Marc Faber is a leading investment adviser and Director of Marc Faber Ltd. He is known notably for his monthly investment newsletter, the “Gloom, Boom and Doom Report”, which highlights unusual investment opportunities. He is also an author of several books, including Amazon.com bestseller, “Tomorrow’s Gold”, and a regular contributor of leading financial publications worldwide. A regular speaker at various investment seminars, Dr. Faber is well-known for his contrarian investment approach. With this, I am pleased to welcome Marc Faber this morning. Hello, Marc.
SMN: Great, Marc. There’s quite a bit of news going on right now, especially with the speech from Ben Bernanke yesterday. Marc, the Fed’s FOMC meeting minutes for June have just been released, and it appears that there’s a division amongst Fed members. There are those who believe that the Fed should begin to taper quantitative easing. Bernanke announced in his speech yesterday that QE will not be tapered at this time. Do you believe that the Federal Reserve will end QE in the future? If so, what would happen to our financial system if they did so?
Marc: First of all, I don’t think they will end QE. I rather think they will have to increase it because as you print money or as you purchase assets, from a central banking point of view, it loses its impact over time. In order to keep the impact going, you have to essentially increase it. I believe that the Dovish members of the Fed will print more money. Especially after the resignation of Mr. Bernanke early next year, when he will be replaced, there will be even more Dovish members.
SMN: You think it’s going to get even worse, and money printing is just going to continue indefinitely?
Marc: Yes, for now. Yes, until the system breaks down. My view would be that there will be money printing, and the problem with money printing is always that you don’t control where it goes to. Ideally, it would go into higher incomes of the middle class and of the working class, but this hasn’t really happened. The real wait is for the typical household or the medium household, they are going down. What is going up is basically selected asset markets, like the real estate market has recovered. In some areas, we’ve hit new highs. The stock market has gone up. But as you know, only very few people own stocks in the United States, so it doesn’t impact the wealth of the majority of people.
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.