Famed author and former trader says the market is not ready for high interest ratesFormer banker Nassim Taleb, best known for his bestseller “Black Swan,” has advised market players to brace for drastic changes worldwide, due to rising interest rates.In an interview with Bloomberg TV, aired on Tuesday, he said that over the past 15 years, investors have grown used to near-zero interest rates, introduced to drag Western economies out of the 2008 financial crisis. This triggered a number of asset bubbles, with assets trading much higher than their true value. Taleb estimates these at more than half a trillion dollars, calling them “illusionary wealth,” with market valuations out of proportion to companies’ cash flow.“What do zero interest rates bring? Tumors. All these years, assets were inflating like crazy. It’s like a tumor, I think it’s the best explanation, because you’re happy with the growth, but it’s uncontrolled growth, and then ‘boom’,” Taleb said, explaining that “tumors” include everything from Bitcoin to soaring real estate prices.Nassim Taleb is known as a writer and economist. He has published three economic bestsellers, and introduced the concept of a ‘Black Swan,’ referring to hard-to-predict and rare events that have significant consequences for financial markets.
This article was originally published by RT.