Nations Will Print Money, Go Bust, Go to War…We’re Doomed
by Andrew Mellon
Today the leading Austrian economic think tank, the Ludwig von Mises Institute held a conference at the University Club in Manhattan in which Marc Faber, famed contrarian investor and publisher of the “Gloom, Boom and Doom Report” gave his perspective on the financial crisis and his outlook for the future.
Below are his main points and entertaining quotes:
•Central banks will never tighten monetary policy again, merely print, print, print
•Bubbles used to be concentrated in 1 sector or region in the 19th century, but off of the gold standard this concentration has ended
•“The lifetime achievement of Greenspan and Bernanke is really that they created a bubble in everything…everywhere.”
•“Central banks love to see asset prices go up,” and their policy reflects their desperation to perpetuate this
•US housing bubble that Greenspan could not spot (even though he has recently spotted bubbles in Asia) stands in stark contrast to that of Hong Kong in 1997, where prices fell by 70%, yet none of the major developers went bankrupt; this was a result of a system not built on excessive debt like that of the US
•“You have to ask what they were smoking at the Federal Reserve,” during the housing bubble, as prices were increasing by 18% annually when interest rates started to steadily rise in 2004
•Over the last couple of years, when the gross increase in public debt has exceeded the gross decrease in private debt, markets have risen, whereas when private debt growth has outpaced public debt growth, markets have tanked
•The next 3-5 years will be highly volatile.