Taleb Says World Is More Fragile Today Than in 2007
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- เผยแพร่เมื่อ 30 ต.ค. 2018
- Oct.31 -- Nassim Nicholas Taleb, scientific advisor at Universa Investments, discusses the factors causing global fragility, hidden liabilities in global markets, and what he sees as safe trades in the current market. He speaks with Bloomberg's Erik Schatzker on "Bloomberg Markets."
Really bothered by all the interruptions from Red Socks Man; when I tune in to hear Black Swan Man.
As the saying goes, Empty vessels......
@@michealbay1290 How does it go?
@@ghostghillie. comment's from 8 months ago
@@michealbay1290 and yet you've arrived! Would you mind telling me how the saying goes?
GhostGhillie ..make the soundest sounds
When will interviewers realize we don't care about what they think? We want to hear experts on their respective subjects, period.
Buy Chainlink
The Onion Knight agreed chainlink and bitcoin!!!
@@Rapterr15 My linkies stay super stinky.
Nassim can express his thoughts better in writing. Still his insight about the financial markets is invaluable
Hi Ramzi, a lot of material for me to work on and explain it better to people! However, I find it extremely important to think about and apply to a portfolio!
Ramzi Batarseh what’s funny is Nassim says he talks vaguely in interviews on purpose. He’s so full of shit. I like straight shooters like Ray Dalio, this guy has a couple of good ideas but he is forgettable
@@Value-Investing Sven... looking forward to your valuable take on this clip on your channel
@@jollybekson1736 I agree with you on the clarity issue, but I must say he has a lot of unique explanations on things, much of it buried within boring details in his books, which he admitted to intentionally making them vague and scattered around in incoherent manner
I'am like that too. I suck face to face explanation but in writing, I can be extremely spot on with my wording.
the way Erik began for a split second I thought Nassim had passed away. Antifragile is the most important book I read this year. As soon as I finished it I knew I was going to have to come back to it again. Long live Nassim!
@Snaggle Toothed where can I find this book?
Don't forget Fooled by Randomness and Black Swan. NN Taleb is a prophet.
@@chrismoore2178 great book. It opened my eyes to how I was fooled by Randomness!
It took a virus named covid to show us how fragile the system is.
virus is sarscov2
many of us already saw it..this is about selling vaccines to suckers like us, who have never seen a study in our lives and shoot up infintes..with no verification.......any weapons of mass destruction found yet...
Nassim is a poor verbal communicator but he writes beautifully. Smart and wise dude. Only 2 ways to fix problem of national debt: high real growth that allows debt repayment or inflate away our debt (dangerous).
Second option sounds like the easiest option, but it will only worsen things
But you can never repay the debt because we live under a debt-based economy. All money is created from nothing and usually has interest attached to it... In order to pay off that interest you need to create more money, as there isn't enough money in the money supply to pay it off. This process goes on until the system collapses (usually due to hyper-inflation where governments - as you rightly say, try to inflate the debt away).
@@antonchigurh4125 That is not how government debt works though.
You have the Central Bank (FED)🏛️
which has two types of customer:
🏦☚[Investment] Banks, insurer and other financial institutions including government pensions etc.
*AND YOUR SPECIAL CUSTOMER*
THE *US Treasury* ☛🦅
*Normal Debt/Credit*
🏛️ The *FED fund rate* the rate a bank pays to temporarily borrow liquidity $%→ 🏦+%💰 →🎩+%💵→🙋♂️+%💳→🙎♂️
By increasing the fund rate the FED sucks circulating money from the economy. By lowering it more money pumps into the system. That's the main tool for regulating *money supply.*
That *is not available* to the US Treasury🦅. If there is a Budget deficit the Treasury issues Bonds so called T-Notes (Treasury Notes) and commissions the FED to sell these securities to it's customers.
A T-Note got a $100 face value and a maturity of 2, 5 or most common10 years (and a few 30 years). In order to sell them you offer interest, the more the Treasury issues the more you will have to offer. Let's say 12% for the 10y T-Note.
The FED hands the Treasury the sales revenue in _Federal Reserve Notes._ Get it?
