Tag Archives: bernanke

NYU’s Taleb Says Debt Raises Risk of `Catastrophe’ | Bloomberg Video


Nov. 14 (Bloomberg) — Nassim Nicholas Taleb, a professor at New York University and author of “The Black Swan” and “Antifragile: Things That Gain From Disorder,” talks about risks created by government debt and Federal Reserve monetary policy. He speaks with John Dawson on Bloomberg Television’s “First Up” on the sidelines of Barclays Asia Forum in Hong Kong. (Source: Bloomberg)

Taleb Says Fed Policymakers `Do Not Understand Risk’

(This video is unavailable. )

The risks stemming from the Federal
Reserve’s efforts to stimulate the economy through bond
purchases are “humongous” and the central bank doesn’t fully
understand the potential effects, said Nassim Taleb, author of
“The Black Swan.”

“These people do not understand risk,” Taleb said in an
interview on Bloomberg Television’s “InsideTrack” program with
Erik Schatzker. He compared U.S. central bank policy makers to
the managers of Long-Term Capital Management LP, the hedge fund
that failed in 1998.

The Fed, led by Chairman Ben S. Bernanke, announced a plan
to buy an additional $600 billion in government debt last week
to support the economy after purchasing $1.7 trillion of assets
from December 2008 through March. Bernanke doesn’t understand
that the plan risks unintended consequences such as
hyperinflation and that it may ultimately backfire and introduce
a new crisis to global markets, Taleb said.

“He is someone who talks about returns without talking
about risk,” Taleb said. “It’s identical to a pilot talking
about speed and not talking about safety. The measure he’s
taking, quantitative easing, may work but should it fail the
risks are humongous.”