Under political pressure during the GFC governments were unsurprisingly reluctant to bail out bankers over fears it would be unpopular with voters, but the healthcare crisis brought about by COVID-19 holds no such problems.

On the contrary, the pandemic’s life-or-death crisis gives governments and central bankers every incentive and moral dispensation needed to launch unchecked, out of control, stimulus programs while taking cash rates to virtually zero to prevent another crash. Moreover, the lessons of the GFC to go hard and early have already been learned.


It’s the virtual zero interest rate policy (ZIRP) globally and stimulus money that has sent bitcoin and other cryptocurrencies into bubble-like valuations.

Younger less-sophisticated and less-experienced generations of investors have no incentive to leave cash in the bank given it’s now all but useless return wise as an asset class. So they’ve swapped central banks’ funny money for other useless asset classes rocketing up.

If risk-free returns on cash were closer to 5 or 6 per cent globally there’s little doubt bitcoin would still be a fringe asset widely regarded as worthless by amateurs and professional alike. But its ZIRP-powered ascent means the horse has now bolted – for regulators unprepared and in the dark – much as it did while investment banks piled up purufacating masses of toxic derivative books in the period up to the GFC.

The banks now face new moral hazards in whether to get involved earning fees on bitcoin and other cryptocurrencies in the knowledge it could all come crashing down again.

Questions of fiduciary duty also exist for chief executives tempted to follow provocateurs Elon Musk and Jack Dorsey in investing company funds in digital currencies backed by nothing other than leaps of faith.

There’s no putting the bitcoin genie back in the bottle now, with its conveniently apolitical and decentralised nature affording plenty of room for hand-washing if the ballooning systemic risk brings markets crashing down again.