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Saturday, April 19, 2014
Marc Faber : The Old World Order is Over
“When you drop dollar bills into the economy…it won’t lift all prices and assets equally at the same time,” he said. In the 1960s and 1970s, extra money flowing through the economy inflated wages; in the early 2000s, money printing inflated tech stocks.
Thus, money printing creates more bubbles. Some assets go up, they overshoot, collapse and cause significant damage. This necessitates, in the view of the U.S. Federal Reserve, more money printing. It is a vicious cycle we’ve seen since the 1970s: every time there is an economic problem, the Fed prints money and creates more distortions and bubbles.
“He’s been a disaster,” Faber warned. Faber pointed out that not only did Bernanke not notice the subprime disaster, he actually denied it existed and even helped create it. “Under his tenure at the Federal Reserve and under his intellectual influence when working for Mr Greenspan, they created the gigantic housing bubble,” Faber said. “Wealth doesn’t come from consumerism, it comes from capital spending,” he said.
“If we have growing debts, there’s a difference in quality of those debts,” he said. Japan, South Korea and Taiwan used their debts to invest in factories, plants…investments that generate wealth. According to Faber however, the U.S. has just acquired debt to fuel consumption. “Where’s the future income?” he asked.
“We live in a new word. We live in a world where the balance of power has shifted to emerging countries,” said Faber.
“This is the new world, where the old world is largely bypassed,” said Faber
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.