There are no atheists in foxholes and no libertarians in a financial crisis

BitCoin currency, the ultimate example of libertarian finance, has undergone some immense recent volatility with price increasing six-times in a few months and then losing 75% of its value in two-days. The price action was volatile enough for Mt.Gox, one of the largest BitCoin exchange, to suspend trading for a “market cooldown” period of 12-hours. What does a BitCoin enthusiast, and supporter of unfettered free-market, have to say about this?

There is a certain irony to the fact that Bitcoin enthusiasts are currently blaming today’s price action on market manipulation, and wishing that there were some mechanism — like a circuit-breaker on exchanges — to keep prices somewhat stable. Because those measures would require a unilateral decision by a policy authority, and unilateral decisions by policy authorities are exactly what Bitcoins were created to protest.

When the financial system nearly collapsed in 2008, we had tools to stop the economy from coming to a total, unfathomable halt. We had the Fed’s emergency borrowing window. We had TARP. We had depositor guarantees, and we’re putting in place laws to try to keep a similar crisis from happening again.

The Bitcoin economy, on the other hand, can’t do anything to stop a collapse once it’s in motion. And the current panic of Bitcoin enthusiasts proves that while people hate currency manipulation and government intervention in boom times, they’re slightly fonder of it when the sky is falling.