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THE DAILY ASTORIAN • THURSDAY, FEBRUARY 1, 2018
editor@dailyastorian.com
KARI BORGEN
Publisher
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Founded in 1873
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OUR VIEW
Power council has work cut out for it
E
ven before Ted Ferrioli and
Richard Devlin officially joined
the Northwest Power and
Conservation Council last month, they
were talking by phone several times a
week about their upcoming work.
Two decades in the Oregon
Legislature forged those connections.
Ferrioli, of John Day, was the long-
time Republican Senate leader. Devlin,
of Tualatin, was Senate Democratic
leader and later co-chairman of the
Legislature’s budget committee. Said
Devlin: “We’ve always had a pretty
good working relationship.”
That relationship will be key as
the pair move from the 90-member
Legislature to the eight-member, four-
state council. It comprises two mem-
bers each from Oregon, Washington,
Idaho and Montana.
The council influences billions of
dollars in public and private spending
on power generation, fish protection
and restoration, water use and other
areas.
“The job is an intersection with
every single public policy issue that
affects the quality of life in the upper
Columbia River Basin,” Ferrioli said.
“The future of the sustainability of
communities really depends on our
continued access to low-cost, highly
renewable hydroelectric power —
An overhead crane is used to remove a piece of main unit power generator in 2014 at
McNary Dam on the Columbia River outside of Umatilla.
and increasingly on alternative energy
sources, including wind, geothermal
and solar. If you look at the epicenter
of all those issues, they all intersect in
the upper Columbia River Basin.”
Gov. Kate Brown appointed Ferrioli
and Devlin to succeed Pendleton law-
yer and rancher Henry Lorenzen and
former Secretary of State Bill Bradbury
as Oregon’s representatives.
They have their work cut out for
them.
Congress authorized the coun-
cil in 1980 as an independent agency
to assess the Northwest’s electric-
ity needs — planning both for elec-
tricity and for protection of fish and
wildlife. Congress acted in response
to the multi-billion-dollar fiasco of
the Washington Public Power Supply
System, better known as WPPSS, in
which public officials grossly overes-
timated the region’s future demand for
electricity and the viability of nuclear
power.
Five nuclear plants were started,
one was completed and currently oper-
ates, and WPPSS now is called Energy
Northwest. The region’s ratepayers still
pay the price for those past bad deci-
sions made by good people.
As Lorenzen left the Northwest
Power and Conservation Council on
Jan. 16, he warned that state legisla-
tors and other policymakers once again
were making decisions about renew-
able energy and other resources on the
basis of politics, not the state-of-the-
art methodologies developed by the
council.
“Our challenge, I believe, is to make
certain in the future, to the best we can,
that the methodologies that we have
developed also are taken into consid-
eration by those entities, those per-
sons who are making those decisions,
whether it be the traditional utility
managers or the legislators,” Lorenzen
said.
As veteran legislators with state-
wide perspectives, Ferrioli and Devlin
should be the right people for that task.
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Bubble, bubble, fraud and trouble with bitcoin
R
ecently my barber asked me whether he
should put all his money in bitcoin. And
the truth is that if he’d bought bitcoin,
say, a year ago he’d be feeling pretty good right
now. On the other hand, Dutch speculators who
bought tulip bulbs in 1635 also felt pretty good
for a while, until tulip prices collapsed in early
1637.
So is bitcoin a giant bub-
ble that will end in grief? Yes.
But it’s a bubble wrapped in
techno-mysticism inside a
cocoon of libertarian ideol-
ogy. And there’s something to
PAUL
be learned about the times we
KRUGMAN live in by peeling away that
wrapping.
If you’ve been living in a cave and haven’t
heard of bitcoin, it’s the biggest, best-known
example of a “cryptocurrency” — an asset that
has no physical existence, consisting of nothing
but a digital record stored on computers. What
makes cryptocurrencies different from ordi-
nary bank accounts, which are also nothing but
digital records, is that they don’t reside in the
servers of any particular financial institution.
