Nassim Taleb spoke to Bloomberg Television this morning, criticising Ben Bernanke, Alan Greenspan, Fed policy, and the idea that the U.S. is supporting the those that wrecked the economy, rather than the other way around.
- 0:30 It’s good that he (Randall Kroszner ex-Fed governor) moved to the University of Chicago. He is claiming that QE2 is safe and a thing to do for security purposes. It’s like people who say out of the money options are safe. He should stay at the University of Chicago and not get involved in economic life.
- 1:15 “You’re short an out of the money option on hyperinflation.” You may print, print, print and no effect. Just like a ketchup bottle you bang on with nothing coming out. And what can happen, is you keep banging on the ketchup bottle and it all comes out. This is the problem with non-linearity. The economics establishment isn’t understanding that. Why are we listening to Bernanke when he didn’t see the risks before?
- 2:30 Who’s bearing the risk now? People who are retirees. You are printing money to help those people who took out mortgages too big and bankers. You are hurting retirees.
- 3:15 You have this asymmetry, people who caused this crisis are being helped, not those who didn’t.
- 3:40 When I hear Greenspan speak I shutdown, I don’t listen. He thought he was smarter than the economy.
- 5:00 This is not a Fed problem, this is a deficit problem. People want a free lunch. We have a risk problem, you don’t double up on future generations. You cannot solve a risk problem by risky methods.
- 6:00 The Fed’s business should be price stability, unfortunately their business seems to be price instability.
- 6:30 If you see gold tripling in price, or other things tripling, it’s going to transfer to other things.
- 7:00 I feel like I did when I left Lebanon as a child, when the currency went from 3 to a dollar to 1500 to a dollar. I feel as jittery as when I was in Lebanon.
- 8:20 Bernanke is like a tailor trying to fit a human to a suit, rather than the other way around.
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