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Marc Faber Fears "The End Of The Capitalist Economic System As We Know It"

Tyler Durden's picture


"We already live in a financial economy in which the debt and capital markets exceed the value of the real economy by far," Marc Faber explains to Germany's Finanzen100, "and that's before the current formation of bubbles." His most ominous warning, and one that fits perfectly with the seeming insanity of Federal Reserve (and all developed market central banks) is that "the next time a bubble bursts, then the capitalist economic system as we know will falter."

Via Finanzen100 (Google Translate),

The numbers speak for themselves: In 1980, the market capitalization of the U.S. stock market was less than 40 percent of gross domestic product (GDP). The debt, measured in credit markets, was about 130 percent of GDP. Today these figures are higher, according to Marc Faber many times: The market capitalization has reached over 100 percent of GDP, the debt about 300 percent. This is consistent with figures from the consulting firm McKinsey. After calculation, the global debt still stood in 2010 at 158 ??trillion. In 2012, there were already $ 200 trillion - and rising. This makes for a worldwide economic power of slightly more than $71 trillion about three times.

It is a powder keg on which we sit. In a normal real economy, said Marc Faber, the debt and equity markets are small - and there in order to steer the accumulated capital into investments. Net interest acts as a regulator. That is, there are only those made with the capital investment that is truly an attractive return, so a higher yield than fixed-income investments bring.

Speculative bubbles encourage innovation

However, it can also come here to the formation of speculative bubbles, as Faber points out. They are there but small, focused on little damage. On the contrary, you might even be necessary because they enabled quantum leaps in progress and can only increase the production capacity. Such a bubble bursts, then prices will fall, and so more consumers can benefit from the development. Examples give it enough: Whether the railroad boom in the twenties of the last century, the Internet boom in the late nineties or real estate bubbles. When prices dropped after the bursting of a speculative bubble, it benefited from broad sections of the population.

Such bubbles are therefore an integral part of the capitalist system. They promote the progress and increase productivity. But the decisive factor: In a real economy, the amount is limited to credit, as much as the real economic performance. Otherwise, with quasi unlimited credit available, investment is driven purely by liquidity - not real economics. And this is even more true when the market interest rate is distorted, as explained Cindy Sweeting of Franklin Templeton. The capital costs are no longer currently being determined by the market, but distorted by the intervention of central banks. Short-term financing costs are close to zero in nominal terms and negative in real terms.

Central banks override market mechanisms

The seemingly favorable debt financing and the affects it also on the decisions of the company. Incorrect or depressed capital costs can prevent new growth and lead to business transactions operate on, which should give it better. Insolvency and bankruptcies are mechanisms to ensure capitalism that no capital flows in companies that do not use it effectively. This mechanism is, however, set by the central banks suspended.

"The unintended consequences of the current artificial reduction and manipulation of interest rates and finance charges are potentially very serious," Sweeting explained: "The risk of asset price bubbles by cheap credit financing, the resolution of leveraged carry trades and the continued preference for cheap, financed on credit, investment in existing systems instead of productive and. because the capital costs are no longer determined by the market growth-enhancing investment in the creation of new facilities, many companies are able to finance subsidized low quality. "

Too much speculative and leveraged capital an economy driven by liquidity accept this very different proportions. The benefit that instigate these bubbles can then be significantly lower than the destroyed by the bursting of such bubbles prosperity. Because there is too much speculative and leveraged capital within the game. There are just too many white elephant 'investments made.

The crises of the past decades due to Faber's view on interest rates too low. In every crisis, but the banks increased the dose they took a more expansionary monetary policy. The patient, however, the real economy, more and more immune to it. So the doctor increased the dose and on. Although the medicine brings temporary relief, but it does not eliminate the cause. The liquidity-driven economy, it is growing like a cancer, according to Faber and on. And that will, as Karl Marx predicted, lead to the ultimate collapse that will put the foundations of our capitalist society on fire.

How it will actually go out is open. Investors should nevertheless take the warning seriously, because the end result will be a violent crash in the capital markets.


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Sun, 11/17/2013 - 15:33 | 4162956 Stoploss
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Then the killing starts.

Sun, 11/17/2013 - 15:56 | 4163031 Anusocracy
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The culling starts.

Sun, 11/17/2013 - 16:07 | 4163064 Four chan
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whats with all the popups on here?

Sun, 11/17/2013 - 16:27 | 4163114 Pladizow
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Are you referring to the results of viewing your avatar?

