If you follow Marc Faber in the news you quickly notice that he has the habit of repeating himself. That's what someone with a good point tends to do. One of the overriding themes in his commentary is that governments (namely the American one) are printing like there's no tomorrow (maybe there isn't).
It's not a complex concept to understand. Even the caveman economist can explain it : Print lots of green paper + economy not grow = inflation.
Here Swiss investor Marc Faber expresses concern that the PIIGS (Portugal, Ireland, Italy, Greece, Spain) might default and that the Euro could be hit hard by such an occurrence. He points out that before a country defaults they often print a lot of money and this results in hyperinflation.
He also mentions how one way for a government to distract attention from the destruction of the country's economy is to go to war. I guess there comes a time when even the Super Bowl halftime show cannot keep them all in awe. Unfortunately the United States has a penchant for invading certain countries these days. If I lived in the Middle East, I'd get ready to duck. If I lived in the PIIGS, I'd buy a little gold and silver.
Marc Faber is back in the guest chair at Bloomberg Asia and talking about the economic state of affairs. I always find it interesting how much his comments on the future diverge from the slick BS of CNBC. He has made some pretty harsh comments on the US dollar in the past - such as saying there will be Zimbabwe-like inflation.
Here he speaks about the dollar and the future of the US. He points out that the US can be expected to continue to devalue the dollar in order to pay for all their imperial excursions in the mid-east. It is important to note that just about every empire has devalued their currency as they decline into insignificance. Simply chanting "USA, USA" at the sight of the star spangled banner, like the proverbial Pavlovian dog, could cause one to be fleeced - whether they are in dollars or the DOW.
Dr. Faber also talks about how the dollar shouldn't be seen as a store of value, but perhaps something like property or other tangible things could be used to save - a point that has been made on this humble blog and many other websites.
He also mentioned the concept of a currency 'based on discipline'. If only there were such a thing! Many have argued for a currency that is printed and issued by the government, rather than one issued by a cartel of private banks (The Fed). That would certainly be better than the current system, but I don't really trust government to exercise much discipline in any field, especially not in the greedy realm of money. I think things like precious metals and land should always be seen as stores of value above money.
This is a good article that condenses a lot of the arguments for gold and finishes with a few links to a guy who does not like the metal. In it you will find comments from such luminaries as Alan Greenspan, Marc Faber, Adrian Ash and others. I found the comments on gold in a deflationary environment interesting. I never really thought of deflation as being good for gold, I just knew I did not want to be at the mercy of a currency that I fundamentally do not believe in as a store of wealth. I wanted the stability of gold, and regardless of whatever deflation there was, I was sure that in the long run we would have inflation due to all the paper and digital dollars being created. But some of the pundits in this article say it doesn't matter if there is deflation or inflation, gold is a 'go-to' asset that will be much sought after.
Some comments of note include Dr. Faber's belief that stocks will rise by about 7% per annum but any gains will be eaten by inflation. Also he repeated a criticism he has made of Bernanke and Greenspan numerous times in the past; that they have succeeded in creating a bubble in everything (that doesn't sound good).
He likes Asian equities and of course, commodities. He advised people to buy physical gold and to store it out of the country.
On the subject of inflation, it seems to me that the 'lame-stream' media is becoming more accepting of the view that the dollar is going to lose significant value over the coming years. I suppose there will be a bubble in gold at some point, when everyone will be running to it, but I'm sure that day has yet to come.
Some sensible advice on how to hedge against inflation. Don't listen to the USA rah rah rah morons on CNBC who think the dollar is king just because they get teary-eyed when the Star Spangled Banner is playing. There are a lot of things about America I love and respect but it aint' the country it used to be and it is not a rising star right now - nor is its dollar.
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