Friday, May 11, 2012

Marc Faber : Another Crisis is coming

Marc Faber : Yes. I think that another crisis is coming, whether it’s against Greece or Spain or Portugal or Italy — across the board — yes, I think another crisis is coming. But as an investor, you have to ask yourself: what are the investment implications? And I think it’s nice to be an academic and say the crisis is coming for this and that reason, but the investment implications are clearly that they will print more money. But I’d like to make one observation; you know, this money printing business succeeds up to a point. It doesn't succeed forever. And money printing is essentially inflation; you increase the quantity of money in the system and you try to increase the quantity of debt. In other words, you try to avoid the deleveraging process, which actually would be important to happen; that they try to prevent. And the difficulty is when you create monetary inflation, it doesn't touch everything at the same time. At certain times it may go into wages or it could go into commodities or it can go into consumer prices or it can go into real estate or it can go into equities or commodities or it can go into precious metals or art prices and so forth and so on — but not at the same time. And the Fed basically since 2008 has expanded its balance sheet with the intention to stabilize the housing market and boost housing prices, but that is precisely the asset that hasn’t gone up. To some extent they stabilized it in some areas where real estate, you know, is no longer declining, but basically it isn’t rising in value, except — and this is the anomaly we have in the marketplace — except in Aspen and from Madison Avenue and Park Avenue and so forth. In prestigious locations around the world, real estate has continued to go up in value. - in Financial Sense NewsHour


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