Subject: Re: Munger, crypto fights back
A couple of things.

First: a) I strongly admire Mr Munger; b) he's generally right ("Think about it for a minute and you'll agree with me, because you're smart and I'm right" - great quote); c) he is, I think, entirely correct wrt cryptocurrencies.

-------------------------

With that stipulated, his editorial last week in the WSJ cherry-picks history:

"....early 1700s, England reacted to a horrible depression that followed the blow up of a promotional plan to get vast profits by using slow-moving sailing ships to trade with very poor people halfway around the world.

What the English Parliament did in its anguish when this crazy promotion blew up, was direct and simple: It banned all public trading in new common stocks and kept this ban in place for about 100 years. And, in that 100 years, England made by far the biggest national contribution to the march of civilization as it led strongly in both the Enlightenment and the Industrial Revolution"

All of that is literally true as regards the South Sea Company (SSC).

But, the British East India Company (EIC) was the prototypical "plan to get vast profits by using slow-moving sailing ships to trade with very poor people halfway around the world." And, a generation before the South Sea Bubble (1720) the EIC -- trading with India -- "[t]he prosperity that the officers of the company enjoyed allowed them to return to Britain and establish sprawling estates and businesses, and to obtain political power. The company developed a lobby in the English parliament. Under pressure from ambitious tradesmen and former associates of the company (pejoratively termed Interlopers by the company), who wanted to establish private trading firms in India..."(Wikipedia)

The point being: yes, SSC shares offered to the public in 1718 were a sucker bet, a bubble. But, the South Sea Company was modeled on a currently-functioning highly successful public-private partnership wherein only the ruling elite took part (1), and who had made enormous fortunes...all by using slow ships to "trade" with poor people halfway around the world.

AND that resultant national wealth was a nontrivial factor in England proceeding to make "by far the biggest national contribution to the march of civilization" during the Industrial Revolution.

There was nothing intrinsically wrong with South Sea Company business model; it was not a lot different on the surface than the EIC. It was the hucksterism that ruined so many of the aspiring middle class (2).

Mr Munger certainly knows this. I'm a little disappointed in the disingenuousness of his editorial (3).

- sutton
(1): excepting the purely clerical and/or bloodshed parts. For those, the hoi polloi were welcomed with open arms.
(2): among many others, e.g. a certain alchemist and occultist named I Newton.
(3): OK, I'll say it. A much better thesis for his editorial: The EIC was to the SSC as nationally-backed and regulated fiat monies are to cryptocurrencies