx of criminal activity, fraud, scams, and insecurity doesn’t seem to bother Skippy. Let them eat cake, after all.

In early, 2021 Canada approved two exchange-traded funds (ETFs) for Bitcoin trading on the Toronto Stock Exchange — the first such ETFs in Canada and North America — allowing Canadians to buy funds linked to the value of Bitcoin, but not actually own the Bitcoin itself. There are currently five Bitcoin ETFs on the TSX, with fees ranging from 1% to 0.4%.

The USA’s Security and Exchanges Commission (SEC) was more cautious and did not approve any Bitcoin ETFs until Oct. 2021. Australia approved its first Bitcoin ETF this month.

ETFs are “regulated financial vehicles, that is they are approved by regulatory authorities, which gives investors a sense of security before investing in them.” However, because investors are identified when they buy ETFs, these services are not popular for criminals and tax dodgers who prefer to trade in anonymous peer-to-peer exchanges. I’m not a financial wizard, but it seems to me ETFs are the only way we can safely allow crypto transactions and still provide oversight into their use.

Poilievre praised the regulator’s decision to allow the ETFs during a  Conservative virtual town hall last September. He also claimed he owns “one of those ETFs.”

Geneviève Tellier, professor of political science at the University of Ottawa, warns Skippy’s obsessive messaging about crypto is a “dangerous game” because it is,

…undermining confidence in financial and banking institutions and in the Canadian dollar.

The article linked above also notes the irony (or blatant hypocrisy) behind Skippy’s pro-crypto campaign:

…for the moment, his [Poilievre’s] campaign does not accept donations in cryptocurrency.

The Washington Post published an opinion piece by David Moscrop about Poilievre, titled, “Pierre Poilievre’s infuriating campaign to be Canada’s Conservative leader.” It called Skippy a “market fundamentalist and ideologue” and “a politician in the mold of Margaret Thatcher and Ronald Reagan — practitioners of economic and social policies, such as the trickle-down theory and deregulation, long disproved and disgraced.” It said Skippy believes,

…government is the problem, deficits and debts are a threat to the well-being of this generation of Canadians and the next, cryptocurrency is the solution to inflation, and the carbon tax must go because it’s wasteful and useless. He believes in the libertarian conception of freedom all the way.

Billionaire investor Warren Buffett and his business partner, Charlie Munger, have warned crypto is like “rat poison” for investors, and has “the potential to collapse, wiping out tens of billions of dollars in wealth for casual buyers.” Buffett is quoted as saying in a 2019 interview with CNBC,

Bitcoin is ingenious but it has no unique value at all. It doesn’t produce anything. You can stare at it all day and no little bitcoins come out. It’s a delusion, basically… What you hope is someone else comes around and pays you more money later on, but then that person has the problem. In terms of value, it’s zero.

Munger added that “I don’t welcome a currency that’s so useful to kidnappers and extortionists. The whole damn development is disgusting and contrary to the interests of civilization.”

According to the CBC story:

While anti-vaccine mandate protesters associated with the so-called “Freedom Convoy” were in downtown Ottawa earlier this year, the Toronto Star reported Poilievre was having “frequent” conversations with Greg Foss, a major Canadian bitcoin investor who raised hundreds of thousands of dollars in cryptocurrency to fuel the anti-vaccine mandate movement.

So the alt-right insurrectionists were using crypto to fund their movement, likely to avoid the oversight of the tax offices and police. Skippy seems fine with that. For me, it raises huge ethical and moral questions.

China banned crypto transactions nationwide, last fall. The World Economic Forum posted this in January:

In late September 2021, the People’s Bank of China (PBOC) banned all cryptocurrency transactions. The PBOC cited the role of cryptocurrencies in facilitating financial crime as well as posing a growing risk to China’s financial system owing to their highly speculative nature. However, one other possible reason behind the cryptocurrency ban is an attempt to combat capital flight from China… Although Chainalysis does not have a definitive figure for how much capital fled China between 2019 and 2020, they estimate that it could be as high as $50 billion.

The CBC piece noted:

The Chinese government has banned cryptocurrencies because it says bitcoin and products like it could destabilize existing financial systems and fuel fraud and money laundering.

Not that I recommend anyone follow China’s lead in pretty much anything they do, but China took the outflow of capital seriously enough to ban crypto entirely because it represented such a threat to one of the world’s largest economies. Other nations should, at least, look seriously at the problem it might cause for them.

Is Skippy okay with destabilizing our own dollar and increased criminal fraud that could affect all Canadians just so he can use his Bitcoins to buy a photo-op lunch? It appears so.

