Nassim Taleb making case for deflation.

In this July 2, 2009 interview on CNBC Nassim Taleb, the author of "Black Swan" book is essentially calling for the government and the privately owned Federal Reserve to stop trying to prop up the deleveraging and let asset prices return to normal valuations.

http://www.cnbc.com/id/31706523

The financial system is crashing and action must be taken by the US government to convert debt into equity to produce a more stable environment, Nassim Taleb, author of "The Black Swan," told CNBC Thursday.


"You may have green shoots, whatever you want to call them, you may have temporary relief, but you are still in a world that's breaking," Taleb said on "Squawk Box."

Anything that's fragile like the financial system will eventually crash, he said.

"We're in the middle of a crash," Taleb said. "So if I'm going to forecast something, it is that it's going to get worse, not better."

The government needs to deleverage debt and not try stimulus packages that will inflate assets, he said.

"What makes me very pessimistic in not seeing any leadership or awareness on parts of government on what has to be done, which is deleverage $40-to-$70 trillion," Taleb said.


"The monkey on our back is debt," he added.

As an example, Taleb said banks should not be sending demands for larger and larger sums from homeowner in arrears on their mortgage. Instead the bank should offer to lower the monthly payments in return for part-ownership of the property.

"People would be able to start from scratch on a healthy basis. You don't want to wait for foreclosure," he said.

Category:

News & Politics

Tags:

• deflation
• cpi
• inflaton
• hyperinflation
• deleveraging
• debt
• credit
• great
• depression
• bubble
• realestate
• real-estate
• real
• estate

[nokia3210fuck]

@boogerie

Just look at countries who suffer the most.

Either their economy is based on banking like Great Britain or Ireland for example, or they don't produce much goods, or the goods they produce are bad so that nobody wants to buy them like American cars for example. America used to produce great cars. Now nobody wants them because they are not competitive anymore.

And America produces less and less.

More and more is produced China which creates jobs in China but not in the US.

[nokia3210fuck]

@boogerie

1/2

As for Germany I can tell you that because I live there.

Germany is the second largest export nation in the world.

We produce goods that are asked for in the international markets.

Cars, technology, machines.

The mp3 audio format for example is an invention of us.

We are actually producing goods.

And these goods are high technology goods which can't be produced in China so these goods ae produced in Germany and this creates jobs.

[nokia3210fuck]

You need to turn up the volume.

I can barely hear anything.

[fntime]

@edwardwills That is not very well thought out. During deflation you would

get less paper currency. Corporate bonds would not be a good investment

during deflationary depression periods.

[edwardwills]

Trust me , I would love for a deinflationary Depression vs Inflationary Depression. That way I could own paper currency (US Dollar) and buy corporarte bonds.

[pretorious700]

the government has zero ability to do anything proactive to increase employment. More government jobs are a drain on the economy, not a plus. only private capital can create real wealth.

[TheCameo86]

How would you keep the equity/cash in the economy? without creating hyperinflation.

[boogerie]

the money quote: "the us government debt is not a major part" (of overall debt).

this discussion is very general, there is no distinction between our trade deficits, corporate debt, consumer debt, housing debt. and public debt.

no wonder the interviewers are confused, first they reflexively think he's talking about government debt then one of them asks if it's just the housing market.

Finally if we're all interconnected, why is Canada, France, and Germany all coming out of recession?

[herbs814]

I believe that banking institutions are more dangerous than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and given to the people, to whom it properly belongs." Thomas Jefferson

[herbs814]

in other words, the best thing for the monetary authorities to do is to reduce their grip on making centralized decisions... and to allow sovereign actors to make decentralized decisions for their own budgets. we are not all in one plane (unless government FORCES use all into one plane). we do not need one driver. the decentralization of power to numerous responsible adults reduces the risk of catastrophic error... not to mention preserves our inalienable rights to liberty and private property.