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The total outstanding US mortgage debt has exceeded a staggering $15.8 trillion with no signs of slowing down, according to data sourced from the US Federal Reserve. Could cryptocurrency serve as a hedge?
A chart published by the Economic Research branch of the Federal Reserve Bank of St. Louis shows that the total mortgage debt declined considerably between the years of 2008 and 2013, reflecting years of economic slowdown and home-ownership reluctance. However, this trend reversed in 2014, and ultimately resulted in the amount of debt surpassing 2008 levels.
Mortgage Debt and the Great Recession
Household mortgage debt is widely believed to have played a monumental role in the 2007 stock market crash and subsequent recession. In the early 2000s, the Federal Reserve cut interest rates for banks. This, in turn, prompted financial institutions to lend more money to businesses, individuals, and aspiring homeowners, even those that wouldn’t otherwise qualify due to ‘subprime’ creditworthiness. These unsustainable subprime mortgages eventually led to the downfall of the Lehman Brothers in September 2008, which precipitated the Great Recession.
Economists and analysts have also observed other indicators that suggest a looming recession, sooner rather than later. An inverted yield curve, for one, has been a reliable predictor of recessions in the past. In fact, all nine major recessions since 1950 were preceded by extended periods of a negative or inverted yield curve. In 2019, the yield curve dropped to its lowest level since May 2007, worrying many on Wall Street. With unprecedented political tension between the US and a host of other countries including China and Iran over the past few months, experts believe that economic turmoil is inevitable.
Cryptocurrencies such as Bi
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the total outstanding US mortgage debthas exceeded a staggering fifteen pointeight trillion dollars with no signs ofslowing downaccording to data sourced from the USFederal Reserve could cryptocurrencyserve as a hedge a chart published bythe economic research branch of theFederal Reserve Bank of st. Louis showsthat the total mortgage debt declinedconsiderably between the years of 2008and 2013 reflecting years of economicslowdown and homeownership reluctancehowever this trend reversed in 2014 andultimately resulted in the amount ofdebt surpassing 2008 levels mortgagedebt in the Great Recession householdmortgage debt is widely believed to haveplayed a monumental role in the 2007stock market crash and subsequentrecession in the early 2000s the FederalReserve cut interest rates for banksthis in turn prompted financialinstitutions to lend more money tobusinesses individuals and aspiringhomeowners even those that wouldn’totherwise qualified you to subprimecreditworthiness these unsustainablesubprime mortgages eventually led to thedownfall of the Lehman Brothers inSeptember 2008 which precipitated theGreat Recession economists and analystshave also observed other indicators thatsuggest a looming recession soonerrather than later an inverted yieldcurve for one has been a reliablepredictor of recessions in the past infact all nine major recessions since1950 were preceded by extended periodsof a negative or inverted yield curve in2019 the yield curve dropped to itslowest level since May 2007 worryingmany on Wall Street with unprecedentedpolitical tension between the US and ahost of other countries including Chinaand Iran over the past few monthsexperts believe that economic turmoil isinevitable crypto currencies such asBitcoin meanwhile have enjoyedconsiderable success and even stabilityin the wake of these indicators in mid2019 trade war tensions between the USand China prompted a mass exodus ofChinese investor wealth from traditionalfinancial instruments intocryptocurrencies this led to asignificant uptick in bitcoins priceto surpass $10,000 for the first time inaround a year cryptocurrency a loomingthreat to Fiat most digital currenciesare unaffected by geopolitical eventssince they are decentralized and can beused regardless of borders or governmentjurisdiction as a result they tend totrade at the same price point everywherein the worldin essence Bitcoin has become appealingto many investors for its ability toserve as a store of wealth as well as areserve currency considering that theworld’s first cryptocurrency Bitcoin waslaunched in the immediate aftermath andin response to the 2008 financial crisisit’s not surprising that it’s alsoperceived as the best hedge against suchevents or a fledgling US economy howeverwhile the future looks B for more onthis story visit the news article linkyou