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Former Federal Reserve Chairman Alan Greenspan has said that cryptocurrencies are “not a good investment because they rely too much on the idiot theory.” However, he pointed out that the collapse of the cryptocurrency exchange FTX was “purely a scam” rather than a result of features inherent in cryptocurrencies. I don’t think
Alan Greenspan on Cryptocurrencies, FTX, and the US Economy
Former Federal Reserve Board member Alan Greenspan shared his views on cryptocurrencies, the collapsed cryptocurrency exchange FTX, and the US economy in a year-end Q&A published this week by Advisors Capital Management.
Greenspan served five terms as Chairman of the Federal Reserve Board from 1987 to 2006. He was appointed chairman by four US presidents. He joined Advisors Capital Management in September 2016 as an economic advisor to an asset management firm.
The former Fed chair was asked to comment on the FTX meltdown and whether he expects contagion from it. [non-fungible token] Greenspan responded, citing “information that has come to light so far.”
FTX’s bankruptcy was purely a scam, not the result of lax risk management, inadequate accounting procedures, or features inherent in cryptocurrencies.
“Fortunately, FTX and companies like them have stepped up marketing of their products in recent years, but the lack of a noticeable broad market response to FTX means they are still in the hands of relatively few investors. It suggests that there is a significant focus on .
“Furthermore, the differences observed in the aftermath of the bursting of the tech bubble and the bursting of the housing bubble clearly show that the credit-backed asset bubble will create far more contagion when it finally deflates. ‘ he remarked. “Right now, we don’t expect the contagion to spread much beyond this particular asset class as the leverage specific to the cryptocurrency/NFT space does not appear to be very high.”
The former head of the Federal Reserve Board added:
When it comes to the wider world of cryptocurrencies, this asset class relies too heavily on the “major theory” to be a good investment.
Greenspan also shared his views on the US economy and the Federal Reserve’s fight against inflation. Commenting on whether a recession is necessary to keep inflation in check, as some economists have suggested, he said:
A recession appears to be the most likely outcome at this point.
However, he does not believe that a “substantial Fed reversal, at least enough to avoid a mild recession” is justified. needs to ease further because it is not temporary, so it may settle on the inflation front for a while, but I think it is too late,” Greenspan concluded.
Do you agree with former Fed Chairman Alan Greenspan on cryptocurrencies and the US economy? Let us know in the comments section below.
image credit: Shutterstock, Pixabay, Wiki Commons
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