Nobel laureate in economics Paul Korgman, said that cryptocurrencies are disturbingly similar to the subprime mortgage crisis. In an opinion piece he wrote for the New York Times, he noted that he “sees uncomfortable parallels” between crypto and the US subprime crash, a crisis that put the entire real estate market on its feet, and was the prelude to the 2007-2008 global financial crisis. .
The subprime crisis was the result of bank loans to people at higher risk, at a time when interest rates were low and house prices were soaring. Once the market became saturated, homeowners found themselves in negative equity with no ability to repay their loans, resulting in heavy losses to lenders.
Krugman argues that crypto investors behave similarly, they invest in speculative financial products without really understanding the risks involved. It should be noted that Krugman is a bearer in everything related to Bitcoin
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Not now, in the past he has compared the cryptocurrency to the Ponzi scheme.
“Many borrowers did not understand why they were coming in,” he wrote in the article. “And cryptocurrencies, with their huge price fluctuations, are as risky as assets can be.”
The Nobel laureate is not convinced that cryptocurrencies pose a systemic risk, however, he wrote that “the numbers are not large enough to do so”. The entire crypto market is worth about $ 1.7 trillion, according to CoinGecko.
Bitcoin and other digital currencies have fallen sharply in recent weeks. Bitcoin stands at $ 36,948, the world’s leading currency cut close to half relative to its peak last November. At its peak, the entire crypto market was worth a combined $ 3 trillion.
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