Why doesn’t Wall Street understand Bitcoin? Goldman Sachs Veteran explains

John Haar – a former member of Goldman Sachs’ Asset Management division – published an article outlining what he perceived to be common views about Bitcoin, good money and Wall Street economics.

He listed several reasons why members of traditional finance either object to or fail to appreciate Bitcoin’s potential as global money.

Ignorance of economic history

As explained in blog posts for Swan on Monday, Haar said that “virtually no one” has taken the time to understand the history or fundamentals of money. For example, they do not understand the qualities that made gold historically dominant as money: durability, divisibility, recognizability, portability, and scarcity.

By extension, this weakens Wall Street’s understanding of Bitcoin – which is often referred to as “digital gold” to have these qualities even stronger.

Haar boils the lack of understanding down to education:

“To the extent that those working in traditional finance have any opinions about the history or fundamentals of money, it has been shaped almost entirely by Keynesian economics,” he said, “and perhaps by MMT in recent years.”

Keynesian economic theory and modern-monetary theory both advocate centralized control over a nation’s money supply to manage the economy.

Bitcoin, on the other hand, resembles a grassroots commodity money with an absolutely fixed supply that no one can change. In fact, central bankers like Ben Bernanke and Christine Lagarde have a history of bad-mouthing the asset.

Despite their alleged ignorance, Wall Street investors would likely “pretend” they were well versed in Bitcoin and other financial topics. As such, they would often take strong positions against Bitcoin that “merely repeat the objections they have heard in the mainstream media.”

Closed mindedness and lack of perspective

Haar also described Wall Street types as “high-performing consensus followers,” who are unlikely to be early adopters of new technology. “They are the people who generally followed the rules throughout their lives … and they generally trust authority and alleged experts,” he said.

Furthermore, the old financial worldview is generally contained in developed countries with relatively stable currencies and secure property rights. In such circumstances, the necessity of Bitcoin is less obvious than for residents of Argentina, TurkeyVenezuela, Nigeriaand the like, where Bitcoin adoption happens to be quite high.

Haar concludes that most in legacy finance who oppose Bitcoin have not arrived at their position through deep research or understanding.

For the few who understand monetary history, he suspects they may be people in senior roles with a financial incentive to speak critically of the asset. Theoretically, Bitcoin could allow people to store their wealth without “investing” their money, which means less business for investment companies.

“They prefer the world’s capital to be forced into investments, which their companies happen to provide access to and earn juicy fees from,” Haar said.