How many businesses in Canada — aside from the lunch counter of Skippy’s photo op — actually accept Bitcoin or other crypto? I can’t find any reliable statistics or a comprehensive list of retailers who accept any crypto (fewer than 300 across Canada, according to this survey.) I have yet to find a single municipal, provincial or federal service that accepts crypto payments. If it’s a “currency” and not just an investment, it should be capable of being used as such in everyday business: grocery stores, parking meters, gas stations, box stores. But it appears that few businesses have adopted it and despite Skippy’s incessant rants about it, I don’t see a tidal wave of support for it.

A story in the Globe and Mail this week was headlined, “Bitcoin investors tend to have low financial literacy, according to BoC research.” It noted:

…around 5 per cent of Canadians owned bitcoin between 2018 and 2020. That ownership was “concentrated among young, educated men with high household income and low financial literacy…” bitcoin owners tend to have a greater knowledge of how bitcoin technology works than non-owners, but score lower on general financial knowledge questions. At the same time, “Canadians who are financially literate are more likely to be aware of bitcoin [than the average Canadian] but less likely to own it,” the researchers said.

The Bank of Canada’s survey also found (emphasis added) a startlingly high percentage of problems with crypto transactions:

Eighteen per cent of the current or past bitcoin owners surveyed by the bank said they had experienced a price crash, 14 per cent said they had lost access to their digital wallets, and 12 per cent said they had participated in an initial coin offering that ended up being a scam.

What I also found intriguing was this paragraph:

The Bank of Canada is developing a prototype for its own central bank digital currency (CBDC) – a kind of digital cash usable for online payments. The federal government has yet to green-light the launch of a CBDC, but the central bank is working on plans in case the government gives it the go-ahead.

So Skippy with his bitcoin obsession seems to be shilling for an unregulated, untaxed offshore corporation that will be in direct competition with a national digital currency when one is developed… how unpatriotic. But then, libertarians never are.

The CBC also noted another fly in Skippy’s ointment:

Securities regulation falls under provincial jurisdiction. Poilievre said he’d work with the provinces and territories to eliminate a “cobweb of contradictory rules” that govern crypto and blockchain — the system which records bitcoin and other cryptocurrency transactions.

What if the provinces tell the feds to bugger off, instead of working with Skippy’s wacky economic plans? Will PM Skippy rule by dictate, just like he accuses PM Justin of doing? Or some form of financial intimidation to get his way? Hearing him talk, methinks yes.

One recent article called crypto a “giant Ponzi scheme” and added (emphasis is mine) crypto was, “not merely a bad investment or speculative bubble but something more akin to a decentralized Ponzi scheme. New investors are being lured in under the pretense that speculation is driving prices when market manipulation is doing the heavy lifting.” The article also noted (emphasis added):

The majority of cryptocurrency mining is now conducted in commercial mining farms, essentially huge warehouses running thousands of high-powered computer processors day and night. The electricity expended mining Bitcoin and other cryptocurrencies is rapidly approaching 1 percent of global usage, which is famously greater than the total electricity consumption of many smaller developed nations.
Given that cryptocurrencies don’t produce anything of material value, this enormous waste of resources renders the whole enterprise a negative-sum game. Investors can only cash out by selling their coins to other investors — but only after the miners and various cryptocurrency service providers take the house’s rake. In other words, investors cannot — in the aggregate — cash out for even what they put in, as cryptocurrencies are inefficient by design.

Former PayPal CEO Bill Harris called Bitcoin “the biggest scam in history” and “a colossal pump-and-dump scheme, the likes of which the world has never seen” with “no intrinsic value” and “absurdly wasteful of natural resources.” He also warned that “90 percent of all remote hacking is now focused on bitcoin theft by commandeering other people’s computers to mine coins.” In a follow-up interview on CNBC, he made the point that “there’s no relationship between value and usefulness.”

Such evidence suggests that crypto is an unregulated fool’s market predominantly used by unethical people trying to hide their investments from government taxation, good for “…facilitating ransomware, laundering money, distributing narcotics and child porn, running Ponzi schemes, and… not much else.”

And yet Skippy is all in with it and wants Canada to be its home at the expense of our own, strong dollar and stable, well-regulated banking system.

