Nobel laureate Paul Krugman says crypto has ‘disturbing’ parallels with subprime mortgage meltdown

Nobel Prize-winning economist Paul Krugman has given an ominous warning about the volatile cryptocurrency market, comparing it to the subprime mortgage crisis of the late 2000s.

In an opinion piece for The New York Times on Thursday, Krugman said he’s “seeing uncomfortable parallels” between crypto and the U.S. subprime crash, which brought the whole housing market to its knees and triggered the 2007-2008 global financial crisis.

“There are disturbing echoes of the subprime crash 15 years ago,” Krugman says in the piece.

The subprime crisis was essentially the result of banks making loans out to people of 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 unable to repay their loans, resulting in hefty losses for lenders.

Krugman argues crypto investors are similarly being sold speculative financial products without truly understanding the risks involved. It’s worth noting Krugman is a known bitcoin bear, having previously likened the cryptocurrency to a Ponzi scheme.