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Nobel Laureate Paul Krugman Compares Crypto to Housing Bubble and Subprime Crisis

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Nobel Prize-winning economist Paul Krugman compared the current state of cryptocurrencies to a housing bubble and a subprime mortgage crisis. Noting that the cryptocurrency has no real value, he said: “This is a house built not on sand, but on nothing at all.”

Paul Krugman on Crypto, the Housing Bubble and the Subprime Mortgage Crash

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Nobel laureate Paul Krugman discussed the current state of the cryptocurrency in his opinion. a piece published in The New York Times on Monday.

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Krugman received the Sveriges Riksbank Alfred Nobel Prize in Economic Sciences in 2008 “for his analysis of trading patterns and the location of economic activity,” according to the Nobel Prize website.

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He began by referring to the book and film The Big Short, which tells the story of investors betting on “the assumption that the huge rise in home prices in the years before [2008 global financial] the crisis was a bubble, and that many of the seemingly sophisticated financial instruments that helped inflate housing ended up being worthless junk,” the economist described, adding:

It just seemed implausible that the markets and the conventional wisdom that the markets were okay could be so wrong. But they were.

Moving on to a discussion of the “current state of crypto,” he quoted the Federal Trade Commission (FTC) as saying that crypto is becoming the payment of choice for many scammers. He also mentioned the collapse of the algorithmic stablecoin terrausd (UST), stating that the “stablecoin” was “neither a stablecoin nor a coin.”

Krugman then noted that at its peak in November, the total market value of cryptocurrencies was nearly $3 trillion. He added that early investors have made huge profits, well-known business schools are offering blockchain courses, and several cities are vying to be the most crypto friendly.

The Nobel laureate in economics opined:

It sounds extreme and implausible to suggest that an asset class that has become so big, whose supporters have gained such great political influence, may have no real value – that it is a house built not on sand, but on nothing at all.

“But I remember the housing bubble and the mortgage crisis. And if you ask me, it looks like we’ve gone from a big sale to a big scam,” he concluded.

What do you think of Paul Krugman’s comments? Let us know in the comments below.

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Credit : news.bitcoin.com

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