The mind boggles.

~~~~~

* From PressProgress:

Breedlove, the founder of the “event-driven hedge fund” Parallax Digital, has promoted a number of controversial ideas on topics ranging from COVID-19 and finance. On his LinkedIn, Breedlove states that his “mission in life is to maximize freedom for humanity” with “worldview-shattering revelations.”
One “worldview-shattering” revelation is Breedlove’s assertion that “COVID is a government diversion strategy” to “plunder wealth.”
Within a week of Poilievre’s podcast appearance, Breedlove featured anti-vaccine conspiracy theorist Dr. Robert Malone – who called COVID-19 a “mass formation psychosis.” – under the title Just Follow The Money.
In another interview with Bitcoin enthusiast Jeffrey A. Tucker, Breedlove said the fight of “individuals” over who gets to “make and break the rules” around COVID-19 reminded him of an “old Rothschilds quote”:“The old Rothschilds quote: ‘Give me the power to issue a nation’s currency, I care not who makes its laws.’ It’s all about the money at the end of the day.”
There is a long history of antisemitic conspiracy theories centred around the Rothschild family, dating back as far as the 19th century.
In a stranger turn, Breedlove claimed “Hitler would not be a household name if fiat currency never existed.”
Back in August 2021, Breedlove compared the efforts of World Economic Forum, which he claims “preys on individual self-ownership,” to the Holocaust.

Breedlove seems like the kind of alt-right, racist, conspiracy-spewing wingnut most Canadians would want to avoid yet Skippy seems to like.

 

 

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7 Comments

  1. https://jacobinmag.com/2022/04/libertarians-crypto-vanuatu-michael-oliver-nfts
    From Jacobin Magazine, Apr. 22, 2022 (empahsis added):

    Crypto millionaires are attempting to buy an island in the Southwest Pacific. It’s the latest in a long line of schemes by libertarians asserting the rights of private capital above all else.

    Utopian thinking is everywhere out of favor, except in the libertarian fantasies of crypto enthusiasts who dream of a world free from the regulatory state, law, and all other forms of external authority. Hucksterism and hostility to collective life are this movement’s defining features. The worldview underlying it is embodied nowhere more literally than in the schemes to exit from the territorial jurisdiction of the nation-state prevalent throughout the history of libertarianism. Crypto luminaries have even sought to buy and govern islands, using oceans to separate themselves from taxes and democracy.

    Perhaps we could convince Skippy move to this island and stop his rage-tweeting about topics he doesn’t understand.

  2. https://nationalpost.com/news/politics/bank-of-canada-rebukes-claims-pierre-poilievre-has-made-on-inflation-cryptocurrency

    Cryptocurrencies are not a way to “opt out” of inflation and they will in no way replace the Canadian dollar, said the two main officials of the Bank of Canada in an apparent rebuke to Conservative Party of Canada leadership candidate Pierre Poilievre.

    Skippy’s crayon economics get schooled by people who actually know what they’re talking about.

  3. https://www.vice.com/en/article/akvn8z/crypto-bad-for-mental-health

    Crypto may be bad for your mental health… from the article:

    Bitcoin reached an all-time high of around $69,000 (£50,850) in November, but then dropped over 40 percent within a few months. As a whole, the crypto market has decreased in value by more than $1 trillion (£737bn) since Bitcoin’s peak, but it has shown signs of rallying in the last week or so.

    Experts like Peter Klein, a cognitive behavioural psychotherapist who offers CBT for cryptocurrency-related mental health issues, have warned that the market crash will have caused an “increase in the severity of the crypto addiction symptoms that people are experiencing”. It seems like this fast-growing investor community is generating its own fast-growing mental health crisis.

  4. https://www.dbrsmorningstar.com/research/393605/dbrs-morningstar-confirms-government-of-canada-at-aaa-stable

    Canada’s AAA ratings are underpinned by the country’s considerable fundamental strengths, including its sound macroeconomic policy frameworks, large and diverse economy, and strong governing institutions. The Stable trend reflects DBRS Morningstar’s view that Canada’s credit profile remains strong despite the economic and health impact of the pandemic as well as the escalating geopolitical tensions.

    Gee whiz, Skippy, it seems Canada’s economy is doing well! Even under the Liberals and the bromance-buddy you love to hate… That means your attacks on our economy are full of shit. But we already knew that…

  5. https://www.nytimes.com/2022/05/05/opinion/crypto-nfts-web3.html

    An excellent piece from the New York times that warns crypto and NFTs are…

    “… polluting the digital world in a thick haze of errors, swindles and expensive, largely unregulated financial speculation that ruins whatever scrap of trust still remains online…
    “You might find it hard to muster much sympathy for folks who paid huge sums to speculate on digital goods in an unbuilt corner of the metaverse. Play stupid games, win stupid prizes.”

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