Gyroscopic Investing

There was a great piece in the satirical news source The Onion a few years ago in which it “reported”? that Fed chairman Ben Bernanke experienced a moment of existential panic during a congressional hearing as he paused, shook his head, and said, “It’s just an illusion . . . Just look at it: meaningless pieces of paper with numbers printed on them. Worthless.”?

Sayeth the Onion headline: “U.S. Economy Grinds to Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion.”?

Which brings us to bitcoin. It is a digital currency, which a certain variety of techno-utopian futurist crowd views as a form of money unencumbered by the shackles of privacy-reducing international anti-money laundering laws and inflation-tolerant central banks. Its value has been extraordinarily volatile over the last several weeks, rising from $20 a couple of months back, to over $250, to around $60 on Friday, with a couple of trading halts in between.

Bitcoin really is a tiny market in the scheme of things, and its recent gyrations mean that the dollar, euro and yen have nothing to fear from the competition. If a currency can lose 75 percent of its buying power in two days, it may not be the best store of value. But it also an important window into the strange and uncomfortable mystery of “What is money,”? which is a harder question to answer than one might think.