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Marc Faber: "People With Financial Assets Are All Doomed"
As Barron's notes in this recent interview, Marc Faber view the world with a skeptical eye, and never hesitates to speak his mind when things don't look quite right. In other words, he would be the first in a crowd to tell you the emperor has no clothes, and has done so early, often, and aptly in the case of numerous investment bubbles. With even the world's bankers now concerned at 'unsustainable bubbles', it is therefore unsurprising that in the discussion below, Faber explains, among other things, the fallacy of the Fed's help "the problem is the money doesn't flow into the system evenly, how with money-printing "the majority loses, and the minority wins," and how, thanks to the further misallocation of capital, "people with assets are all doomed, because prices are grossly inflated globally for stocks and bonds." Faber says he buys gold every month, adding that "I want to have some assets that aren't in the banking system. When the asset bubble bursts, financial assets will be particularly vulnerable."
On the error of the Fed's ways:
The Fed has been flooding the system with money. The problem is the money doesn't flow into the system evenly. It doesn't increase economic activity and asset prices in concert. Instead, it creates dangerous excesses in countries and asset classes. Money-printing fueled the colossal stock-market bubble of 1999-2000, when the Nasdaq more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market - things like stocks, bonds, art, wine, jewelry, and luxury real estate.
Money-printing boosts the economy of the people closest to the money flow. But it doesn't help the worker in Detroit, or the vast majority of the middle class. It leads to a widening wealth gap. The majority loses, and the minority wins.
...
The neo-Keynesians would argue that if the Fed hadn't flooded the system with money, things would have been much worse. That might be true, but they would have been worse for a shorter period of time.
On the Bubble:
I am suggesting that in the fourth year of an economic expansion, near-zero interest rates will lead to a further misallocation of capital. I thought the U.S. market would have a 20% correction last fall, but it didn't happen. I also said the market might explode to the upside before the correction occurred. We might be in the final acceleration phase now. The Standard & Poor's 500 is at 1650. It could rally to 1750 or even 2000 in the next month or two before collapsing. People with assets are all doomed, because prices are grossly inflated globally for stocks, bonds, and collectibles.
On China:
There has been a huge credit bubble in China, and it isn't going to end well. Its economy officially grew 7.7% in the first quarter. In reality, it is growing 4% a year, at best. Figures on Chinese exports to Taiwan, South Korea, Hong Kong, and Singapore don't agree with the import figures of those countries. In each case, reported exports are much larger than reported imports.
On wealth divides and Social Unrest:
Again, the economy of the rich is booming. There has been huge wealth accumulation in Asia in recent years. But the middle class has experienced diminishing purchasing power. Throughout history, growing wealth inequality has been corrected either peacefully, through taxation and wealth redistribution, or by revolution, as in Russia. I am not sure we will have a revolution in the Western world, but I can see European voters turning against the arrogance of the bureaucracy.
On Europe:
Investors don't fully comprehend what happened in Cyprus. In the event of future bailouts, bank depositors will lose a percentage of their money. Money in the bank isn't 100% safe anymore.
On Gold:
Gold is down 30% from its 2011 peak of $1,921, but has far outperformed financial assets since 1999. A correction was overdue. I have about a 25% allocation to gold and buy some every month. I want to have some assets that aren't in the banking system. When the asset bubble bursts, financial assets will be particularly vulnerable.
Gold is easier to carry than a Lamborghini.
Most of my gold is in a safe-deposit box in Switzerland, but I am shifting it to Asia.
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I love how people think TPTB are so ubiquitous. They are not. The Tylers, from what I understand, are somewhat elusive and invisible from their origins. They are not releasing state secrets either, just blogs and other news with kickass insight. Fear not, it's like whack a mole. Whack one, three pop up.
I would buy you a beer any day IR. No quit. Even if it sucks. Too far now.
True ZHers know how it works. Many of us have our own websites set up all over the place. If ZeroHedge is "crushed" we will simply appear elsewhere. We are not going to shut our mouths and we are legion. There are a lot more of us than they think there are. We will never let them win.
"Let's be honest, he has been crying wolf since 2007"
Correct but obviously he's been smarter than Gerald Celente...
That's a good analysis from Marc Faber. However, I don't quite follow his logic:
He says - correctly IMO - that the Fed's money-printing is going into high-end asset markets (specifically: "things like stocks, bonds, art, wine, jewelry, and luxury real estate"). We see this every day in the relentless rise of these asset markets.