🏛️F-Note💵⇆🧾T-Note🦅
Anyway. The 🏛️FED got a *target inflation* rate of currently 2%. That means in one year there shall exist 2% more 💵. If the Economy grows 2% that year, you got 2% money inflation meeting 2% more GDP = 0% real inflation. System is stable. If growth turns out higher or lower the FED does some fine adjustment of the *money supply* via the *FED fund rate.* So far clear?
Back to government debt🦅. For many people that still comes as a shock but, if the government runs a deficit. Both *expenditures* and *cutting tax revenue* =more deficit=goverment debt.
Though cutting taxes is often not the issue at large tax breaks, incentives, credit etc. ← those are.
Less revenue or more spending is generally a question of direction of wealth distribution. Neutral or fair is subjective here.
Now the interesting part. The government never pays back debt. The 🏛️FED does. Because it knows that in 10 years, someone will show up with a T-Note and needs to pay out $112. If that money is there or not doesn't matter. God said *“Let there be light” (Fiat lux!)* the FED says *Fiat money!* and cashes out $112.
Of course you could use the image in your head whereby the FED uses tax and fund rate revenue to pay out those Bonds. If it's more than 2% though i prefer the image that the FED does _Fiat money!_ turns around and lits up $100 it just made in interest.
And if the the government would balance it's budget, not even surplus. The inflation would slowly but steady eat away the debt. Fact of the matter is balanced budget with modest growth is better than high growth with increasing deficit, for the simple reason that one cannot outgrow making debt.
The image of debt is actually misleading, because neither does the Government ever pay it back nor could it. The debt is money that is already slated to exist. The only way to reduce it is not creating more debt. The logic here is inverted the government doesn't make money to pay it back. The Government makes money and lits it up. The FED exchanges Bonds for Cash. Always. All the Government can do is stop issuing bonds and lit up every federal reserve note it's tiny hands can grab.
Christopher Robbins well you know the US isn’t going to go down the real growth route, politically expedient protectionist policy’s undermining R&D to drive more efficiency and innovation in pretty much every US industry bar tech, but, even the tech industry is being challenged internationally now, and with the current anti-immigrants rhetoric tech companies are going to find it increasingly difficult to recruit crucial skilled employees.
I think growth will remain high for a long time due to massive investment into electric vehicles and other innovations. But govt and corporations need to start paying down debt.
Nassim var very honest in his demeanor and his admission that there really isn't anything inherently safe to invest at present is frighteningly clear. Real estate is overvalued, stocks will go down at some point, bonds - don't know enough about them to have a solid opinion, crypto's - unclear, though they do have some trust factor from me because of the lack of regulation (read - not tied to debt) and, finally, cash.. My country uses EUR, but Italy might go bancrupt with their 2019 budget and might as well take the eurozone with them. No currency really is safe.
Gold might be an option but storing it is an issue in itself. Storing at a bank costs quite a lot and might be needed to insure (for your sake), buying and storing at an online storage facility has costs based on the current spot price and weight ratio, keeping it at home is dangerous and prone to unnecessary stress.
Wat's wrong with the interviewer ? Can't you let Nassim talk
@Dr Williams it's like a gambler just discover his scary big risk appetite
Actually Nassim has called him his favorite interviewer before, so... why not?
Interviewer doesn't want to spook the market. Dudes a talking head for fake news. Dude was speaking too much truth.
My thoughts exactly, the interviewer is only interested in one version of the story and nothing else
This is extremely important to keep in mind when building a portfolio in this environment!
Sven, ultimately it's very simple, the debt problems have never been resolved... At some point and who knows when, no matter the manipulation, everything will revert to fair value... I like your videos but never forget that the true fundamentals are rotten to the core...
Dr Sven, you should put this video on your channel, basically he's echoing everything you been saying. Even Dr. Taleb is buying gold/miners. I find it hilarious that he called out Fed's ponzi scheme.
what about cryptocurrencies? Do you consider these asset classes reliable and effective for future plans?
Like fixed products in qualified accounts?
"Big Short" coming right up....lol, perhaps in between 2020 - 2021
Wow, great interview. The interviewer kept things moving but allowed the full expression of Taleb's thoughts and Taleb wasn't pugnacious. Scary stuff but that which can't continue won't - hide if you can!
