A number of economic and business leceaders in this era of stock market exuberance note that many of their peers have never managed through an economic downturn. Not just an nterest rate cycle as initiated by the Federal Reserve in 2022 to fight inflaiion. But an actual recession.
A second potential bubble indicator beyond the stock market’s seemingly unending upward trajectory, is the multiple schemes to get rich-quickly. These opportunities are based on some virtual digital innovation with an intriguing but unknowable future value. Hence crypto, stable coins and other forms of new financial transaction-payment business offerings.
The new CEO of Wells Fargo was asked whether the bank would be offering stable coins for consumers. His reply was pragmatic. A stable coin is just putting a wrapper around the US$. “For countries with higher inflation than the US,it might make some sense. But the use-case in the US is not clear. Every time you use it you incur transaction costs.”
The Urge for Crypto
Retired Warren Buffet of Berkshire was outspoken inhis views on crypto and virtual currencies..
“Cryptocurrencies basically have no value and they don’t produce anything… In terms of value: zero.” (CNBC, 2020)
In this 2023 CNBC interview Buffett explains the consumer and market fascination with digital options as another example of the human desire to gamble,. Humans have an impulse to to take a chance on winning big even when all odds are that will not happen.
(https://www.youtube.com/watch?v=vGVt8Y2ZdWI)
Everybody Wants Your Money
This is a trailer for a recent movie on the crypto environment: Everybody is Lying to You for Money:
(https://www.youtube.com/watch?v=DZR7LncSmEE)
McKENZIE-the film’s creator: Crypto is only good for two things: gambling—is the price going to go up or down?—and crime. The amount of crime that crypto facilitates is staggering. There’s a crypto company, Chainanalysis, that estimated $154 billion of criminal activity was facilitated via crypto last year alone. There’s the bubble idea that the price could, over time, keep going up, as new people flock to crypto as the story continues to spread. And then crime gives it a use case, a reason to be valuable.
The Appeal of Change
The future will be different than today. Many physical aspects of our world will undergo makeovers and upgrades.
As stewards of member resources and community investments, the challenge for coop leaders is what changes are based on long understood core values; and what new enterprises rely or prey on human shortcomings.
Are crypto and stable coin “assets” adding to a community’s future or merely facilitating member participation in a gigantic, universal digital game? Is this an area where your credit union should educate versus coordinate member experimentation?