'Black Swan' author Nassim Taleb says years of zero interest rates destroyed the economic structure and created 'tumors like bitcoin'
- Years of 0% interest rates in the US damaged the economy and created bubbles like bitcoin, Nassim Taleb told CNBC on Thursday.
- "You're creating bubbles, creating tumors like bitcoin," the author of "The Black Swan" said about monetary policy.
Years of US interest rates sitting at zero have damaged the world's largest economy and created speculative bubbles such as bitcoin, "The Black Swan" author Nassim Nicholas Taleb told CNBC on Thursday.
"We've had 15 years, 14 and a half years of Disneyland that basically has destroyed the economic structure. Think about it. No interest rates," said Taleb.
"At zero interest rates … for long periods of time, you are hurting the economy. You're creating bubbles, creating tumors like bitcoin, creating hedge funds that should not exist but have existed for 15 years," said the former options trader whose New York Times bestseller focuses on understanding extreme and unpredictable events.
Taleb has been critical of bitcoin before, comparing the cryptocurrency to a "contagious disease" and calling it an "obsolete product of low interest rates."
The Federal Reserve held the fed funds target rate at a range of 0% to 0.25% between 2008 and 2015, with ultra-low rates put in place during the global financial crisis. The Fed cut rates to near zero again in March 2020 in response to the COVID-19 health crisis.
Next week, policy makers are expected to deliver the fifth rate hike of 2022, continuing to make borrowing money more expensive to reach its goal of cooling inflation by slowing economic activity.
"So now we need to go back to normal economic life. People with experience remember that there was at some point such a thing as a discount rate … that your investment had to earn cash flow. All these notions escape the new generation," said Taleb.
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