Submitted by Taps Coogan on the 19th of May 2019 to The Sounding Line.
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Legendary trader, risk analyst, and author, Nassim Taleb, recently spoke with Yahoo Finance about his concerns over the swelling public debt.
Some excerpts from Nassim Taleb:
“The idea is not so much to predict these (black swan events), as to walk away from them or to know where they can occur. So now there are fragilities in the system, visibly, of course caused by the reaction to the last spate of events. We still have a lot of debt in the economy and that fragilizes, and the debt shifted largely from private to public, which is very bad because private debt, people have skin in the game, so they may be liable. Government debt: civil servants walking away and retiring without any cost for their decision. So, this is why I worry greatly about public debt. And today we have a situation that’s very precarious because we have growth, supposedly, We have very low unemployment, record low unemployment, they say. But what? The deficit is swelling? Something doesn’t work.”
“The problem is centralization causes deficits. You can pretty much take that as a rule. Centralization lowers skin in the game… Whereas when you have decentralized communities, like in Switzerland, people are much more fiscally responsible because those who make decisions live in the community… We have a problem of agency between us and those supposed to represent our interests. They do not represent our interests, so they run deficits… So we need to have some kind of laws banning the government from deficits.”
There is more to the interview, so enjoy it above.
As we noted here, in order to stop the growth in the national debt without raising taxes, the federal government would now have to eliminate all spending other than entitlements, emergency spending, and servicing the national debt. That would mean eliminating every single federal agency and the entire military. In fact, in 2018 just the interest expense on local, state, and federal debt amounted to 93% of all military spending, including off-budget emergency and oversees contingency spending. A record $9 trillion of federal debt will be maturing in the next four years.
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