A restaurant in Chiltiupan, El Salvador, accepting Bitcoin. Courtesy of Reuters
- One of the world’s foremost economists has branded the El Salvador president and Congress as stupid for making Bitcoin legal tender.
- Steve Hanke believes that BTC will end up collapsing the Salvadorian economy, further claiming that the ‘dark forces’ are behind the move and the country will become a criminal hub.
El Salvador has been praised by many in the cryptocurrency world for adopting Bitcoin as legal tender. However, one revered economist is not impressed and has branded the Salvadorian president and Congress as ‘stupid’ for the move. Steve Hanke, an economist with a global reputation as a currency reformer, believes that dark forces are behind the move and it will likely collapse the entire country’s economy.
Hanke is a professor of applied economics at the John Hopkins University in Maryland, USA. He also serves as a director of the Troubled Currencies Project at the Cato Institute in Washington. Previously, he has held various roles including being the senior economist with President Ronald Reagan’s Council of Economic Advisers.
El Salvador’s lawmakers voted 62-22 to make El Salvador the first country to adopt #Bitcoin as legal tender. President Nayib Bukele and his 62 accomplices have just had their names entered into Hanke’s Encyclopedia of Economic Stupidity.https://t.co/bUECOptOQU
— Steve Hanke (@steve_hanke) June 11, 2021
In a recent interview, Hanke pulled no punches, slamming El Salvador’s move as economic sabotage. He stated:
It [the BTC move]does indicate that the President and the Congressmen who voted for adopting Bitcoin in El Salvador as legal tender are in a word – stupid. They have entered the Hanke’s dictionary for economic stupidity.
Related: El Salvador’s Bitcoin move comes under fire from global regulators – was it all worth it?
Dark forces behind the Bitcoin move in El Salvador
The economist broke down his reasons for his harsh remarks. For one, El Salvador is one of the three Latin American countries that are dollarized – meaning they don’t have a local currency and instead use the U.S dollar. The other two are Panama and Ecuador. Hanke believes that the inevitable end of El Salvador’s love story with Bitcoin is criminal use.
Dark forces are clearly behind this. Criminal elements want to get in and obtain the “real legal tender” which is the greenback [the U.S dollar]… The reason this is so stupid is that the vulnerability of El Salvador increases massively because they are dollarized.
El Salvador is already facing severe economic challenges. And according to Hanke, the BTC move will only serve to exacerbate the situation.
Adopting BTC will “not only accelerate it, but it also has the potential to completely collapse the economy because all the USD in El Salvador could be vacuumed up and there would be no money in the country,” he told Kitco News.
Hanke further attacked the narrative that Bitcoin is better for remittances as it’s much cheaper.
El Salvador president Nayib Bukele claims it’s cheaper to send remittances via #Bitcoin to ELSL than by traditional alternatives. This is a big LIE. To send $200 via Western Union or MoneyGram cost 0%-4%. To cash out Bitcoin at an ATM in ELSL, it cost 8% on avg (@CoinATMRadar).
— Steve Hanke (@steve_hanke) June 10, 2021
He believes that despite becoming legal tender, Bitcoin will still not be used to pay for day-to-day needs. Rather, the Salvadorians will still have to go to the ATM to cash out into U.S dollars. This, he stated, is much more expensive than if the people use MoneyGram and other traditional avenues.
On whether the move by El Salvador will lead to other countries legalizing Bitcoin, the economist believes that it’s only a matter of time. Already, Panama and Paraguay – two countries he termed as criminal havens – are looking into legalizing the crypto. This is the work of “dark forces,” he insisted.
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