All Financial Wisdom
Stiglitz, Krugman and Shiller: Nobel Economists who say that Bitcoin is a Bubble
After the rise to 20,000 dollars for Bitcoin and its subsequent fall (although it has slowed down), the debate is even more intense. And who better than to opine on whether Bitcoin is a bubble than Nobel Prize winners. Of course, not even a Nobel Prize in Economics can be considered infallible.
Krugman, the Nobel Prize in Economics and popularizer
Paul Krugman is perhaps the most famous Nobel Prize winner in Economics of all time, as he has a column in the New York Times and his articles are published in many newspapers around the world. His Nobel Prize is very solid, his works on the advantage of international trade are widely recognized, but his detractors always say that he usually gets involved in matters that do not concern him, and his left profile, always against the Republican Party, has made him win many enemies.
In 2013, he published a column saying that Bitcoin was evil, since all he wanted was to destabilize the global financial system. In 2014, he went further saying that Bitcoin was a scam.
Recently, in an interview, Krugman has indicated that he believes Bitcoin is a bubble. Its price can not be determined and is the result of a libertarian dream that believes that today’s society is going to collapse. It also uses the argument that many people are buying Bitcoin without understanding it well and that it is really a Ponzi scheme, where everyone thinks that they will win.
Joseph Stiglitz, always controversial
Joseph Stiglitz is also a very famous Nobel Prize in Economics, perhaps because his work suggests that the asymmetry of market information should be resolved with more State intervention. He is, therefore, the theoretical father of modern socialism.
Rewgarding Bitcoin, his recent statements are quite descriptive: he believes that Bitcoin should be banned. According to him, the reason that there is Bitcoin is to have a currency outside the control of the governments, and the objective is clear: money laundering and tax evasion.
For Stiglitz, if Bitcoin wants to be legal, it would have to be required the same transparency as the other financial transactions: nothing of anonymity and an explained purpose of the same. But he argues that if this happened it would lose its usefulness and collapse, since it would not offer anything that the global financial system does not offer.
Robert J. Shiller, an expert in asset valuation
A bit less less controversial is Robert J. Shiller, winner of a Nobel Prize in Economics for his work in the valuation of assets. In fact he is quite a prolific literary. His book Irrational Exuberance explained the dot-com bubble and in the next edition he predicted the US housing bubble. Therefore, he is a great expert in correctly assessing assets.
In this case Shiller is not as drastic and controversial with Bitcoin as the other two laureates. He does not know how far the price of Bitcoin will go, but he assures us that he is living in the 1920s, and that he will arrive in 1929 (in clear reference to the crack of the New York Stock Exchange). However, he also predicts that when it collapses, its value will not be zero – it will simply be lower.
Other economists pointing to the Bitcoin bubble
Not all economists get to have the Nobel Prize in Economics, but some also quite influential point in the same direction as the previous ones. For example, Kenneth Rogoff, professor of economics at Harvard University, believes that governments should be tougher against the use of Bitcoin.
Paul Donovan, chief economist at UBS Bank, also recently indicated that Bitcoin is a bubble, making a reference to the tulip bubble in the Netherlands of 1637. Also Adam Ozimek, senior economist at Moody’s, has recently indicated that the value of Bitcoin. It will not be null, but we are living a bubble.
In short, we have the vast majority of economists indicating that what you are seeing with Bitcoin is a bubble. But the truth is that the defenses of its value also have their power: if we are facing a disruption, the establishment is not capable of predicting it, as history has continually shown us.