Before I even heard of NNT and his Black Swan, I had this feeling in my bones that the world was more fragile day after day; reading him confirmed my fears. Economic downturns get greater, disasters increase in magnitude, and a war could easily decimate the entire human race; the black swan keeps growing, and in the wrong direction.
What im trying to understand is... are presenters today dumb or are they protecting naratives?
dumb
even if there was a narrative to protect it would still be better to hire some dumbass haha
JediRy the general population is this financially illiterate. If all they are exposed to on finance programs is this they have no hope of attaining independence.
lol seriously! It's like he's poking him with a fork the whole time trying to get him to say the apocalypse is coming.
I think it's a combination of the two, but the exact ratio depends on the journalist.
Protecting narratives. He didn't seem super dumb to me.
How much Leveraging is a good idea? What's the threshold where it goes "bad"? (The last guy who makes a buck off it?)
God I absolutely can't stand this interviewer. So irritating
he has vastly improved since, see his other interviews with Taleb
A wise man will indicate where his knowledge ends;
8:27
"Not prediction; risk detection."
Let the IYI's predict.
Taleb is so good. The risk management theories he describes can be understood by any layman...although they are highly techincal and mathematically built. Summarising such complicated theories onto easy books and talks needs tremendous abilities.
A sign of great intelligence
Gold & Land I guess my grandma was a financial expert :p
Really bothered by the red socks
I was more bothered by the constant beard scratching in the audio.
Moderators are brain-free, they need red socks, I've seen that with an Austrian presenter. He often even has two colors. New world color order.
Seeking attention. Plus he is not a good listener.
thank you GQ
OCD intensifies.
He understands that zero percent interest rates and quantitative easing has a cost that we have not yet paid, but will soon. If you have used these last ten years as an opportunity to deleverage and shore up your balance sheet with safe assets you should be okay. If you used it to borrow and invest in stocks and real estate, you may be in trouble.
Matt McCracken USA has world reserve currency that world doesn't control which is controlled by USA so it'll be fine . They can literally destroy countries and print their way out of problem no country in history had this luxury where the reserve is also not pegged to anything tangible . These libertarian doommongers are morons of highest order
Sagar Dhillon the U.S.A. may be fine if you are referring to politicians/corporations but the general public’s standard of living (purchasing power) is and has been in decline for years. The disparity in net worth cannot continue unabated.
Newlinjim not true , strengthening dollar means increase in purchasing power that's like basics bro
Sagar Dhillon yes but the disparity in who gets those dollars is the issue. If I don’t have the money to bet on the #5 horse and he wins that doesn’t really benefit me now does it.
Newlinjim by
Best part was cut in the end! What about tail risk? How does Inverse (fund he works with Spitznagel) trade options to mitigate tail risks?
It buys put options
Nassim never disappoints.
He disappoints when he starts to try to make predictions about the future
This is always the experience of a descendant of the great phoenicians trying to explain the right way of thinking to a descendant of Western culture. Extreme arrogance is the Hall mark of Western culture. Everybody knows that the person he is talking to knows more then him yet the way he is talking to him you would think that they are somehow in a debate trying to prove that the guy with the Red Sox is smarter. The arrogance on display here is truly astounding and if anybody is wondering how we got into this position well it is demonstrated right in this video. Those with the know how and the understanding to explain reality to the Westerner are interrupted and talked over to the point where no effective communication can occur. While the world grovels 4 but a Fragment of the knowledge of a Phoenician scholar the world still believes in the concept of Western supremacy
It's a shame that the current interest rate is considered and talk about on the episode as "high" interest rates. You still can't keep up with inflation with anything except the banks offer. The stock market is your only other option. It forces many into the stocks and I don't think it's by accident.
"I worry about tails.." - Best abrupt end for something so valuable in these times.
2 Trillion hidden liabilities now with covid19....this guy is the Best!
Highly recommend to read his book. It's hard to read, really, but the book is worth it.
I love this guy. Absolute genius.
is it possible to short the junk bond market without using credit default swaps?
since CDS are only available to institutional investors. what about the retail investor?
Short junk bond etf
How do you inflation hedge your cash as Taleb advises??
TIPS
Buy gold.
"i know you say you're not someone who predicts stuff, but can you please make a prediction?" - this interviewer
This is the truest thing said about our economy today.
