Would Keynes have bought Bitcoin? — classic economics vs. crypto


John Maynard Keynes (1883-1946) was the greatest economist of the twentieth century. Less well known is that he had a parallel career as a successful investor: fairly successful early in his career, and spectacularly successful later on when he changed his strategy.

After the first world war, his income depended more on his investments than his academic work.

In addition to his personal investments, he managed the investments of King’s College, Cambridge, of which he was a member.

Under his stewardship, the value of the King’s College fund increased twelve-fold over a period in which broader markets failed to even double.

It was said Keynes achieved these high returns while only devoting half an hour every morning to the task before he got out of bed.

Keynes quoted approvingly to his friends a line from Volpone, a classic poem:

I glory more in the cunning purchase of my wealth than in the glad possession

He most certainly did seem to more highly value the cleverness with which he made money than the money itself. He saw strategy as an alternative to art for someone without the requisite talent.

The younger Keynes

Keynes as a young man was very confident about his own abilities, and less so about those of the general investing public.

In his early investments, he tried to benefit from market timing, staying just ahead of the crowd.

Compared to the crowd at this time, the young Keynes invested more in equities (shares) than in bonds (debt).

He also speculated on exchange rates and commodities. And he was far more willing than the crowd at the time to invest outside his country, being fond of Australian government bonds.

Among his portfolio were modern artworks. Some were by his friends but – judging by the records he kept of their prices – some also served as investments.

He spent ₤13,000 amassing art that was valued at ₤76 million in 2019.

Paul Cézanne’s 1877 Still-life with apples, bought by Keynes in 1918. Fitzwilliam Museum