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The increasing US debt pile is similar to a “death spiral” from which only a “miracle” might rescue the US, economist and ‘Black Swan’ author Nassim Taleb warned at a business event on Monday, as reported by Bloomberg.
Taleb classified the growing US debt load as a “white swan,” which refers to a risk event that is highly predicted and more likely than a “black swan” event, which is a metaphor for an occurrence that completely surprises.
“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 told CNN. “A debt spiral is comparable.
Earlier this week, US Treasury Secretary Janet Yellen said that the absolute level of US public debt looks like “a scary number.”
US government federal debt topped $34 trillion for the first time in history at the end of December. It now amounts to about $102,000 for an average American family of three. In 2023 alone, it grew by more than $4 trillion.
According to Taleb, a former trader best known for writing multiple popular economics books, white swans encompass both the US deficit and the American economy, which has become more vulnerable to shocks than in prior years. He described such susceptibility as a characteristic of globalisation, because troubles in one location can reverberate around the world.
When asked how the US “debt spiral” may unfold, Taleb responded, “We need something to come in from the outside, or maybe some kind of miracle,” adding that this makes him “kind of gloomy about the entire political system in the Western world.”
