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Nassim Taleb predicts a ‘death spiral’ for US due to debt.

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TLDR:

Author and hedge fund advisor Nassim Nicholas Taleb has warned that the US economy is in a “death spiral” due to its national debt problem. He compared the national debt to a “white swan” event, a highly probable risk that is more easily predictable than a “black swan” event. Taleb and other big Wall Street names like Jamie Dimon have highlighted the issue, with Dimon stating that the debt level could cause a global market “rebellion” in the next 10 years. Taleb also expressed concern about the overvaluation of companies in the stock market.

The US national debt currently stands at $34.14 trillion, and despite some positive economic signals such as decreasing inflation and stable employment, experts like Taleb and Dimon are sounding the alarm. They believe that the debt level, which will continue to rise due to the costs of maintaining the debt, could lead to a “death spiral” for the country. Former treasury secretary Robert Rubin also warned that the US is in a “terrible place” due to the deficit and called for tax increases to address the issue.

Taleb compared the overvaluation of companies in the stock market to a “hockey stick,” where the debt will continue to rise rapidly. He expressed concern that analysts are losing sight of how to appropriately value companies, leading to inflated valuations based on narratives and stories about the future. Other analysts have also cautioned about the overvaluation of stocks.

Despite the warnings, some experts believe that certain stocks, such as those of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla, will continue to be strong performers in the market.

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