Nobel laureate Paul Krugman compares the crypto craze to the housing bubble

Krugman warns digital tokens might be worthless

Paul Krugman compared the cryptocurrency craze to the mid-2000s housing bubble in a recent New York Times column. He warned the hype around digital coins resembled people’s unwavering faith in the US housing market before it tanked, sparking a global financial crisis.

Only a handful of investors — including Michael Burry of “The Big Short” fame and John Paulson — recognized that house prices had surged to unsustainable heights, and had the audacity and conviction to bet against ostensibly safe, mortgage-backed securities. Krugman, who won the Nobel Prize for economics in 2008, attributed the mass delusion affecting almost everyone else to the “incredulity factor.” Americans just couldn’t believe that house prices were as inflated as naysayers claimed, or comprehend that trillions of dollars of real-estate value might be eradicated, he said.