The Republicans in Congress, along with many Democrats, are rushing ahead with legislation to promote crypto currencies in various ways. Their motivation is not hard to understand; they got hundreds of millions of dollars in campaign contributions from the industry. In terms of economic policy, the effort to promote crypto is taking the country 180 degrees in the wrong direction. The only real question is how bad the results will be.

When we think of finance, we need to think of trucking. Just as we need the trucking industry to transport items to factories and stores, we need the financial sector to make payments and allocate capital. But both finance and trucking are intermediate goods; they don’t directly make us better off, like healthcare or housing.

The fewer resources (labor and capital) we devote to these sectors, the better. If we have fewer people working in these industries, it means that we have more people available to work in sectors that provide the items we value.

Everyone can understand this with trucking. If the size of the trucking sector had quintupled relative to the size of the economy in the last half century, we would probably all be talking about how incredibly inefficient our trucking industry is.

But almost no one complains about the inefficiency of our financial system, even though the share of some components (the securities and commodities trading sector) has quintupled over the last half century. Maybe this is........

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