Marc Faber Warns "We Have Reached The Endgame Of Monetary Policy"

Tyler Durden's picture

"One day this whole credit bubble will be deflated very badly - you are going to experience a complete implosion of all asset prices and the credit system..."

Via South China Morning Post,

Marc Faber was in fine form at the CLSA Investor Forum, dispensing his trademark gloom and doom. The final keynote was a tour de force of the history of debt, asset bubbles and financial markets in the 20th and 21st centuries.

"Unlike the '50s and '70s when there was relatively less overall debt, a financial market crash did not inflict great damage on the economy.


Debt levels are significantly higher these days, and so a market crash can inflict serious damage on economies.


We've gone through a period of huge asset inflation, in stocks, bonds, commodities, and real estate, and we essentially now have in the world, a huge asset bubble.


So everything is grossly inflated."

In addition there has since 2007 been:

"colossal asset inflation" in high-end goods...

In thinking about what the next big bubble will be, Faber said:

"The problem is I believe you and I are the bubble... the financial system is just too big, that is the problem.


Maybe we can't see where the next bubble is because we are the bubble - that is something to consider."

Faber thought economists should distinguish between economic growth where credit grows at the same rate as the economy, which he believes is sound compared with a situation where credit grows faster than the economy. Credit used in capital formation is more beneficial to an economy than if used for consumption, as is the case in the US.

"One day this whole credit bubble will be deflated very badly - you are going to experience a complete implosion of all asset prices and the credit system - but as to when -I don't know."

Advanced sign of the cracks in the system are already evident. A dollar of additional credit in the system created significant economic growth, but these days an additional dollar has very little impact.

"That is a sign that we have reached the end of monetary policy."

Another indication is when the US government has to issue treasuries to pay the interest on its maturing debt.

"That will be the end game - then you are dealing with a collapse in the currency."

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King_of_simpletons's picture

Bernanke will fix this by raising QE to $ 100 Billion a month. Just you watch the maestro do his magic.

Eisenhorn's picture

CTRL+P to infinity AND BEYOND!

Pure Evil's picture

Somebody's gotta give Japan and China a run for their money.

If not us, then whom, if not now, then when?

ratso's picture

Farber only has one note - the sky is falling.  Give me a break pleeeaasse.  Haven't we heard that crap just toooooo often about everything.  Get a new script Farber.  You are boring us senseless.

Nothing but the truth.'s picture

So you disagree with the mans outlook ?

Keyser's picture

Peter Schiff with an Austrian accent. 

flacon's picture

FABER: "So everything is grossly inflated.""


So are his words grossly inflated too? It's impossible to have EVERYTHING inflated because there are two sides to every trade. Someone is short and someone is long. 


The winning trade was to buy puts December 30th on the Ultra VIX. Down from $300 to just $30 - a 90% loss. 

Pool Shark's picture



"All generalizations are grossly inflated;"

"including this one..."


TruthInSunshine's picture

What the hell...we're already at the point where the United States, as well as most developed debtor nations (and god only knows how bad things really are in the opaque BRIC "miracle" emergent economies), are issuing treasury notes to pay the interest on the national debt.

If anything, Faber may be UNDERSTATING how bad things truly are at present.

Lost My Shorts's picture

Yes, but he is also the proverbial stopped clock, who always says the same thing and is only right at long intervals.

The Raiders are going to win the super bowl.  It's only a matter of time.  See, I can make accurate predictons too.

GetZeeGold's picture



Time to get some gold and ride out that last fiscal wave.


Jamb a stick in the CTRL-P button and slip out the back before the damn thing blows.


The last thing getting bailed-in will be my sock drawer.

GMadScientist's picture

Faber is like the old saw about Marxists: they've predicted 12 out of the last 3 recessions correctly.

MeelionDollerBogus's picture

I suspect the muppets may even be catching on to this bubble in bonds. Getting all suspicious-like.

grgy's picture

Peter Schiff with a Swiss (German) accent.  There, fixed it for ya.

GetZeeGold's picture



Why do the really smart people always talk so funny?

flacon's picture

The problem with the Austrians, like Faber, Schiff, etc. is that they are right and will win the war, but there are many, many battles still to be waged which they will lose. 


