Economist Paul Krugman analyzes the 'bizarre alliance between Bitcoin and MAGA'

In MAGA World, it isn’t uncommon to find far-right Republicans trumpeting their love of Bitcoin and other cryptocurrencies. Sen. Ted Cruz, in October 2021, declared that he wanted to “see Texas become the center of the universe for Bitcoin and crypto” — and former Ohio State Treasurer Josh Mandel tweeted that Ohio “must be a pro-God, pro-family, pro-Bitcoin state.” Liberal economist and New York Times opinion writer Paul Krugman analyzes the MAGA far right’s “bizarre” obsession with Bitcoin in his January 10 column, offering some reasons for the obsession.

Krugman writes, “There has long been a strong connection between support for Bitcoin and right-wing extremism — like the traditional association between conservatism and an obsession with gold, only more so…. It does seem important to understand the cultish aspects of the cryptocurrency movement.”

Krugman’s column isn’t critical of Bitcoin itself, but he finds MAGA Republicans’ obsession with it strange — including Mandel’s goofy willingness to equate Bitcoin with “God and country.”

“I still sometimes encounter people who say that we live in a digital age, so we should be using digital money,” Krugman explains. “But we already do! Like many people, I pay for most things by clicking a mouse, tapping my debit card or pressing a button on my phone. I used to keep singles in my wallet to buy fruit and vegetables from New York’s ubiquitous sidewalk stands, but these days, even they often accept Venmo.”

Krugman continues, “All of these payments, however, depend on trusting a third party: People accept debit cards, Apple Pay, Venmo and so on because they’re linked to a bank account. Bitcoin’s whole purpose, as laid out in its original 2008 white paper, was to remove the need for that kind of trust: It would validate payments using methods related to cryptography — coded communication. The goal was to create a peer-to-peer system of payments independent of financial institutions.”

The economist adds that although Bitcoin has been available since January 2009, it hasn’t caught on with the general public the way its strongest proponents would like.

“The truth is that although Bitcoin has been around a long time by internet standards — 13 years! — it and other cryptocurrencies have made hardly any inroads into the traditional role of money, as a medium of exchange used to purchase goods and services,” Krugman notes. “Hard numbers are scarce, but it looks as if a vast majority of cryptocurrency transactions involve market speculation rather than the ordinary business of life. Yet Bitcoin and its rivals now have a combined market valuation of more than $1 trillion.”

Krugman adds, “What do investors think they’re buying? One answer is protection against the perennial fear that governments will inflate away all your wealth.”

The Times columnist argues that the MAGA movement’s obsession with Bitcoin fits in with its conspiracy mindset.

Krugman writes, “What’s with the deepening alliance between Bitcoin and MAGA? The answer, I’d argue, is that Bitcoin was supposed to create a monetary system that functions without trust — and the modern right is all about fostering distrust. COVID is a hoax; the election was stolen; California’s forest fires had nothing to do with climate change, and they were started by Rothschild-controlled space lasers. In this context, it’s perfectly natural for MAGAesque politicians to demand an end to a monetary system that runs through banks — we know who controls them, right? — and rests on a currency that’s managed by government-appointed officials.”

Krugman adds, “There’s no evidence of widespread monetary abuse, but that doesn’t matter on the extreme right. The point, then, is that while there are real economic issues associated with cryptocurrencies, their rise has a lot to do with the broader political madness that has American democracy on the brink.”