- The President of the Federal Reserve Bank of Minneapolis has likened Bitcoin to Beanie Babies, claiming both are pure speculation.
- In the past, he has called BTC a giant garbage dumpster and claimed it is only for toy collectors and not a viable currency.
The Federal Reserve Bank has never quite liked Bitcoin. Fed executives have in the past criticized the top cryptocurrency for its price volatility, energy consumption, exchange hacks and more. The latest to dismiss Bitcoin is the President of the Federal Reserve Bank of Minneapolis Neel Kashkari.
Kashkari was speaking in a virtual town hall event organized by the Montana Bureau of Business and Economic Research. When asked about his thoughts on Bitcoin, he dismissed it as a toy whose only purpose is speculation, as Wall Street Journal’s Michael S. Derby reported:
A few years ago, people were speculating on Beanie Babies. Now they’re speculating on Bitcoin.
Fed's Kashkari: A few years ago, "people were speculating on Beanie Babies. Now they’re speculating on bitcoin."
— Michael S. Derby (@michaelsderby) February 1, 2021
Kashkari was referring to the unprecedented craze in the late 1990s when Beanie Babies became a multibillion-dollar industry. Having gone for less than $3 prior, they shot up dramatically to thousands of dollars between 1997 and 1999. But just as it had started, the Beanie Babies craze died down overnight.
In making the comparison, Kashkari is relying on the oldest criticism of Bitcoin from the mainstream financial industry. Many have in the past compared Bitcoin to the Tulip bubble in the 1630s. One of the top critics has been Jamie Dimon, the CEO of America’s largest bank JP Morgan. In December 2019, he stated, “It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed.”
However, a few months later, he admitted that he regretted making the remarks. JP Morgan has also become quite bullish on Bitcoin in recent months, touting it as a better alternative to gold as a store of value.
A history of Bitcoin criticism
Kashkari’s comments at a time when Bitcoin is getting great adoption appear misguided. Terming Bitcoin a purely speculative asset, especially, goes against recent trends in which institutional investors are purchasing the cryptocurrency in hordes as a hedge against dollar deflation. BTC’s use in funds transfers across borders and for financial inclusivity in developing countries further waters down his remarks.
However, Kashkari is well known for his fierce criticism of Bitcoin. A year ago, when asked whether he would prefer his 1-year-old daughter to have a Bitcoin or a low-yielding Treasury bond, he stated:
The bitcoin and cryptocurrency, it’s basically, it’s like a giant garbage dumpster. The reason that the dollar has value is because the U.S. government has a legal monopoly on producing the dollar. […] Maybe five years from now, or 10 years from now, or 20 years from now, something useful will emerge from this but so far all that’s emerging is burning garbage.
In 2018, he called Bitcoin a toy.
If you live in any modern advanced economy, I would stick with the dollar, I would stick with the yen and leave bitcoin for the, you know, toy collectors.
He has also criticized Bitcoin’s power consumption in the past.
And the bitcoin algorithm drives ever higher power consumption, rather than increased efficiency.
— Neel Kashkari (@neelkashkari) March 1, 2018
Otherwise, Kashkari is infamous in the crypto community for an interview with “60 minutes.” He said that the Federal Reserve has “infinite cash,” whereupon the “brrrr” meme gained great popularity in the crypto scene.