Upcoming Issue of ai5000: Black Swan Author Nassim Taleb Lists Bernanke's Six Problems

"He did not see a truck coming right at him"

Jan 25, 2010, 12:25 ET from Asset International

STAMFORD, Conn., Jan. 25 /PRNewswire/ -- In the fourth issue of ai5000, set to publish in February, Black Swan author Nassim Taleb presents a list of six problems that encumber Federal Reserve chairman Ben Bernanke:

1. His education is in tools that aren't helpful - and he doesn't know it.

2. He studied the Great Depression, but the current economic environment is not comparable.

3. Bernanke doesn't recognize that 99% of risk is tied to debt/leverage and the explosion of connectivity. It's like he did not see a truck coming right at him.

4. He has no notion of nonlinearities, and how monetary policies can be responsive in non-linear ways.

5. He doesn't understand fat tails.

6. He doesn't realize that the biggest risk of failure is signified by the Federal Reserve. We do not need more regulation. We actually need smaller institutions.

In an interview with ai5000 editor Kip McDaniel, Taleb also says that investors need to understand the value of doing nothing with their money. "It's like smokers," he explains. "The best thing you can do for a smoker's health is to tell him not to smoke. And what has been the best investment over the past ten years? Cash and short-term bonds."

Available only online, ai5000 (ai5000.com) focuses on the world's 5,000 largest owners of capital.

About ai5000

A quarterly online publication, ai5000 focuses on the 5,000 largest pools of capital in the world, across pension plans, sovereign wealth funds, endowments, foundations, insurance funds and other leading institutional investors. ai5000 is edited by Kip McDaniel and was established by Charles Ruffel, founder of Asset International and PLANSPONSOR, PLANADVISOR and Global Custodian.

SOURCE Asset International