Nassim Taleb claims America encountering doom of swelling debt


(MENAFN) Economist Nassim Taleb, renowned for his work on risk and authorship of 'Black Swan,' has sounded a cautionary note on the growing United States national debt, describing it as a "death spiral" that may only be averted by a miraculous intervention. Taleb, speaking at a recent business event, characterized the expanding debt as a "white swan," signaling a highly predictable and more probable risk event compared to the unexpected "black swan" events.

Taleb highlighted the concerning trajectory of the United States debt load, emphasizing the political dynamics that contribute to its escalation. He expressed skepticism about Congress repeatedly extending the debt limit without addressing the underlying issues, creating a scenario where a debt spiral becomes increasingly likely.

"So long as you have Congress keep extending the debt limit and doing deals because they're afraid of the consequences of doing the right thing, that's the political structure of the political system, eventually you're going to have a debt spiral," Taleb warned. He drew parallels between a debt spiral and a death spiral, suggesting that without corrective action, the consequences could be dire for the nation's economic stability.

United States Treasury Secretary Janet Yellen recently acknowledged the alarming level of the national debt, referring to it as a "scary number." As of the end of December, the United States government's federal debt surpassed USD34 trillion, marking a historic high. This translates to approximately USD102,000 for an average American family of three. Notably, in 2023 alone, the national debt grew by more than USD4 trillion.

Taleb, a former trader with a track record of bestselling books on economics, categorizes both the United States deficit and the vulnerabilities in the American economy as white swans. He attributes this vulnerability to globalization, emphasizing how problems in one region can have cascading effects globally.

As Taleb issues this stark warning, the rising national debt continues to be a focal point of economic discussions, with concerns about its sustainability and potential repercussions for the broader financial landscape. The notion of a "death spiral" adds urgency to the need for thoughtful and decisive actions to address the root causes of the growing debt burden.

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