U.S. President Barack Obama and his administration weakened the country’s economy by seeking to foster growth instead of paying down the federal debt, said Nassim Nicholas Taleb, author of “The Black Swan.”I believe we are at a moment in time where continued Keynesian fiscal policies will not work. Our debt, both public and private, is much too large for the endless spending of Keynesianism. The day of reckoning has been postponed by government policies that consolidated the banking system into fewer, larger banks. Our government is fostering common mode failures in the financial sector under the absurd rubric of financial reform. We need a financial system—indeed, all sectors of civilization—that allow failure to have little impact on the rest of society. A few big banks won't do that. A lot of small banks will.
“Obama did exactly the opposite of what should have been done,” Taleb said yesterday in Montreal in a speech as part of Canada’s Salon Speakers series. “He surrounded himself with people who exacerbated the problem. You have a person who has cancer and instead of removing the cancer, you give him tranquilizers. When you give tranquilizers to a cancer patient, they feel better but the cancer gets worse.”
Today, Taleb said, “total debt is higher than it was in 2008 and unemployment is worse.”
Put simply: "Too big to fail is two words too long."
Taleb was interviewed by EconTalk's Russ Roberts this past Spring. The hour and ten minute podcast is quite good!