“The crisis has not solved anything. On the contrary there is less transparency today than there was before. The government’s balance sheet is expanding, and the abuses that have led to the one cause of the crisis have continued”.
“I think eventually there will be a big bust and then the whole credit expansion will come to an end”.
“Before that happens, governments will continue printing money which in time will lead to a very high inflation rate, and the economy will not respond to stimulus”.
“The average family will be hurt by that, and then in order to distract the attention of the people, the governments will go to war”.
“People ask me against whom? Well, they will invent an enemy,” Faber said.
“At some stage, somewhere in future, we will have a war – that you have to be prepared for. And during war times, commodities go up strongly,” said Faber.
“If you want to hedge against war, you don’t want to own derivatives in UBS and AIG, but you have to own them physically, like farmland and agricultural commodities. That is something to consider for you as a personal safety and hedge. You have to own some commodities,” he added.
“I think gold will go up more,” he added.
“Will it go US$2,000, US$200,000 or US$2 trillion? I don’t know,” Faber said. “But if you have money printing in the world, then the price will over time rise. It will go up more for things that you just can’t increase the supply, and the supply of precious metals is very limited.”
Faber expects the US government to increase its stimulus spending should the Standard & Poor’s 500 Index fall toward 900. The US budget deficit under President Barack Obama’s administration reached a record US$1.4 trillion in the fiscal year that ended Sept. 30. Debt amounted to 9.9% of the nation’s economy, triple the size of the 2008 shortfall.
“I don’t think the S&P will drop below 800 or 900, and eventually will go higher in nominal terms, but not necessary in real terms,” he said, predicting a correction in the measure in the “near term.”
Faber has been warning about a collapse of the capitalistic system ‘as we know it today,’ massive government debt defaults and the impoverishment of large segments of Western society.He said central banks will continue to print money at full speed, but long-term this strategy will lead to a fall in purchasing power and living standards, especially in developed countries.
The years 2006 and 2007 were “the peak of prosperity” and the world economy is not likely to return soon to that level, he added.
Unless the system is cleaned out of losses, “the way communism collapsed, capitalism will collapse,” according to Faber. “The best way to deal with any economic problem is to let the market work it through.”
“No decent citizen should trust the Federal Reserve for one second. It’s very important that everyone own some gold because the government will make the dollar (in the long term) useless.”
Faber has built his home in Northern Thailand. The pic shows his toilet (from his site).
7 comments:
I think he is on the right track, but it will not get that far.
I now suspect, reading the tea leaves,that there are several countries in the West which are not far from a state of outright revolution. You can see the anger in the USA, and when the purchasing power of the $ finally hits the skids this will erupt. The UK is quietly nearing the boiling point, because the Govt has enacted a catastrophic and totally undemocratic mass-immigration conspiracy which has badly destabilized the society; and in addition the banks are not far off from suffering a total loss of confidence. Also, the politicians in the UK have been caught out stealing money by fiddling their expenses. It takes a lot to make the ordinary Brit give way to hatred, but their govt is certainly trying very hard to push them over the edge. And they are going.
There is, however, a real possibility the USA will blow first, since there is an increasing percentage of citizens who are strongly committed to the view that the original vision of the Founding Fathers is being gang-raped, and who are really sick of the weaknesses and indignities they have to endure.
Forget gold. I would buy earplugs.
Anon.
Anger there is. But just as America turned left (Obama) only a year ago, Great Britain could also turn to the left. Maybe someone who promises immediate end of the war and equality. There is no guarantee that the anger will bring the right into power. Maybe the extreme left will win, as has been doing all these years since Margaret Thatcher.
BTW, in the US, now that Obama is the center-left, someone must be waiting for his moment out there on Obama's extreme left. Who is there?
Not you or I, for sure.
Maybe Ronduck?
Anon.
I'm not on Obama's extreme left.
J, thinking of this post do you think that Americans have a susceptibility to apocalyptic thinking?
Ronduck, I know. Just "pulling your leg". Hope you don't mind. :)
Anon.
Americans as a people are a very optimistic people, they are sure that the future will be better than the present and the past. Apocalipsis would be the end of the world, the peak of pessimism. I think that Americans like to speak of the End of the World as a motivational figure. Like "Buy now, tomorrow there will be no more", or "Fill your tax forms because the End of The Year is coming and it will be too late".
The US seems to generate a lot of end of the world cults from Heavens Gate, Al Gore, The Club of Rome wackos, the rapture cult, and quite a few others.
Do you think this end of the world fanaticism is the opposite, the counterpart of our natural optimism that you speak of?
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