Wednesday, July 16, 2014

Marc Faber Warns of a near Dollar Crisis

ET Now: What about currencies? Currencies are also exhibiting a lot of volatility. Do you see some weakness in the US dollar after the recent correction?

Marc Faber: Well, given the reduced demand for imported oil from the US and the potential that the US will become energy self-sufficient, it is a puzzle to me that the US dollar has been stronger.
So it tells me that structurally the US dollar is still weak. Now I believe that the following scenario could actually lead to a dollar crisis. Let us assume that the stock market continues to go up and the economy does not respond much, but prices begin to rise and so rents, insurance costs, medical costs, food costs and energy costs rise.
The Fed will at that time have to choose if they increase interest rates and tighten monetary conditions in order to combat inflation, or continue to ease and print money in order to avoid asset markets from declining. At that point, there could be a crisis of confidence in the US dollar which would then weaken the US dollar considerably. - in ET Now July 2014

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.

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