If I understood him correctly, we’re not really doomed unless a miracle doesn’t occur to save us....
Three Dogs and a Camper well, it’s not all of us anyway. Until the sun burns out, then it’ll be all of us.
His answer to the question at 10:40 was sobering.
Wye Oak Mobile Device Repair , I guess we’ve been warned.
Sounds like he’s talking about today, but it was three years ago. Very clear.
any idea on WHY the red socks , just WHY???
This interviewer is really irritating. Talks far too much.
Nah. He's trying to help Taleb not to get entangled with English. He's not native speaker and obviously can't perfectly articulate what he's trying to say.
clsman89 Taleb has no trouble speaking, he has trouble spoon feeding someone who doesn’t grasp basic economics.
@@Newlinjim True!
@@clansman89 This is what this guy does. I have seen the exact same thing with American guests such as Ray Dalio.
agreed.
what happened to the sound?
House of cards
What's going to happen for P2P platform? Any advice ?
When countries buy debt bonds of other countries (lend to them) do they also borrow the money to do this too?
I think they buy the bonds of country A with the foreign currency (country A's currency) they earned exporting
marouane faris yes, ‘paid in kind’. This is what kills emerging markets when a downturn in the cycle happens. As their export GDP shrinks their currency globally loses value. This is a spiral when loan payments come due. Of course if you do your homework it’s a profitable short.
Granted Taleb may not communicate in the way expect someone too, but it's not that he's unclear.... he's very clear spelling out that we can't compare the next crash to the last because we've exhausted all levers. And the way it'll play will depend on which one of the crisis setups that we have running... stock market, real estate, debt/bond, etc.
This interviewer is horrible. It's his job to adjust and interview the greatest minds. That responsibility lies upon him otherwise move over so someone else can extract what we need to know from the great minds.
\\/\// people want to be told what to do. They don’t want to understand anything, just tell me what to do. I don’t know if it makes them feel better about themselves if they lose money because somebody else told them to do something that fails or what. I think it’s because they run on emotion and applying logic /reason is a foreign concept to them. They will never attain the ability to connect the dots and are in fact unaware of the existence of multiple dots.
Most people good at maths etc do not communicate always well in a verbal flow. They express better written.
Interesting to be watching this April 2020. Oh dear!
Avidcomp specially after the 4000% return from Universa investment in March
Nassim is probably right, to get out of this economic situation we need growth without more debt and smooth inflation (to pay that current debt). But this is the best scenario, for small investor we need to be diversify (hedged), save some money a side and be psychologically prepared when the next crisis comes.
The reason they are (FED) raising rates to is cover their backs/to give the impression that all is well.
Is levered the right word?
The USA needs to borrow 1.5 trillion$ at basically 0 interest rate meanwhile external buyers namely China and oil producers as taleb says which were the buyers are under different ecnomic crisises. So no money to spare. Riddle me this.....
WHY IS THE INTERVIEWER TALKING LIKE THIS?
Erik: is there any place you can put your money that is safe?
Nassim: uhhhhh....
😂
Lee Murray he said land and gold. Right after saying real estate will go down
@@MetalBum he meant "housing" actually
@@rayancharafeddine4982 got it
Love listening to this guy
I am tired of everybody talking about trillions of $s of government debt. Why nobody says what percentage of that is of the total GDP. According to wikipedia:At the end of the 2nd quarter of 2017, United States public debt-to-GDP ratio was at 103.8%. Yes, 104% is high, but nowhere near problematic, especially in low interest environment.
Haha how odd this afternoon i was looking at a copy of Bloomberg Markets May 2008 edition deciding on whether to consign it to the bin...
"All is as it was before, many such journeys are possible." A few of us keep aware of what happened before and realize it's happening again like before the Great Depression with the mixing of banks and investment firms.
Prophetic on every single point.
Nassim Taleb - I enjoy his books, so I propose he should eat less gourmet food, and write more books.
Nassim has a risk approach that works. But most don't understand it.
Spot on Nassim.
Silver! Stock up now. You will be so happy next year and 2020!
Only way to protect yourself is by diversification. Get a bit of everything... bonds, stocks, crypto, real estate etc.