If you doubt me, just look at the price of gold or the price of the Dow / S&P. Austrians continue to lose the smaller battles, but in the end they will win the war. 


In the meantime most ordinary folk like you and me will lose our jobs, have to sell our gold to survive and end up poor.

Arius's picture

exactly.  in the long run we are all dead ...

or ZH"s on a long enough timeline the survival rate drops to zero


or market remains irrational longer than you are solvent

flacon's picture

Thanks for reminding me. It's always good to think about the long run. 

GetZeeGold's picture



Never overlook the short can be a real killer.

JR's picture

But in the short run, we're alive.

And America is moving at lightning speed in the wrong direction.

The debt isn’t just bigger; the Fed balance sheet isn’t just larger; the Congress and the President aren’t just a little out of touch: the numbers are historically astronomical.

A ll are out of control. The equity markets have priced in excessive stimulation for the next several years. When a hammer falls and this ends suddenly, the markets will not just drift lower; they will torpedo to the bottom, perhaps with greater intensity than ever seen before.

All of them, the Bernankes, the Dimons and Blankfeins, the Fed’s multibillionaire dollar friends, the Congress, the government bureaucrats and the President, don’t produce anything. They are a giant sponge on American labor and production. They jump in where they are not asked, needed nor wanted. And, now, they've eaten the seed corn.

It’s a fight for or against the bankers who produce nothing but extract the value from the nation’s wages and pensions and savings and Social Security and insurance payouts by watering down their value with QE and debt. Pelosi covers their tracks on one hand by saying Congress can’t cut anything and on the other by saying there’s nothing left in the cupboard. She and her cohorts are despicable. What these sellouts to the bankers are saying to hardworking Americans is:

“How much did you make? Send it in.”

As Greenspan once explained: The “shabby secret” of paper money is that deficit spending and currency debasement are simply nothing more than a “scheme for the hidden confiscation of wealth.”

It’s time to say NO to this Fed-controlled government.

artless's picture

Fine then. I agree with your statements and believe that until the Blankfeins, Dimons, and Bernankes are frogged marched off to prison nothing will change all that much. Indeed nothing much will change even if that happens wet dream that it is.

Most of the world is just fine saying no to all pf this. But what exactly are you or anyone else actually going to DO about it?

Do not take this as a personal attack ( I do not know you obviously and have no idea your situation) but I wager the answer is nothing. You (and I'm using "you" as a stand in for the average American) have a couple kids, a 401K perhaps, a job with that oh so important benefit package, a mortgage (and the ever so important deduction), car payments, a mother-in-law in a retirement community, and shit naybe even some colege debt that still sin't paid off. You're all in. You've bought the American Dream farm of lies and bullshit and there's no way out without hurting everyone around you. What are you going to do?

Nothing. I do not hold it against anyone if in such a scenario. I understand it.

But then after that you're gonna line up in droves and vote for the next bunch of criminal psychopaths to take the reigns of the Plantation that is The United Socio-Fascist States of Amerika in the HOPE that something will CHANGE.

THAT I do hold against "you" and will never understand.

If you were born any time after 1960 and did not GROW UP KNOWING that the whole thing was just a fucking ruse then you are blind.

JR's picture

There comes a time for all Americans when a bureaucracy transitions into a quasi-police state and people of good will be forced to fight for their country or face internment, execution, property confiscations, and worse.

I can tell you that I will fight rather than consent to this Stalinesque progression and I believe millions of others will fight as well… because 401(k)s, jobs, retirements, assisted living accommodations and relationships of all kinds will have no meaning if the fabric of this nation is to be lost.

All of our priorities will change and if our continued efforts to turn the tide in the political direction of this country are unsuccessful, then we must fight, and you will as well, I know.

ZH already is in the field; it is a fight club.

Bay of Pigs's picture

Trying to hold people accountable in the US gov't has been difficult, if not downright impossible.

Help send a message to Chilton and the CFTC that we're sick of their corruption and lies. Pitchforks and torches are next.

