Gloom Boom & Doom editor and published Marc Faber joins the Money Show to discuss the economy, short term financial market forecasts, long-term inflation, and global trends.
Marc Faber on the financial markets
Q: How high can the market go before, if I read your work correctly, America falls apart and takes everything down with it?
A: I’m not sure that the risk/reward now is particularly favorable. The inflationary school of thought says the Federal Reserve has no other option but to print money, and that will lift asset prices. The Standard & Poor’s 500 could get to 1,000 or 1,100 or depending on how much money they print, possibly even higher than that.
Between March and today, the S&P is up 40%, and in an environment of zero interest rates, that’s a huge gain. Many of the resource stocks we were recommending in November and December have tripled. So, maybe we have for two or three months now a reversal in expectations, where people suddenly realize that maybe the economy doesn’t recover a lot and that deflationary pressures are still there. But if the S&P was to come down to 800 or 750, the Fed would probably increase its money printing activity. So, I kind of doubt that we’ll see new lows.
Marc Faber discusses inflation
Q. You’ve warned that US risks Zimbabwe-style hyperinflation and then more recently said US inflation could reach 10% to 20% in five to ten years. Isn’t there a big gap between those outcomes?
A. We have the worst recession since the Second World War and actually the prices of necessities are still rising, including food and energy. So, one day within the next ten years, when the economy slowly recovers and when further dollar weakness occurs, inflationary pressures will increase. And once you have inflation increasing, it’s not easy to stop it unless you implement tight monetary conditions, which would imply very high real interest rates. And I don’t think that Mr. Bernanke or the US government have any intention whatsoever of having positive real interest rates. Combine easy monetary policies with large fiscal deficits, and the likelihood of much higher inflation is there. Once we go to 10% inflation, 20% becomes quite likely and once we go to 20%, we can easily go into hyperinflation.
My comments: For those following the recent inflation/deflation discussion here at SHTFÂ you might find of interest that Marc Faber suggests that the time frame of inflation is some time in the next ten years, but more importantly, that the trigger will be real green shoot recovery in the economy.
Read the full Marc Faber interview at the moneyshow.com where Dr. Faber also discusses:
Source: Moneyshow.com
It Took 22 Years to Get to This Point
Speaking to author and podcaster Dana Parish, former Centers for Disease Control and Prevention...
The United States just made a decision that could lead to World War 3. The current ruling class...
This article was originally published by Michael Snyder at The Economic Collapse Blog. This...
These warnings from Russia, are likely falling on deaf ears. Moscow has not followed through on...
Commenting Policy:
Some comments on this web site are automatically moderated through our Spam protection systems. Please be patient if your comment isn’t immediately available. We’re not trying to censor you, the system just wants to make sure you’re not a robot posting random spam.
This website thrives because of its community. While we support lively debates and understand that people get excited, frustrated or angry at times, we ask that the conversation remain civil. Racism, to include any religious affiliation, will not be tolerated on this site, including the disparagement of people in the comments section.
Comments