Great Guy, I woul like to know what he thinks
about Brazil
Ele segue Bolsonaro no twitter
We're in more debt today but it's in different places. Really? So having debt in different places makes it okay?
The idea that this discussion makes pop into my head is:
"What happens when the Lender Of Last Resort and/or The Central Trading Currency and/or The Guarantor Of Public Debt attain a "Junk Bond" rating or status? Inflation/Monetization? Extended Stagflation? Global Depression?
What happens beyond governmental activities?
MartinUToob Venezuela .
Actually, after mulling it over, this sort of thing already happened in the U.S. in the 70s and early 80s. Also, with inflation and interest rates so low by historical standards, I would opine that debt financing would be preferred to taxes, which would pull money out of the private sector. I mean at these interest rates, debt is a steal!
However, the whole matter still begs the question of how much debt leveraging is ok. The ratio of National Debt to GDP is in the ball park of WWII. So it's not like it's never been done before. Finally, in Corporate and Private Finance, debt leveraging increases the rate of return and I assume the same can be said to be true in the Public Sector. However, when the economy turns down losses are amplified too, so such an approach has it's downside risk as well.
Still, "How Much Debt Is OK?"
A final note: back in 2008-9, many notable economists were recommending that the deficit be increased to $2 trillion to jump start the economy instead of the then proposed $1 trillion. I think Obama settled on something like $800 billion, being financially conservative. So, with an economy that currently generates something around $20 trillion a year, $1 or 2 trillion isn't really such a big deal, although it would be difficult to hide in...say...a closet.
But anyway,...yeah....good point.
IMF special drawing rights
God bless this man
This anchor should be the guest. He's talking more and dictating things. They should switch the seats
In the 1970's, America stopped investing in themselves (social services/schools) and the country (infrastructure). Traditional industrial investment & growth effectively stopped. We turned to services, we turned to outsourcing, the overall trend has been to lower taxes. Money has been drained out of the population to be hoarded by the very few. Companies have borrowed big to buy back shares because company officers want to maximize the value of their shares (and they are selling, not buying). Government has been forced to borrow to provide a de facto universal income because otherwise the economy would collapse.
In a true capitalist economy the cost of borrowing should be high reflecting the value of money. Debt allows new factories to be built and economy expand. Zero cost of borrowing tells us that there is no healthy economy because cash hoarding has stripped the country bare.
Taleb is right. Nothing has been fixed since 2008, just more debt to kick the can down the road.
I would love to meet this man Nasim in person for a good dinner!
Well that was prescient from 2022 perspective.
Buy tangible assets like gold
I'm with you on gold and silver but I'm working to start a business with partners. I'm trying to design it to thrive regardless of a crash. We know it's coming so why not provide something people who are going to not have pensions, IRAs, or 401(k) that are worth anything?
There's no guarantee that gold or silver will suddenly make us rich. They could even go down under certain circumstances.
@@philosophyze The way I understand Taleb doesn't have gold to get rich but to have a backup that is not subject to currency inflation
we do have inflation! we have asset price inflation - we need price inflation of consumer goods and services for debt to be eroded
I'm not a huge fan of Erik's interview style. But Nassim is perfectly on the money (no pun intended).
Nice red socks Eric, are they Bloomberg TV Halloween issue ?:-))
NNT we love you!!
we should listen this Man...
The heading says it all. More debt, more derivative exposure, more bubbles =catastrophe
Red socks man has a great guest, he should let Taleb speak more.
Could of had a great conversation. Instead it became a “what’s gonna happen?”
after covid pandemic - he was so right! And it did hit real estate reits tanked alot.
That's funny because I can understand him really well better than regular people you speak to everyday
I fucking love listening to Nassim Taleb.
LOL BLACK SWAN MAN, you guys are awesome.
Very True Considering the whole Corona Virus Situation
4:52 merval. He had to scramble last year to find out what happened. Maybe does not have icahn on speed dial.
The interviewer needs to learn how to conduct an interview.. Allow the conversation to build before you can ask questions .... Seriously!!!
Here we are today!
Taleb is soooo much better in print. Oral presentations for him are like Chernobyl. Total disasters!
2.53 quote the exact number
Interviewer is astute as well
This is the most Ignorant Rude Interviewer I have seen in a long time.. And he's like this with Everyone!..
