Saturday, April 28, 2012

Marc Faber : We Have Negative Real Interest Rates

Marc Faber : Well, basically, it’s quite obvious that all central banks would like to reduce government debt as a percent of the economy by inflating. And over time you could do that. But obviously, it may not create a lot of prosperity, but rather problems down the line. And the question is not to what extent do you inflate because, say, in America, the Bureau of Labor Statistics will put, say, deflation at 2 to 3 percent per annum when, in fact, the cost of living increases for people is more like between 5 to 10 percent. So we have strongly negative real interest rates both on short term deposits and even on government bonds. So basically, there is a significant loss in the purchasing power of money. - in The Financial Sense NewsHour - 06 Apr 2012
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