Friday, January 30, 2015
Marc Faber Warns -- QE has Grossly Inflated U.S. Equity Prices
Quantitative easing by major central banks has pushed up asset prices, but it has not contributed to the advance of the real economy, Faber, who is well known for his opposition to money-printing and for his bearish views, said Tuesday evening during a conference organized by French bank Societe Generale.
So far, London and New York property, as well as equities, have "reacted very well" to the Fed's quantitative easing efforts, "but that doesn't boost the wealth of the nation and it leads to less social cohesion," Faber warned.
"One of the problems of this liquidity injection is that the Fed can force relatively responsible central banks to print money," Faber added.
QE has "grossly inflated" asset prices and as a result U.S. equities as "highly expensive," Faber said. A sustainable recovery should be based on investment rather than on consumption, but companies will find it more difficult to boost profits in the current economic climate, he added.
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.
Posted by Nicole Bourbaki