Nassim Nicholas Taleb, a Lebanese-American options trader and strategist who is more popular for his book “The Black Swan: The Impact of the Highly Improbable,” voiced his support for the Federal Reserve in a series of tweets in the wake of the recent crisis in the banking system.
What Happened: Taleb took exception to a tweet by Balaji Srinivasan, whose book “The Network State: How To Start A New Country,” proposes setting up decentralized digital communities that crowdfund resources to build new autonomous cities and states.
See Also: Best Financial Services Stocks Right Now
Srinivasan slammed the Fed for going back on the interest rate forecasts it published in December 2020, in which it estimated a median fed funds rate of 0.1% for 2023 as opposed to the 4.75% rate currently. “Off by >47 times,” he said, adding that any bank that bought long-term bonds on that guidance got destroyed.
Responding to the tweet, Taleb clarified that the Fed is not in the business of providing guidance to Investors. “Its business is monetary and financial stability,” he said.
“Technologists (particularly cryptoheads) are proving way too ignorant about basic finance,” Taleb added.
If SVB Financial Group (NASDAQ:SIVB) followed the Fed guidance, it would have realized the central bank raised the guidance as soon as inflation popped and got out of its bets, the statistician and risk analyst said.
Ignore The Ignoramus: Taleb also schooled Srinivasan on finance. He noted that on average one bank failed and closed every other day in the 80s and 90s. Since 2000, the average bank failure frequency has dropped off to one every week.
“So ignore those technologists who know nothing of financial history,” Taleb said. He also recalled the Savings & Loans industry that has vanished.
“Make sure you ignore this psychotic ignoramus. He has the financial sophistication of a goldfish swimming in Vodka-spiked water,” Taleb said.
Read Next: ‘Black Swan’ Author Says Biden’s Walk Through Kyiv Streets ‘Worst Humiliation’ For Putin