Oracle of Kypseli's picture

We can all try to avoid (not evade) paying taxes as much as possible. Live within our means. Stay away from the stock market casino. Bank with local credit unions or small banks. Self insure medical. Vote out all incumbants. call, fax or write your representatives on a daily basis until they get it. 


Captain Benny's picture

You're missing the point.  You should not bank with anyone except yourself.  Holding a digitized debt obligation known as a Federal Reserve Note is still just that... its all effectively part of the one big bad bank.  Either you're in or you're out.... banking with JPM is no different than banking with Name Your State Credit Union.

Oracle of Kypseli's picture

Feel free to modify as you like. PM's are of course the gold standard (pan intended). Banking with JPM is actually different than small banks as you starve JPM leverage.

Banks also convert your on demand accounts to savings accounts without you knowing thus, increasing leverage. 

Help Is Not Coming's picture

Well you could bank with JPM and then exercise your legal remedy under 12USC411 and redeem your Federal Reserve Notes for lawful money. This would deny JPM the ability to fractional reserve lend against your money. However, given that JPM already so flagrantly flaunts the law and breaks it routinely, I doubt seriously that they would abide by 12USC411 and just ignore it like they ignore every other legal requirement around finance and banking.

GMadScientist's picture

Tell us where you work in the US that you aren't paid in dollars (most likely via direct deposit).

The "more prepper than thou" routine is less useful than people fighting back in whatever way is reasonable for them. If they're denying JPM dry powder to influence PMs, they're helping; you're not.


Lost My Shorts's picture

Can't say about you personally, but 95% who talk like you just vote the republican party lever, which does nearly nothing to address the problems you raise.  Lindsay Graham is your daddy.  The reason most of this talk leads to nothing is because it is nothing.  I hope you are different, but how will you convince your republican friends, or make common cause with fellow citizens who aren't exactly like you?

Oracle of Kypseli's picture

This fight is irrespective of party affiliations. Don't make it so.

Congress as a whole is a bunch of hores of all kinds.

Lost My Shorts's picture

Maybe it "should be" but it definitely not "is" irrespective of party affiliations.  Most people, including on ZH, hate people different from themselves more than they hate the goverment.  The elites know that, and they play people easily that way.  In the end, people always side with the government against people different from themselves.  Divide and conquer is ancient wisdom for a reason.

There is so much preaching to the choir on ZH.  Usually one just yawns.  But every so often I get the urge to say, hey pal, why waste your time preaching to the choir?  Why not do something that would make a difference?  Do you even kinow what would make a difference?

drunkenlout's picture

Thanks, artless, for describing me with the tyranny of averages.  I don't have a couple kids;  correct answer is zero.  I no longer have a 401 k, I don't have a job with a benefit package.  No car payments, no living mother-in-law, nor FOL.  No college debt, nor any other debt.

I do have some assets, which are entirely unencumbered.  It's OK if you want to be pissed off at the abstract me, whom you have described bass-ackwards.  It's even OK to challenge me on what am I doing about it.  The answer is what I have done.  What are your recomendations?



Herodotus's picture

Who will rid us of this troublesome priest?

Sorynn's picture

More and more people are collapsing before the market.

I was completely unaware until 2011.  Running my own business lead me to seeking out alternate media sources, because the stories on the MSM made no sense.  That lead me to ZH, Chris Duane, Chris Martenson JMG and others...

2012... Accounting and Finance job - outsourced, business doors - shuttered, house - handed back to the bank, family - almost divorced and split from the boys.

2013... For the last year, I have worked in consulting roles, and I probably will for some time.  I do not have many assets anymore, but I have some that are physical, and I am having great fun learning practical skills (Organic Gardening and soil generation, permaculture techniques, soap making, canning, BJJ, Judo, Escrima and playing guitar) and working in the cash economy.  Crash or not, I am moving back towards family, pooling resources and working to make each other more secure and happy in our own ways. 

HH or someone here is long black markets and his tribe... So am I.

mt paul's picture

on a long enough timeline

every thing is worth nothing ...