Sun, 11/17/2013 - 17:21 | 4163262 Terminus C
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If I recall correctly, you used to have a "pop up" inducing avatar yourself.

Sun, 11/17/2013 - 17:28 | 4163282 CH1
CH1's picture

I hope the system crashes and burns HARD.

It will open a chance for actual free markets to exist.

Sun, 11/17/2013 - 18:05 | 4163346 john39
john39's picture

yes, but...  the psychopaths who have been running the world are engineering the collapse towards an end...  and its not freedom for the serfs.   in the confusion and choas that will result from total economic collapse, they will attempt to slip their new system into place...  probably some type of global fiat, maybe even based on a (fake) gold standard.

Sun, 11/17/2013 - 19:49 | 4163589 CH1
CH1's picture

the psychopaths who have been running the world are engineering the collapse towards an end...

Honestly, I think you credit them with too much ability. If they were so smart, they would have killed the Internet in 1993.

And, truthfully, neither of us really knows what they are trying to do.

Mon, 11/18/2013 - 05:05 | 4164423 Truthseeker2
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The FOUR HORSEMEN Herald the Death Knell of Predatory Capitalism

• DOLLAR Collapse

• DEBT Overwhelm

• DERIVATIVE Implosion

• DEFLATION of Assets


"The global money matrix, worldwide financial architecture and planetary economic landscape most closely resemble the proverbial House of Cards in the form of a Pyramid-Ponzi scheme superstructure built on quicksand." 

Sun, 11/17/2013 - 20:25 | 4163663 andrewp111
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Any new system will be all-electronic, so negative interest rates become possible in the real world, and so the system administrators have full power and control. The new system will also allow money to have a "color", much like food stamps can only purchase defined food items, and the Central Bankers will be the only ones who can convert money from one color to another. This will allow them to compartmentalize and manipulate inflation and deflation in individual economic sectors without getting spillover.  It will be the "Mark of the Beast Currency".

Mon, 11/18/2013 - 11:06 | 4165071 Keyser
Keyser's picture

Unless I can hold it in my grubby little hands, I won't believe it's real. Much like I don't believe anything I hear and only half of what I see. Yeah, I am specualtively in bit coin, but PM's are where it's at in a deflationary reset. 


Sun, 11/17/2013 - 21:55 | 4163881 Kirk2NCC1701
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Whatever they slip in, will not be more libertarian, but more totalitarian.

IMO, the naive hope for the former, and realists expect the latter. Judging by the way the current system is being hijacked.

Sun, 11/17/2013 - 18:23 | 4163386 asteroids
asteroids's picture

I've been saying for years... "too much credit, too much debt, and an asteroid full of CDS ready to come crashing on your head". It's the CDS market that will cause enourmous misery when not if a credit of debt event happens. I could easily see DB or JPM going up in flames.

Mon, 11/18/2013 - 06:57 | 4164464 Jimbobo
Jimbobo's picture

for some reason I pictured you like an old blue collar grandpa talking to his kids/grandkids in a "I Told you so!" manner

Mon, 11/18/2013 - 11:09 | 4165089 Keyser
Keyser's picture

If the derivatives market implodes, it takes all the large banks with it.  If CDS's blow up in Germany, it takes the US banks with it. There will be no hiding this time. 

Sun, 11/17/2013 - 21:36 | 4163848 janus
janus's picture

@terminus C....yup, janus recalls them fondly.  some of the best funbags i've evah seen.

damnit, plazidow...we all love you, but bring back those spectacular titties!

alas, in the final analysis, i still don't know whether i'm more a tit or ass man.  it's a syllogistic nightmare (or, more properly, wetdream)...but, truth be known, it's a dialectic i intend never to resolve.

here's to insoluble quandries!


Sun, 11/17/2013 - 17:36 | 4163296 rbg81
rbg81's picture

For some mysterious reason, I find myself agreeing with you unconditionally.

Now....can I see a nipple?

Sun, 11/17/2013 - 20:26 | 4163665 Kayman
Kayman's picture

Yeah. I'm getting pop-ups too.  So, just to fuck the system, every advertizer that "pops" up never gets my business. And whenever I search for something on Google and their stupid ad algorithms bombard me with Googles version of help, I never deal with them either.

But it does make me wonder if anyone ever checks on the efficacy of advertizing on these Internet shitholes.

Sun, 11/17/2013 - 15:35 | 4162964 remain calm
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Got Gold?

Mon, 11/18/2013 - 11:11 | 4165093 Keyser
Keyser's picture

Alas, I lost several kilos in a boating accident, so no, no tengo oro... 


