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Project Syndicate: Does bitcoin threaten economic stability?

HONG KONG (Project Syndicate) — Financial markets today are thriving. The Dow Jones Industrial Average , the S&P 500 SPX, +0.51% , and the Nasdaq Composite index COMP, +0.90% have all reached record highs lately, with emerging-economy financial markets also performing strongly, as investors search for stability amid widespread uncertainty.

But, because this performance is not based on market fundamentals, it is unsustainable — and very risky.

According to Mohamed El-Erian, the lost lesson of the 2007 financial crisis is that current economic-growth models are “overly reliant on liquidity and leverage — from private financial institutions, and then from central banks.

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