Instead, a bitcoin’s existence is documented by
records distributed in many places.
And your ownership isn’t verified by
proving (and hence revealing) your identity.
Instead, ownership of a bitcoin is verified by
possession of a secret password, which —
using techniques derived from cryptography,
the art of writing or solving codes — lets you
access that virtual coin without revealing any
information you don’t choose to.
It’s a nifty trick. But what is it good for?
In principle, you can use bitcoin to pay for
things electronically. But you can use debit
cards, PayPal, Venmo, etc. to do that, too —
and bitcoin turns out to be a clunky, slow,
costly means of payment. In fact, even bitcoin
conferences sometimes refuse to accept bit-
coins from attendees. There’s really no rea-
son to use bitcoin in transactions — unless you
don’t want anyone to see either what you’re
buying or what you’re selling, which is why
much actual bitcoin use seems to involve
drugs, sex and other black-market goods.
So bitcoins aren’t really digital cash. What
they are, sort of, is the digital equivalent of
$100 bills.
Like bitcoins, $100 bills aren’t much use
for ordinary transactions: Most shops won’t
accept them. But “Benjamins” are popular
with thieves, drug dealers and tax evaders. And
while most of us can go years without seeing a
$100 bill, there are a lot of those bills out there
— more than a trillion dollars’ worth, account-
ing for 78 percent of the value of U.S. currency
in circulation.
So are bitcoins a superior alternative to
$100 bills, allowing you to make secret trans-
actions without lugging around suitcases full of
cash? Not really, because they lack one crucial
feature: a tether to reality.
Although the modern dollar is a “fiat” cur-
rency, not backed by any other asset, like
gold, its value is ultimately backed by the fact
that the U.S. government will accept it, in
fact demands it, in payment for taxes. Its pur-
chasing power is also stabilized by the Fed-
eral Reserve, which will reduce the outstand-
ing supply of dollars if inflation runs too high,
increase that supply to prevent deflation. And
a $100 bill is, of course, worth 100 of these
broadly stable dollars.
Bitcoin, by contrast, has no intrinsic value
at all. Combine that lack of a tether to reality
with the very limited extent to which bitcoin is
used for anything, and you have an asset whose
price is almost purely speculative, and hence
incredibly volatile. Bitcoins lost about 40 per-
cent of their value over the past six weeks; if
bitcoin were an actual currency, that would
be the equivalent of a roughly 8,000 percent
annual inflation rate.
Oh, and bitcoin’s untethered nature also
makes it highly susceptible to market manipu-
lation. Back in 2013 fraudulent activities by a
single trader appear to have caused a sevenfold
increase in bitcoin’s price. Who’s driving the
price now? Nobody knows. Some observers
think North Korea may be involved.
But what about the fact that those who did
buy bitcoin early have made huge amounts of
money? Well, people who invested with Ber-
nie Madoff also made lots of money, or at least
seemed to, for a long time.
As Robert Shiller, the world’s leading bub-
ble expert, points out, asset bubbles are like
“naturally occurring Ponzi schemes.” Early
investors in a bubble make a lot of money as
new investors are drawn in, and those prof-
its pull in even more people. The process can
go on for years before something — a real-
ity check, or simply exhaustion of the pool of
potential marks — brings the party to a sudden,
painful end.
When it comes to cryptocurrencies there’s
an additional factor: It’s a bubble, but it’s also
something of a cult, whose initiates are given
to paranoid fantasies about evil governments
stealing all their money (as opposed to private
hackers, who have stolen a remarkably high
proportion of extant cryptocurrency tokens).
Journalists who write skeptically about bitcoin
tell me that no other subject generates as much
hate mail.
So no, my barber shouldn’t buy bitcoin.
This will end badly, and the sooner it does, the
better.
Paul Krugman is a syndicated columnist for
the New York Times News Service.