>>> WELCOME BACK TO "SQUAWK BOX" THIS MORNING WE ARE JOINED BY A VERY SPECIAL GUEST WHO IS HERE TO TALK ABOUT THE MARKETS, NICHOLAS NASSIM TALEB. >> I'VE BEEN HERE BEFORE IT'S NICE TO SEE STABILITY I'VE KNOWN YOU GUYS 10 YEARS, 15 YEARS. >> 11 WE'VE ALL BEEN TOGETHER. >> I THINK A DOZEN YEARS NOW >> OH, YES, 12 I BASE IT ALL BASED ON WHEN MY SON WAS BORN >> TALKING ABOUT STABILITY AND RISK, WHERE DO YOU THINK WE REALLY ARE IN THESE MARKETS? WE HAD BARRY STERNLICHT COME ON AND TELL US THE FED DOESN'T KNOW WHAT THEY'RE TALKING ABOUT AND THINGS ARE MUCH WORSE THAN WE KNOW >> LET'S TALK THE BIG PICTURE. 2008 WE HAD A DEBT PROBLEM, NO THE FED PUT THE INTEREST RATES AT ZERO FOR 15 YEARS NOW LOWERING RATES TO ZERO MADE NO SENSE, YOU KNOW THEY DIDN'T TRY -- A PANIC THEY DIDN'T TRY TO LOWER TO 3% THEY WENT ALL THE WAY TO ZERO. ONCE IT'S AT ZERO, IT'S VERY HARD TO RAISE IT SO NOW WE'RE GOING TO HAVE TO LEARN TO LIVE IN AN ENVIRONMENT WITH HIGHER INTEREST RATES AND 15 YEARS, THAT'S A GENERATION OF TRADERS, GENERATION OF FINANCE PRACTICERS WHO DON'T KNOW WHAT INTEREST RATE MEANS WELCOME TO A NEW ERA MONETARY POLICY IS SOMETHING THAT IS, YOU KNOW, SHORT TERM. THEY USED THAT TOOL IN PLACE OF A STRUCTURAL REFORM, YOU SEE YOU CAN'T USE -- IT'S NOT MADE FOR THAT SO THAT'S A BIG MISTAKE AND WE GOT TO PAY THE PRICE >> WHEN DOES THAT PRICE COME, WHAT DOES THE PRICE LOOK LIKE? >> I DON'T KNOW WHEN IT WILL COME, BUT LET'S LOOK AT WHAT WE HAVE IT'S MORE THAN $100 TRILLION OF REAL ESTATE VALUATION. WE'RE NOT AT 3% MORTGAGES BUT 7% AND GOING NORTH, OKAY? SO AND YOU HAVE A LOT OF THE METHODOLOGY OF THE STARTUP BUSINESS CHANGED IN THE PAST YOU USED TO BE SELLING YOUR FUTURE CASH FLOW. NOW THEY'RE SELLING YOU FUTURE FUNDING LIKE YOU'RE GOING TO SELL IT TO SOMEONE ELSE. SO THE WHOLE STRUCTURE NEEDS TO TUMBLE, OKAY >> IT NEEDS TO TUMBLE? LIKE 2008 STYLE TUMABBLE IN. >> PROBABLY BECAUSE SYSTEMS DON'T FIX THEMSELVES WITHOUT SOME KIND OF PAIN. >> YOU THINK A TRUE CRISIS IS COMING >> THE RISK IS RIGHT THERE WE KNOW WE HAVE REAL ESTATE VALUATIONS THAT DON'T MAKE SENSE FOR THE INTEREST RATES, SHORT-TERM RATES AT 5 1/4% WE HAVE STARTUPS THAT BASICALLY ARE USING THE FUNDING MARKET TO -- AS CASH MACHINE. IT'S NOT SUSTAINABLE THE STOCK MARKET IS ANOTHER STORY BECAUSE THE STOCK MARKET SEEMS TO HAVE SOME, YOU KNOW, PROBABLY MORE ROBUST ON THE OTHERS -- >> YOU SAY A BLACK SWAN EVENT -- >> IT'S A WHITE SWAN THE RISK IS RIGHT IN FRONT OF US IF YOU SEE A BRIDGE THAT'S FRAGILE, YOU KNOW IT'S GOING TO COLLAPSE SO YOU NEED TO FIX IT. YOU HAVE TO REDUCE DEBT AND DO A LOT OF THINGS THAT ARE NOT COSMETIC >> IF YOU HAVE DON'T BELIEVE IN MMT, THE BINS THAT WE HAD AT ZERO IS MUCH LARGER THAN ANY BINGE WE'VE HAD IN THE PAST. IF YOU BELIEVE IN COME UPPINS, HANGOVERS, HOWEVER YOU DESCRIBE IT, THIS HAS BEEN THE MOTHER OF ALL BINGES BUT WE HAVEN'T SEEN IT THERE ARE PEOPLE THAT ARGUE WITH ME ALL THE TIME THAT THE STRENGTH OFTHE DOLLAR, THAT THEY DON'T THINK IT'S EVER GOING TO CHANGE SO WE'RE ABLE TO PRINT. WE'RE THE COUNTRY OF RECORD ON THE ENTIRE PLANET, WE HAVE THIS ABILITY TO PRINT THAT'S NEVER GOING TO GO AWAY SO WE CAN SPEND AS MUCH AS WE WANT THAT'S THE MMT PEOPLE. >> NO, MMT MADE NO SENSE BUT PEOPLE BOUGHT INTO IT BECAUSE IT WAS, AGAIN, IT WAS -- >> YOU CAN MAKE A CASE FOR IT BECAUSE WE CAN ALWAYS PRINT MONEY BECAUSE WE ARE THE -- THE DOLLAR IS THE STANDARD FOR THE WORLD. >> GERMANY WAS A POWER, OKAY, AND THEY PRINTED, OKAY >> I KNOW. THEY SEEM TO IGNORE HISTORY. I SENT THEM A PICTURE OF A WHEELBARROW FULL OF CASH WHEN THEY ARGUE WITH ME >> ONE THING YOU DID AHEAD OF 2008 WAS YOU HEDGED. IF YOU WERE A INVESTORS TODAY GIVEN THIS FRAGILE BRIDGE, WHAT COULD YOU DO >> IT DEPENDS. IF YOU CAN'T TAKE RISK HEDGE, NOT GOING TO SELL -- >> YOU CAN TRY TO SELL IT IF YOU LIKE >> IF YOU'RE AN INDIVIDUAL, YOU HAVE TO STAY AWAY FROM THE TWO BUSINESSES YOU'RE GOING TO STAY AWAY FROM, YOU KNOW, NEW TECHNOLOGIES, PARTICULARLY THE ONES THAT ARE CONNECTED TO A.I. BECAUSE IT'S GOING TO BE VERY UNSTABLE AND THE OTHER ONE IS
