Thursday, February 25, 2016

Marc Faber : Interest Rates are going to go Below Zero

Have monetary policy tools now run their course globally? It is too much attention on central banks. Japan has embarked on a negative rate regime. ECB is talking stimulus. How do you see some of this playing out?

Marc Faber : It is the view among most central bankers that you cut the interest rate and the economy will respond positively. But that is far from certain.

First of all, interest rates provide savers income. So, if you have zero interest rate the savers, the insurance industry, pension funds are being hurt. That should be very clear.

Number two, if I came to you and say: Look, interest rates are going to go below zero and on your deposits you don’t get money any more, the reaction of you would be to spend more. But, it could also be that you would save more because say on a million dollar before you got an interest of 10 per cent and now that you get nothing and that lowering of interest rate has actually led in the case of Denmark, Sweden, Switzerland and Finland to actually higher savings rate.

In other words, people feel insecure. The household scratches its head and says what is happening? I am not getting any money in my retirement and so I have to save more. So, the view that lower interest rates stimulate growth is very questionable. - in Bloomberg TV India

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.

1 comment:

  1. Do you think the Canadian central bank will do NIRP?


Dr. Marc Faber Tomorrow's Gold

Dr. Marc Faber author of the Gloom, Boom and Doom report is a world class Investor, Doctor Faber 's typically controversial and contrarian views have earned him the label of Dr. Doom. Doctor Doom also trades currencies and commodity futures like Gold Natural Gas and Crude Oil.Even his harshest critics must admit that he's been unerringly correct in his market forecasts over the past three decades . Marc Faber is a Swiss investor.He was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24, obtained a PhD in Economics magna cum laude. Between 1970 and 1978, Dr Faber worked for White Weld & Company Limited in New York, Zurich and Hong Kong. Since 1973, he has lived in Hong Kong. From 1978 to February 1990, he was the Managing Director of Drexel Burnham Lambert (HK) Ltd. In June 1990, he set up his own business, which acts as an investment advisor and fund manager. Faber is publisher of the Gloom Boom & Doom Report newsletter and is the director of Marc Faber Ltd which acts as an investment advisor and fund manager.

Dr Faber studied economics at the University of Zurich and, at the age of 24, obtained a PhD in economics. He publishes a widely read monthly investment newsletter The Gloom, Boom & Doom Report, which highlights unusual investment opportunities, and is the author of several books, including Tomorrow’s Gold – Asia’s Age of Discovery which was first published in 2002 and highlights future investment opportunities around the world. Tomorrow’s Gold was for several weeks on Amazon’s bestseller list and has been translated into Japanese, Korean, Thai and German. A regular speaker at various investment seminars, Dr Faber is well known for his contrarian investment approach. He is also associated with a variety of funds.