Look at it from the interviewers position. Nassim takes forever to express himself and he doesnt do it coherently. The interviewer doesnt have 3 hours, as all TV is run by the clock. So he is reining in Nassim's thoughts for the audience! Interviewer is assisting Nassim and doing a great job
Erik should take Econ 101 before he interviews Taleb
why can't the financial system use bitcoin as the monetary gold standard, simple solution to solve complex problems.
Why not just short stocks then?
no further west Better call options spreads
@@DG-nj1hf can you explain how those work
@@nofurtherwest3474 www.google.com/search?source=hp&ei=pNUgXN68OvKgrgTOqZOoBA&q=call+credit+spread&oq=call+cre&gs_l=psy-ab.1.5.0i203l10.1098.4435..6727...0.0..0.760.2193.5j1j4-1j1j1......0....1..gws-wiz.....0..0j35i39j0i131.RGahkV6wo2w
Smart Man. There is no free lunch, Econ 101
interestingly, that was the exact time when bond yields peaked.
Before you read the below, I want you to know that I lay out the below logic in the hope for considered discussion and open exploration. Nothing I say is deterministic. I am simply trying to understand macro-trends. I'd be very interested to hear what you have to say about this logic:
Toxic debt from corporate and housing sector in 2008 off-loaded (in effect mitigated) by the Federal Reserve. Today, U.S. operating from place of early stages in explosive debt cycle. I.e. the so-called 'lender of last resort' (FED) from the 2008 crisis is itself heavily indebted; therefore can not act in same way. Those who leveraged in times of low IR (corporates + commercial/investment banks) base their success on GDP/earnings. In order to 'maintain' GDP, either need to increase inflation (dangerous) or increase GDP through non-debt means. AI and ML, while still in procurement, may offer this efficiency advantage - however, U.S. not ready to implement. A country that is ready to implement and also has much less sovereign debt is China.
Is this the case where a rising power, through action via trade war, can trigger the meltdown of the U.S. economic system and position itself as firm leader of the economic world through it's direct deployment of automated and AI controlled systems? I wonder, therefore, what this would look like going forwards with a world economy run by a party that sees it's constituents much more like digits than humans. Thoughts?
A further question: debt, when forecasted incorrectly and with bad intent, can be likened to a pyramid scheme. Is this particular end to the debt cycle (as Ray Dalio puts it) the end of an era for U.S. global dominance? Interesting times for sure.
Alex Staniforth people seem to forget that a country is nothing more than the individual people within its borders. AI,productivity gains through technology, etc,etc. benefit the few in an ever increasing global population. This means fewer and fewer people have the means to sustain the ever sought after GDP. We’ve already experienced the mini effects of these globalized economic policy’s. Look what happened to the corps that offshore production compared to the purchasing power of the people living in the country those corps were chartered. It had an inverse effect and once it becomes the norm it has an inverse effect on that nations purchasing power as a whole. To boost coffers they then refuse to repatriate and end up being granted a lower tax rate if they will, pretty please. You can’t live within your budget if bread is $2 one week and $15 the next. This is the long term effect and the reason our youth are embracing socialism so we see as we go round and round what history plainly shows. The people do matter at some point. Look at Venezuela’s recent political history.
Crypto Currencies own their existence to this kind of debt.
I wish Bloomberg would or TH-cam would date their videos.
Oct 31, 2018, son
The date is in the description
Global debt has outpaced GDP growth for the last 10 years. Something's got to give at some point. What we are seeing now is a global economic contraction and deflation in the form of global negative interest rates.
Basic Austrian economic theory (i.e. Mises) has been saying this for decades....
The Federal Government cannot have a solvency debt crisis...CANNOT ! Taleb's point about Private Debt is sound but the Sovereign, the US Government, in no way and no how can it 'run out of money to pay its bills'. The US Dollar is also the reserve currency of the World and at this time there's no alternative country on the horizon that can play that role. There's less need to worry than Taleb is suggesting. The system will probably shift away at some point from reliance on the US dollar but not in the near future.
“Red Socks, you’re out of your element!”
- Walter Sobchak
Id like to hear this guy speak just once and be able to finish a sentence
Crises of 2007 as you've stated is not a crises of debt.
Its liquidity trap