Friday, March 11, 2016
Marc Faber: Derivatives will not exist forever
Mike Gleason: Deutsche Bank has been the subject of major concern. The share price continues to fall and the CDS market indicates default risk at the bank is rising dramatically, but it isn't just Deutsche Bank. The markets suggest risk is spiking for a long list of the largest U.S. and European banks. The potential problem is huge, given that many of these firms are much bigger than Lehman was and they carry even more derivative exposure. How concerned should people be about this? Do you expect problems imminently or is there a good chance this will blow over?
Marc Faber: Well, I have always maintained derivatives will not exist forever. Eventually, there will be no derivatives and we'll start a new system, which is based on, say, gold or another currency that cannot be multiplied by some academics at the central bank. I mean, when you think about it philosophically, now we have 5,000 years of human history from the old days in Babylon up to today that has been recorded. Never, ever before have interest rates been this low. Never, ever before have we had negative interest rates. This has all been created by some mad academics that populate the halls of glass buildings called central banks. This is now really a disgrace to humanity that in democracies in particular, we give so much power to these people that basically rule the world to a large extent.
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.