This being so, when the bubbles burst it will be the owners of these assets who will catch a severe cold. No? It won't be the middle-classes and the poor who are generally not invested in them.
Am I concerned for the uber-wealthy investors - banksters and the like - who've bought shedloads of high-end assets and might suffer a serious loss in value when the bubbles burst? Not really.
Just popped over to the Telegraph website and read a news item that has literally blew me away.
The phone making company Motorola has this new fangled and brilliant idea of giving you a fucking tatoo to allow your phone to work, now call me old fashioned here but talk about indentured servitude? What the fuck are these idiots thinking, proposing, and people allowing to go down to the detriment of their lives? Getting tatooed so you can access a fucking toy?
The comments section was quite fucking surreal, some people think this a great idea, and some people even wear a bracelet that does the same thing???? Can these fucking idiots be for real letting a phone company know exactly where you are, when you access the toy, what you put on said toy, and what you say on said toy?
I give up I really do, we deserve exactly whats coming down the pike folks, if people are this fucking stupid we are trully fucked.
Never mind gold and silver, these brainless fucking morons will be the end of us all.
And I'm not making this up, go and have a look, its fucking spine chilling thats what this is.
That part of Motorola is now owned by Google, who can't even spell the word "privacy", let alone know how to practice it.
"I give up I really do"
Ahh, 96 there you are. ZHers do not give up and neither will you. The tougher it gets, the more they rip us off , the more they want to fuck with us, the stronger we get and the more our resolve increases. The more I am told "NO" the more I say fuck you and YES! I have been among them and trust me when I say that they are scared shitless of us because they do not understand what fuels our souls. Unsurprising since they have no souls which they either were born without, lost or sold.
I really want to see you write 96. Never give up.
+1,000
Every day I get frustrated with the drivel, divisiveness, and trolling, posted on ZH (and among my "friends") ... but every day I also remind myself that 'they' are trying to wear us down into submission ... "ordo ab chao".
NEVER SUBMIT!!!!
+1000 back to you. No we are not giving up. AND we can still be peaceable about it. Yes, I have guns and I know well how to use them but I really don't think that is the answer although it is getting more difficult these days. I will not back down. Here is a video my Russian counterpart shot last weekend at my place in Wisconsin. Manipuflation vs. the three bears. We had only arrived twenty minutes earlier and these bears obviously smelled fresh meat. It would have been easy for one of those bears to snatch my two year old son and kill him but I saw them first and confronted them.
The mother bear did make a charge at me and a shot was fired.(not on video) Zero casualties.(this time)
http://www.youtube.com/watch?v=luPtaLx2VnQ
That's quite a video there. Glad you were able to get in their way. Haven't seen one in person at our cabin up north MN but know that they've been there, with thrashed crab apple trees. Deer also abundant of course.
Yes, I was suprised. I was unloading the van of all of the shit the women and children seem to need when I saw momma bear sitting there not twenty feet away. We had a brief staring contest and she bailed as did I. Fortunately, I had the shotgun and 00 buckshot ammo right there in the back of the van. It was a long winter here as you know and the bears were hungry. We already had meat in the freezer so there were no smells of raw meat in the air. The bears smelled us and most likely my children. I am convinced that the bears were after my children as they like to run around outside. I saw the bears first.
To be honest, I was outgunned there in that video yet I stood against the bears even so. Had all three of those bears charged me I would have stood no chance. The next time I go over there I will be bringing my Springfield M1A so as to even out the odds a bit. I know it has been a long winter but targeting my children as a food source is punishable by death and I do not care about licenses.
My offer to buy you lunch stands Sir.
http://www.springfield-armory.com/armory.php?model=14
I replied on the above comments. I'll definitely be looking for your posts on here, and glad to hear some folks from MN know what's going on. Ron Paul did great in MN and I shook hands and mentioned Austrian economics with Kurt Bills at the MN State Fair, who RP endorsed but sadly lost to Klobuchar.
Most of MN is conservative, down to earth, family-oriented. Sadly it's the population-dense Twin Cities and Iron Range that vote blue and controls so much of the vote and therefore our lives.
Yes, I met Kurt Bills and spoke with him. Seems a solid guy. I am glad to make your acquaintance. I was the first to suggest the idea behind what became the Rally For the Republic. I have carried enough water now.
http://www.youtube.com/watch?v=Y9o6XO1pFPY
.
It causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name.
http://www.telegraph.co.uk/technology/mobile-phones/10090863/Google-Moto...
the new normal?
666 :)
Oil is abiotic, it doesn't run out google Joe Vials Abiotic oil
Good to know that the old fields will come back in a hundred million years or so. Meanwhile, we will continue to steam clean sand for a substitute.
I recommend a bunch of you read The Worst Hard Time.
So much head-up-assery here this evening (Japan) I feel like some reality needs added to the mixture.
@BigInJapan
did you mean this book?
The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl
Author: Timothy Egan
http://www.amazon.com/The-Worst-Hard-Time-Survived/dp/0618773479/
"Absolutely totally bleak. Depressing. Tragic. American experiences in the horrific Dust Bowl of the 1930's as related in "Worst Hard Times" was all of this and more. Yet in the hands of author Timothy Egan the story is compelling and an absolute must read for anyone interested in the Thirties, the Depression or, of course, the Dust Bowl.
The statistics are here as are thorough accounts of the incredible dust storms that devastated a land an its people. Egan puts names to many of those who survived and faces to the names. Here is the success of "The Worst Hard Times," putting the devastating impact of the ecological disaster in human terms."
Precious Words..
Canada is now making a $100 legal tender silver coin. You can buy one for $100 paper bill... It is 100% garunteed by the governnment and convertible into cash at any Canadian Bank...and if that's not good enough for you the Royal Mint promises to refund your currency if you are not completely satisfied with their new 1 oz super coin....So silver is being used as a medium to issue a premier currecny...Me thinks China will do the same with gold soon... or just buy 4 regular maple leafs for the same money that have the smaller $5 legal tender. Unfortunately they are only garunteed for their purity and weight...however you do have a greater chance to double your money in 5 or so years. It's so easy. Just stay out of debt, stack, and have fun.
http://www.mint.ca/store/coin/100-for-100-fine-silver-coin-bison-2013-prod1680033#.UatDaH4o6Uk
Aren't they gonna tell us the silver content .... who's kidding who .... we know it isn't 4 trounces .... it is so leftist to try to manage perceptions .... put the fucking cards on the table ? I'm delighted with the idea of a sort of recognition/transition to super money .... but let's start by being up front ? edit: Oh, it is one ounce .... my bad .... that sounds so gay .... does it say one ounce on the coin ? re-edit: In the 24 second video .... they show the handsome obverse twice .... and they don't show the reverse .... where hopefully the content and purity are displayed .... just like Rush .... even when I'm wrong .... I'm right !
36 grams = 1.157 troy ounces of .9999 Ag.
Marc Faber is 67 years old. By the time fiat currency collapses he'll be too frail to shoot his way into the bank to get his gold out of the safety deposit box and too demented to care.
--bks
Investors can go long on financial assets as well as short them. Nothing new, Mark.
I'm 68 and old Faber is 67 .... after the reset .... my modest hoard .... may be bigger .... than his .... after he is skinned alive .... by the socialist wealth adjusters .... it's not how much you have .... it's how much you keep ! I like Mark .... I even look like him .... but he is TBTH .... Too Big To Hide !
That SOB Faber is living my dream.
http://www.marketwatch.com/story/markets-under-a-monetary-easing-spell-bis-2013-06-02?link=MW_story_latest_news
The Bank for International Settlements says markets are rising mostly because of these efforts, because expansionary monetary policy lowers the discount rate at which future profits are valued.
The BIS points out that even as advanced economy stock market indexes have gained, commodity prices have fallen and emerging market stocks have not gained as much. That suggests monetary policy is giving these assets a boost that the economic data on their own might not warrant.
The “ride to normality” as the economy recovers will be “bumpy,” says Stephen Cecchetti, head of the monetary and economic department of the BIS.
While “volatility per se is not necessarily bad,” it does create risks, notably to the interest-sensitive assets on the balance sheets of banks, investors and others, Cecchetti said.
“With the outstanding volume of government bonds greater than ever, interest rate risk — expressed as potential losses in relation to GDP — is at a record high in most advanced economies. And these losses will be spread across banks, households and industrial firms,” he says.
Separately, the BIS found there was a sharp, $467 billion reduction in cross-border interbank lending between the third and the fourth quarter of 2012, amid concerns over European finances.