Rather than taxpayers propping up large banks, Taleb said, the hedge fund model should be followed.
“Some go bust, some do okay, some have problems,” he said. “We don’t care. It’s their problem. It’s not society’s problem.”
Fixing the financial crisis requires a financial system with less debt and less complex derivatives, he said. The solution is not to alter the current financial structure, said Taleb, but rather, to look for “robustness” in the system.
“Complexity causes fragility,” he said. “You’re no longer riding a horse—you’re flying a Concorde. A horse doesn’t explode but a Concorde can have a problem. We now have a Concorde in our hands.”
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