Black Swan author Nassim Nicholas Taleb said the US deficit is swelling to a point that it would take a miracle to reverse the damage.

“So long as you have Congress keep extending the debt limit and doing deals because they’re afraid of the consequences of doing the right thing, that’s the political structure of the political system, eventually you’re going to have a debt spiral,” he said Monday night at an event for Universa Investments, the hedge fund firm he advises. “And a debt spiral is like a death spiral.”

Taleb defined the ballooning debt load as a “white swan,” a risk that’s more probable than a surprise “black swan” event. While he didn’t identify specific outcomes in markets, he did say white swans include both the US deficit and an economy that’s far more vulnerable to shocks than in prior years.

The reason for that, he said, is that the world is far more interconnected due to globalization, with issues in one region able to ricochet around the world.

Taleb joins a number of observers on Wall Street and beyond voicing concerns about the the growing US debt pile. This month, former Treasury Secretary Robert Rubin said the world’s biggest economy is in a “terrible place” with regard to its federal deficits, while BlackRock Inc. Vice Chairman Philipp Hildebrand has warned that any default could imperil the dollar as a global currency.

Universa, based in Miami, is a so-called tail-risk fund that’s designed to protect investors in the event of extreme downturns. The firm’s greatest profits come during infrequent market crashes such as the pandemic-fueled downturn in March 2020. Taleb himself is known for navigating the Black Monday crash of 1987 and for anticipating the financial crisis of 2008.

When asked how the US “spiral” could ultimately play out, Taleb said “we need something to come in from the outside, or maybe some kind of miracle.”

“This makes me kind of gloomy about the entire political system in the Western world,” he said. 

This article was provided by Bloomberg News.