‘Black Swan’ Author Nassim Taleb Is Feeling Gloomy, Says U.S. Is In A Death Spiral

It's not the debt, it's the interest. 

Well, the debt too but the terrifying question is "What price will investors demand for giving their money to the U.S. government?"

The problem gets serious when the price (interest rate) becomes unsustainable and the Federal Reserve has to resume their bulk buying of treasuries, actually monetizing the Federal deficit. That's where hyper-inflation comes from, issuing debt to pay the interest.
Just ask Rudy Havenstein, president of the Reichsbank during the Weimar hyperinflation.

Coincidentally, Havenstein, like Jerome Powell was an attorney, not an economist, though J-Pow will have left the Fed by the time the monetizing starts in earnest, sometime early in the next decade.

From Fortune, January 31:

‘Black Swan’ author Nassim Taleb, who correctly called the 2008 financial crisis, says the U.S. is in a ‘death spiral’ over government debt

It’s been dubbed the “most predictable crisis” facing the U.S. economy, but an expert has warned it will take a “miracle” to save America from its national debt problem.

Nassim Nicholas Taleb, author of the bestselling book The Black Swan, correctly predicted the 2008 financial crash but said “gloomy” times ahead for the U.S. economy are far more easy to spot. 

Taleb, who advises Miami-based hedge fund Universa Investments, told an event hosted by the organization this week that national debt is a “white swan,” a risk that’s more probable than an unpredictable “black swan” event.

“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,” he explained, per Bloomberg. “And a debt spiral is like a death spiral.”

Currently the American national debt stands at $34.14 trillion—about $100,000 for every person in the U.S.—with the debt ceiling currently suspended until 2025 courtesy of a deal passed in the summer of 2023.

And although some of the shorter-term economic signals are flashing green—inflation is coming down, the Fed may be eyeing rate cuts, and employment is staying stable—Taleb and big Wall Street names like Jamie Dimon are sounding the alarm.

Last week the CEO of JPMorgan Chase said Washington faces a global market “rebellion” over the debt level, adding: “It is a cliff. We see the cliff. It’s about 10 years out.”

Likewise former Treasury Secretary Robert Rubin said last week the U.S. was in a “terrible place” because of the deficit, and called for tax increases to balance the books.

Taleb also echoed Dimon’s warning that the issue—which he referred to as a “hockey stick” courtesy of the uptick debt will take as a result of costs to maintain the debt—won’t be contained to just America.

“We need something to come in from the outside, or maybe some kind of miracle,” Taleb said in answer to how the issue could be rectified. “This makes me kind of gloomy about the entire political system in the Western world.”

‘We have no idea how to value companies’ 

Unfortunately for his audience, Taleb also didn’t have a rosy outlook for the stock market....

....MUCH MORE

This bringing in new money to repay maturing debt is pretty much the definition of a Ponzi scheme and brings to mind the comment of another Fed head, Herbert Stein in the context of trade:

"What economists know seems to consist entirely of a list of things that cannot go 

on forever, and this may be one of them. But if it can’t go on forever it will stop."

—Wall Street Journal, May 1985, via Quote Investigator and a variation earlier that year at

A symposium on the 40th anniversary of the Joint Economic Committee : hearings before the Joint Economic Committee, Congress of the United States, Ninety-ninth Congress, first session, January 16 and 17, 1986 via the Hathi Trust.