A New York Nobelist Compares Cryptocurrency to Housing Bubble and Subprime Mortgage Crisis

08-Jun-2022 By: Simran Mishra

A New York Nobelist Compares Cryptocurrency to Housing Bubble and Subprime Mortgage Crisis

The current situation of cryptocurrencies has been compared by Nobel Laureate economist Paul Krugman to the housing boom and the subprime mortgage crisis. "It is a house constructed not on sand, but on nothing at all," he remarked, referring to crypto's lack of genuine worth.

In an editorial article published in New York's local newspaper on Monday, Nobel laureate Paul Krugman analyzed the present condition of Cryptocurrency.

According to the sources, Krugman earned the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 2008 for his research on market structure and economic output placement.

He began by referring to The Big Short, a book and film that tells the story of investors betting on "the premise that the massive spike in housing prices in the years leading up to the [2008 global financial] crisis was a bubble, and that many of the ostensibly intricate financial instruments that helped bolster housing would eventually be discovered as worthless junk," as described by the economist. But they were.

He then went on to talk about the present condition of crypto, citing the Federal Trade Commission (FTC) as saying that crypto is becoming the preferred method of payment for many criminals. He also referenced the terraUSD algorithmic stablecoin's collapse, claiming that the "stablecoin" was neither stable nor a coin.

Krugman went on to say that the overall market value of cryptocurrencies was about $3 trillion at their zenith in November. He went on to say that early investors profited handsomely, that prestigious business schools now offer blockchain courses, and that multiple towns are striving to become the most crypto-friendly.

The Nobel Laureate in Economics stated:

To imply that an asset class that has grown so huge, whose proponents have gained so much political clout, may be worthless — that it is a house constructed not on sand, but on nothing at all — seems radical and improbable.

"However, I recall the property boom and the subprime mortgage disaster. And, if you ask me, it appears like we've moved on from the Big Short to the Big Scam," he said.

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