Not enough people are making fun of Balaji Srinivasan right now

He lost a million dollar bet. He should also lose the presumption that he knows what he's talking about.

Remember the Silicon Valley Bank collapse? It was only a couple months ago. All of Silicon Valley's industry titans panicked in the group chat and managed to drive their favorite regional bank into insolvency.

After the Fed stepped in and made all depositors whole, Balaji Srinivasan (who I’ve written about before) found a whole new thing to be upset about. The bank bailout was just the start of a downward spiral for the global economy. Fiat money would soon be worthless! The U.S. Dollar was about to go into hyperinflation.

Twitter poster James Medlock (not his real name) responded to the panic by offering an old-fashioned one-sided bet:

Then Balaji surprised people by taking the bait.

Balaji insisted that he was so sure that the USD was on the verge of a hyperinflation spiral that he offered to bet $1,000,000 that a single Bitcoin would be worth $1,000,000 within 90 days.

Noah Smith and others quickly pointed out what a phenomenally stupid bet this was for Balaji. If Balaji was wrong, he'd lose a million dollars and look like an idiot. If he was right, then he’d look like a savant, but he also would have foregone the chance to make a $36,000,000 profit by purchasing ~37 bitcoins for ~$26K apiece.

It was such a stone-cold-stupid bet that it prompted speculation that he must have some secret plan no one could see. (Maybe it was a pump and dump! Maybe Balaji was spending $1 million to temporarily boost the price of the asset, giving him a chance to quietly unload a ton of bitcoin at the inflated price!?!)

Well it has been just over 45 days and, whatever Balaji’s plan was, he has already given up. Earlier this week, Balaji admitted defeat and settled the bet with Medlock. Medlock took home a cool half mil, and directed Balaji to donate another half mil to charity.

But Balaji Srinivasan isn’t the type of guy to admit that he’s wrong and rethink his underlying assumptions.

Instead, he has released a video, declaring that this was totally his plan all along, guys! You see, he didn't LOSE a $1M bet. No no no. He "burned a million to tell you they're printing trillions.” He “spent [his] own money to send a provably costly signal that there's something wrong with the economy."

Srinivasan’s superpower comes from speaking with enough confidence, while possessing enough money and connections, that credulous people wonder if he's on to something. (The guy was willing to bet a million dollars in March that the economy was about to run into hyperinflation. ...What does he know that the rest of us don't?)

With this video, he’s attempting a narrative reframe. He didn't lose a million dollars because he was completely about macroeconomics. He spent a million dollars to raise awareness of a critical issue. Fiat money is going to be worthless and everyone is going to move to Bitcoin! We may not know when, but all the signs are there. Someone needs to sound the alarm, and that someone is Balaji!

He did nothing of the sort, of course. Srinivasan didn’t enter into this bet as a public education stunt. This wasn’t some benevolent public service announcement. If he wanted to spend a million dollars raising awareness, there are plenty of more efficient ways to allocate that money.

More importantly, everyone who followed this bet (econ/finance Twitter, crypto/crypto-skeptic Twitter, people who listen to podcasts and read Substacks about the Silicon Valley Bank crisis, etc) is already aware that the Fed has a printing press and knows how to use it.

Hell, the U.S. government is currently staring down a looming debt ceiling crisis! The whole point of the debt ceiling is that the Fed prints trillions of dollars, and Congress has installed an artificial ceiling that has to be periodically raised.

Balaji was confident that he saw the future. Bitcoin wins when and if people lose confidence in fiat currency. He thought Bitcoin’s time had finally arrived, and he tried to use his platform to advance the collapse. His ideas were ridiculous, and demonstrably wrong.

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2023 is shaping up to be a big year for recognizing that the titans of Silicon Valley actually have very little clue how the financial system works. That’s essentially what capsized Silicon Valley Bank: the venture capitalist crowd was long on self-confidence and short on basic-understanding-of-how-things-work.

At some point with characters like Balaji, you have to ask yourself whether he's putting on a show or whether he really is a fool. There are a lot of guys at the heights of Silicon Valley who put on a similar performance. (*cough* David Sacks *coughcough* Jason Calcanis.) They have money, and they speak with such confidence. For years, they’ve been taken them seriously. This ought to be the year when that presumption of omnicompetence withers away.

I suspect people aren’t talking much about Srinivasan’s disastrously failed bet out of an innate instinct to be polite. It’s rude to poke fun at someone who just lost a ton of money. Usually they already feel bad enough.

But Balaji is a showman. He’s treated far too credulously by far too many people. And, if you dig into his writing a bit, you’ll find that he’s something of a crazed ideologue, trying to build legitimacy for a set of socially-corrosive, libertarian/utopian, never-gonna-work-in-reality-but-cause-real-harm idea.

The results are in. Balaji is a fool. He ought to forever be remembered as the icon of this brash, unstable idiocy. He’s too rich to know any better, and too egotistical to ask intelligent questions and learn from the answers. They ought to build statues of the guy. Balaji Srinivasan: world’s dumbest gambler.

Don’t permit him to reframe this story. He made a ludicrous prediction. He makes plenty of them. This one blew up in his face.

He should lose more than just the money here.

He ought to lose the presumption that he has any idea what he’s talking about.