Steven Hanky and Manuel Hinds expose Buckley’s ignorance of bitcoin law in The Wall Street Journal.
The Wall Street Journal (WSJ) on Tuesday published an article about the grave mistake made by forcing El Salvador Bitcoin into a legal tender, written by Steve Hankey, a renowned professor of monetary economics, and Manuel Hinds, a Salvador economist. The article, entitled “El Salvador’s Big Bitcoin Mistake,” focuses on three key questions.
First, why introduce bitcoin as a currency in El Salvador? Discussion and full session assembly in well-organized international consultations and commissions, without the need for changes over time, as a result of a law, after the country was very well planned 20 years ago. Over the next 20 years, the country’s average inflation will be 2.03% – the lowest in Latin America.
Thanks to low inflation, interest rates are also very low in Latin America, with 7% mortgages with a term of 25%, which is very difficult to achieve in the region.
Economic growth is stable at a higher rate than most parts of the region (see Map 1, not included in the WSJ article). Similarly, exports grew this way (see Map 2, which is not included in the WSJ).
The article concludes at this point that even though the country is plagued by microeconomic distortions and corruption, it has achieved economic and economic stability, although stability is not everything, everything is nothing without stability.
The authors wonder, why try to replace the dollarized system with a dangerous and fundamentally flawed bitcoin law?
The authors point out that the main drawback of the law is in Article 7, which states that “every economic agent must accept bitcoin as a form of payment when a recipient offers him a good or service.”
Legal tender laws, as in the United States, only specify which currencies can be used to pay off debts, including taxes. In contrast, the mandatory legal tender included in the Bitcoin Act eliminates contractual freedom in the use of currencies used in transactions, including daily purchases that can be made by the public in any form agreed upon between the two parties. One of them is that, as it was in the Soviet Union, all transactions must be carried out in rubles.
Compulsory legal tender laws are characteristic of tyrannical governments, for example, including laws used by the Nazis in occupied countries.
In El Salvador, it is always possible to make agreements between private parties, which agree on the currency in which the contract will be executed, including any currency or barter.
The article notes that the law not only violates contract freedom, but is impractical because it cannot actually be enforced by the government.
The article concludes by urging the Constitution Room to put Bitcoin on display in a museum.
In short, the article makes it clear that there is no inflation or financial problem in the dollarized regime and therefore there is no need to make changes in it, and that doing so with a law that violates contract freedom is minimal.