Barron's : The Dow Jones industrials are up 17% this year. The Nikkei has rallied 60%, even after its recent selloff, in response to the Bank of Japan's asset purchases aimed at weakening the yen. Remind us again why you're so negative on "money-printing." Shouldn't investors be toasting Federal Reserve Chairman Ben Bernanke right now?
Marc Faber: I own equities, and I should
thank Mr. Bernanke. The Fed has been flooding the system with money. The
problem is the money doesn't flow into the system evenly. It doesn't
increase economic activity and asset prices in concert. Instead, it
creates dangerous excesses in countries and asset classes.
Money-printing fueled the colossal stock-market bubble of 1999-2000,
when the Nasdaq more than doubled, becoming disconnected from economic
reality. It fueled the housing bubble, which burst in 2008, and the
commodities bubble. Now money is flowing into the high-end asset
market—things like stocks, bonds, art, wine, jewelry, and luxury real
estate. The art-auction houses are seeing record sales. Property prices
in the Hamptons rose 35% last year. Sandy Weill [the former head of
Citigroup] bought a Manhattan condominium in 2007 for $43.7 million. He
sold it last year for $88 million.
Money-printing boosts the economy of
the people closest to the money flow. But it doesn't help the worker in
Detroit, or the vast majority of the middle class. It leads to a
widening wealth gap. The majority loses, and the minority wins. Although
I have been a beneficiary of this policy, I can't approve as an
economist and social observer. - in Barron's