Even by his standards, Marc Faber has been sounding unusually gloomy of late. The Hong Kong-based Swiss investor, who foresaw the 1990s Asian crisis and was among the first to call the multi-year raw materials upswing, says we are in danger of "a total collapse".
In recent years we have been through "a period of huge asset inflation" in assets ranging from equities to real estate, Faber told Bloomberg TV. And now the outlook is darkening. The economists at America's Federal Reserve "have boxed themselves into a corner where they are now desperate".
Fearful of the impact of higher market interest rates, they have opted to keep printing money, and will print even more to reassure investors if stocks slide. Trapped on a money-printing treadmill, the Fed has launched 'QE unlimited' just as Faber feared in 2008 when quantitative easing began.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
It's not as though the real economy has benefited from all this money, says Faber. All it has done is to raise asset prices, thus increasing inequality because the wealthy tend to invest more, while commodity prices have risen, making it more expensive for people to go to work and heat their homes. The remote academics at the Fed have no empathy with ordinary people, he claims.
The upshot is that we are in for a nasty bust as asset prices slump and, to make matters worse, because of all the money printing this could turn into an inflationary collapse in fiat currencies.
So, it's no surprise, then, that, like MoneyWeek, Faber sees gold as an "insurance policy". Keep some close to you, he warns. "It is important that one day when the so-called sh*t hits the fan and I think the Fed is well on the way to creating this situation you have access to your gold, that it is not taken away."
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