BoNeSxxx's picture

5 acres, shelter, a cow and some chickens are the best insurance against having to sell your gold to survive...

Not that this is any earth shattering revelation around here... but it helps me sleep at night knowing my stack is the absolute last thing I will part with and it won't be until I choose to do it.  Period.  End of story.

D-liverSil-ver's picture

Add some non-GMO non-Hybrid seed or you will only be able grow that 5 acres for one year.

quasimodo's picture

This non-GMO you speak of, is it better than GMO? Please enlighten me, I live in the midwest where it's all corn and soybeans, cattle and hogs. I don't think they use any of that GMO stuff here?

Wait, what???

greatbeard's picture

>> Add some non-GMO non-Hybrid seed

You could save a sack full of words and just say heirloom.  And I'd bet 99% of the folks who have taken the time to start gardening already know about heirloom vs hybrid seeds.

whirling tword freedom's picture

Wouldn't hurt to have supplies to build a still and have  some sugar and yeast around..... just in case.  lol.... Somebody will have to make it.

TheMeatTrapper's picture



You are absolutely correct. Get debt free, learn to catch, shoot and grow food. Walk a lot and stay in shape. Learn to make something that other people need. Stack for your kids with the idea that your stack doesn't exist - it's a birthright for the next generation. 

That's my outlook. I trap more meat than my family can eat, and I sell the fur. A $5 trap will put meat on the table for years and years. Funny how the $5 trap used to cost $1.75. 

Learn To Trap Now!

BobPaulson's picture

Get debt free? Why? How about borrow as much as you can and buy gold with it? What are you some kind of protestant masochist? The geniuses of this thing so far are the people who bought houses, got helocs, bought a bunch of shit then defaulted on their mortgages. Of course if they bought a bunch of useless services they broke even.

I just mortgaged my house again at 3% fixed for 10 years and bought a rural property in the mountains cash. Either it is crushing deflation and the government buys back all debt with funny munny or crushing inflation. Either way your debt is gone. There isn't enough fucking collection agencies to reel in all the bad debt out there. Best not be a lender (saver) in these times unless it is gold or land. So far the savers have gotten hosed every single time because democracy always votes to screw the minority and bail out the morons. All you have to do is get the easy cash and buy something solid out of their reach.

My feeling is the ones who are going to get raped are the ones who think they have a pension, insurance plan, stocks or some other counterparty trick and when they find out nobody is paying, they'll have to blow their nose with that paper.

lasvegaspersona's picture

I agree Bob P.

It is confusing to hear folks say they are worried about a currency collapse and in the next breath say they are getting out of debt.

I say if you are sure you can service your debt then some debt is good. The only ones who will suffer with this plan are those who suddenly find themselves unable to pay. I suppose if this goes on for years that could be a lot of us.

Since I am in my 3rd year of believing the end could be near soon I am not one to say borrow money and buy gold. If this ends with a Weimar like event or with a sudden reset...then that would be the best strategy. If it drags on the a very balanced approached is best....with debt as a part of it.

Kirk2NCC1701's picture

That's very sage advice from BP. Cash is King!

Which is why every adviser, broker, planner or schemer wants your cash. True quality advice is extremely hard to provide these days, given the internet(s).

Trust your cash deposits with the Bank of Certa & Sealy. ;-)

whirling tword freedom's picture

It's possible you are correct but, I've never seen a bank or anyone else relieve anyone of an obligation.....  Those are bank assets and, loans don't get forgiven unless you pay them off.  Whatever happens after any reset we have, your loans will be assets for someone else at some new exchange rate using possibly a new currency.

It may be a good strategy but, it hasn't been the way I have gone.

Regardless, I have a place in the country too and a 3% loan on a relatively small mortgage I could come up with enough to pay off if I needed to.

i want to have cash on hand as well as PMs.... It could be we have massive deflation before we have all the QE kick in and devalue things....  In that scenerio, cash is king and with cash you can buy up assets cheap if you have cash.  The cash I have aside will pay off the house if I want to do that but, at 3% interest, I'd rather have the cash.

MeelionDollerBogus's picture

Credit cards are unsecured credit. There's no legal basis to take anything.