Cryptocurrency VS Fiat – U.S. Mortgage Debt is Rising Again

Household mortgage debt is increasing again after reverting to a decline from 2008 to 2013. In those years, economic slowdown caused the population to tend toward hiring, instead of buying the houses. According to experts, the household mortgage was one of the main incentives in the stock market’s downfall in 2007. In its wake came The Great Recession.

Some experts claim that if you look at the greater picture, you’ll see that in truth, in the root of these events lay the Federal Reserve’s decision. They reduced interest rates for banks in the early 2000s. Financial institutions, in response, lent more money to businesses, homeowners, and other citizens.

The banks often did not take into consideration that some of the lenders weren’t qualified according to “subprime” creditworthiness. In September 2008, the Lehman Brothers fell due to the unsustainable subprime mortgages. Their collapse was one of the triggers of the Great Recession.

While the Fiat was failing, cryptocurrencies skyrocketed and stabilized. In 2019, Bitcoin’s price rose because of the trade war tensions between the U.S. and China. As the situation became more turbulent, Chinese investors began to sink their fortune into cryptocurrencies, rather than traditional financial instruments. Which eventually caused the digital futures market’s rally.

Are We on the Precipice of Another Great Recession?

Analysts noted that an inverted or negative yield curve preceded every recession. There were all in all nine major recessions since 1950. Each of them came after extended periods of an inverted yield curve. That’s why Wall Street experts fear the stock market’s collapse. In 2019, the yield curve dropped to its lowest level ever since 2007. And it seems the upcoming year will be full of economic and political tensions.

Meanwhile, these geopolitical events don’t affect digital currencies as much because they are decentralized. They trade at almost the same price worldwide. That’s what makes cryptocurrencies so attractive for the investors.