When Taleb held a public discussion with Cameron about debt two years ago, the admiration was mutual. Taleb described the then opposition leader as ‘the best thing we have left on this planet’. Even now he stands by that assessment. ‘I saw in him, then, someone who wants to rebuild society along the right model. Cameron was the first leader to grasp that deficits are dangerous.’ But this was two years ago. Our conversation moves on to what has happened since.

British economic output is forecast to grow by £100 billion over the next four years, I put it to him, but with a corresponding increase in the national debt of £360 billion. The analogy Taleb reaches for is not flattering. ‘In any Ponzi scheme, there is great growth initially,’ he says. ‘Then you have to pay it back.

’But he’s quick to add that Cameron had limited choices. ‘Debt may be necessary for a while, you don’t want to create great social disruption.’ He can talk about the economic danger of high debt, but recognises there is also political danger in austerity. ‘I try to stay outside immediate debates. I talk about structure that we should arrive at, not what should be done tomorrow morning.’

via Flight of the black swan | The Spectator.