The agenda that the current government has promoted by adopting bitcoin as a legal tender will lead El Salvador to monetary chaos and economic collapse, according to the renowned American economist Steve Hanke.
“Markets tell us that (Nayib) Bukele’s authoritarian tendencies and wild ideas about cryptocurrencies will result in monetary chaos and economic collapse. For the United States, that would mean another wave of immigrants from an unstable and bankrupt state in Central America.” – he said in an article published in the National Review.
El Salvador is ready to implement the Bitcoin Law as of September 7th. The Latin American country made history after Congress approved Bitcoin as legal tender.
The unprecedented decision was met with criticism from organizations such as the IMF, the World Bank and several other rating agencies. The latest to do financial terrorism is Steve Hanke, professor of applied economics at Johns Hopkins University.
He criticized the president of El Salvador for continuing with his plan to implement Bitcoin, claiming that the president is “playing with fire” that can burn El Salvador.
“The World Bank and the IMF have issued warnings, but the president has ignored those red flags and is going ahead with his crazy Bitcoin Act. Bukele is playing with fire and will be burned.”
International regulatory bodies & the financial markets are telling us that El Salvador Pres @nayibbukele‘s authoritarian tendencies & crackpot cryptocurrency ideas (read: the #BTC Law) will result in currency chaos & economic collapse. See my latest @NRO: https://t.co/cqWHLvFyKW
— Steve Hanke (@steve_hanke) August 20, 2021
President of El Salvador retorts
El Salvador’s president, Nayib Bukele, responded to the economist’s tweet and called him a “boomer” (“Tiozão”).
Bukele has faced a lot of criticism from around the world and also from within the country. The opposition party even filed a lawsuit to stop the implementation of the Bitcoin law citing economic imbalance.
Who is this boomer? https://t.co/jeoJZivYAY
— Nayib Bukele 🇸🇻 (@nayibbukele) August 20, 2021
In addition, several demonstrations and protests against the law are taking place in the country, with several groups calling for the repeal of the law that will allow, from September, the use of bitcoin as legal currency.
“Bitcoin facilitates public corruption, drug traffickers’ operations, arms and people trafficking, extortion and tax evasion. It will also cause monetary chaos, reduce people’s wages, pensions and savings.” they say.
Steve Hanke says that as the government moves forward with its proposals, markets back off, and he cited the recent degradation of El Salvador’s sovereign debt by Moody’s, as well as the drop in bond prices, in particular the 2035 bond that fell to its lowest level in nine months after the passage of the Bitcoin Law.
The economist also believes that the decision to adopt bitcoin as the legal currency will make the country be watched by the International Financial Action Group (FATF).