Elon Musk, the outspoken and controversial billionaire chief executive of electric car-maker Tesla, isn’t a fan of the Federal Reserve’s coronavirus stimulus.
Musk, who previously warned U.S. fiscal policy has “become detached from reality,” has now said “central bank currency issuance” is making cryptocurrency bitcoin look “solid by comparison.”
Musk made the comments in response to Harry Potter author JK Rowling asking for bitcoin to be explained to her.
“Massive currency issuance by government central banks is making bitcoin internet ghost money look solid by comparison,” Musk said in a Twitter exchange with Harry Potter author JK Rowling last night, adding he still owns 0.25 bitcoin.
JK Rowling set bitcoin and cryptocurrency Twitter alight when she asked a crypto reporter to “explain [bitcoin] to me.”
The bitcoin and crypto community was quick to send Rowling a barrage of explanations, articles and memes in an attempt to explain bitcoin, though the British author didn’t appear convinced.
“I’m sure cryptocurrencies are fascinating. I’ve genuinely tried to grasp the very detailed information I’ve been sent tonight,” Rowling said, adding people close to her “understand it and have tried to explain it.”
“But I’m afraid this is a total blind spot to me. I’m just about able to grasp a barter system. Talk of collectibles, tokenomics and blockchains and my brain just takes a walk.”
The likes of ethereum creator Vitalik Buterin and crypto exchange creator Tyler Winklevoss added to the debate.
“[Bitcoin is] a digital currency,” Buterin said. “There’s [around] 18 million units of it. It’s not backed by anything, it’s just valuable because it is, like collectibles. There’s a network of computers (which anyone can join) that maintains a decentralized global excel spreadsheet of how many coins each person has,” adding “people find [bitcoin] interesting because there is no central authority that controls this network.”
“It’s magical internet money,” said Neeraj Agrawal, of Washington-based cryptocurrency policy think tank Coincenter, referencing a Reddit bitcoin meme.
“Bitcoin is not magic, funny. That’s the U.S. dollar and the Fed,” said Tyler Winklevoss, who, with his twin brother Cameron, created the U.S.-based Gemini bitcoin and crypto exchange.
Bitcoin and cryptocurrencies have been thrust into the limelight by the coronavirus crisis and government measures to prop up the global economy.
Last month, Fed officials slashed interest rates to zero, launched an unprecedented bond buying program and teamed up with the Treasury Department to begin precedent-setting emergency lending to companies and first-ever corporate bond purchases.
Federal Reserve chair Jerome Powell this week warned the Fed might need to go further, with the U.S. facing an “extended period” of weak economic growth “without modern precedent.”
Many bitcoin and cryptocurrency exchanges have seen users and trading volumes soar since the coronavirus crisis began and people’s faith in the financial system wavers.
“The bitcoin protocol has a monetary policy built into the code and it is therefore not bound by political or other external manipulation,” said Guy Hirsch, U.S. managing director of brokerage eToro.
“Every 210,000 blocks bitcoin will hold a stronger stock-to-flow ratio, which makes bitcoin a real source of value. Central banks have now made printing trillions of dollars a normal occurrence, which is not sustainable.”
“You can’t just legislate money and solve these things,” Musk told podcaster Joe Rogan earlier this month.
“This notion though, that you can just sort of send checks out to everybody and things will be fine, is not true, obviously,” Musk said, referring to stimulus checks sent out over recent weeks, and warning “the [economic] machine just grinds to a halt,” impacting medical and food supplies.