Sun, 11/17/2013 - 15:37 | 4162966 Sudden Debt
Sudden Debt's picture




Sun, 11/17/2013 - 15:58 | 4163036 Black Forest
Black Forest's picture

Good idea. Communication networks will become extremely stable when the "Capitalist Economic System As We Know It" crumbles.


Sun, 11/17/2013 - 16:06 | 4163057 DFCtomm
DFCtomm's picture

Do you realize the technology required to even make a crappy pentium 4 processor? If there is no capitalist infrastructure then you have no computer on which you can store your bitcoins. There are levels of value that depend on how far we fall.


precious metals




You can put bitcoins below cash but above precious metals.


EDIT: I'll leave this up to shame myself, but you should consider a /s tag.

Sun, 11/17/2013 - 16:09 | 4163068 Black Forest
Black Forest's picture

EDIT: I'll leave this up to shame myself, but you should consider a /s tag.

Agreed :)

Sun, 11/17/2013 - 16:21 | 4163098 DFCtomm
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To be fair the world has become so bizarre that it's destroying sarcasm. The onion is barely recognizable as sarcasm now.

Sun, 11/17/2013 - 20:33 | 4163687 SunRise
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add antibiotics, aspirin

Sun, 11/17/2013 - 16:10 | 4163067 joego1
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I can see people in fema camps fighting over their laptops to protect their bitcoins. "Start the generator Fred lets see if the internet is up yet so I can unload my bitcoin." You folks seem to be one of the few people that see the folly of bitcoin as a safe haven from fiat.

Sun, 11/17/2013 - 18:10 | 4163356 FredFlintstone
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I will be working the generator in a FEMA camp? Do I get any special privileges?


Sun, 11/17/2013 - 20:30 | 4163678 Kayman
Kayman's picture

Speaking of generators, I bought a nice little 4 cylinder Lister/Petter 65KW the other day. Just for temporary backup. 

Sun, 11/17/2013 - 20:34 | 4163689 SunRise
SunRise's picture

65KW Temporary Backup?   What are you running - all the street lights in New York City?

Sun, 11/17/2013 - 21:55 | 4163880 gonetogalt
gonetogalt's picture

Yea, a 5kw Lister-Petter goes about 12 hrs on a gallon of diesel. depending on load.

Sun, 11/17/2013 - 23:39 | 4164100 fockewulf190
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Internet access? In a FEMA camp? Surely you jest!

Sun, 11/17/2013 - 15:36 | 4162967 Dr Benway
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 "the next time a bubble bursts, then the capitalist economic system as we know will falter."


LOL, that already happened last time

Sun, 11/17/2013 - 20:32 | 4163684 Kayman
Kayman's picture

L, that already happened last time

Yeah, but the Fed turned on their anti-gravity machine, so we ain't falling no more. Unfortunately, the side effect is terminal cancer.

Sun, 11/17/2013 - 15:37 | 4162969 Confundido
Confundido's picture

Not too far, in a country ahead of the curve....:

Sun, 11/17/2013 - 17:21 | 4163264 Oracle of Kypseli
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Chavez legacy

Sun, 11/17/2013 - 15:36 | 4162970 Flakmeister
Flakmeister's picture

Faber gets it, even if I don't agree with everything he says...

Sun, 11/17/2013 - 15:44 | 4162995 Confundido
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Agree...what about his explanation on the underperformance of gold? Ridiculous! In his words, it seems that gold underperformed because printed money is not "distributed evenly". It goes first to some assets, and then eventually, to gold. Yes, I get that money printing is not neutral, but if it doesn't get to gold, why would god fall by 30% from its peak? The logical argument would have been that gold should have stayed at $1,900s for the last two years. In any case, his argument reduces to: Gold fell because people did not buy it, which is nothing else but a tautology. So, yes, I agree with you: He get's it, even if I don't agree with everything he says.

Sun, 11/17/2013 - 15:56 | 4163029 SRSrocco
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Not only is the Capitalist Economic System going to Bust so is the Great Bakken Oil Field:

The Coming Bust of the Great Bakken Oil Field

The daily decline rate of the Bakken is 63,000 barrels a day up from only 35,000 barrels a day in the beginning of 2012.  At this rate the daily decline rate for the Bakken will be 80-85,000 bd by the end of 2014.

Sun, 11/17/2013 - 17:17 | 4163240 frankthomaswhite59
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Thank you EROI/SRSrocco.

Sun, 11/17/2013 - 20:39 | 4163704 Kayman
Kayman's picture

Don't need no stinking Keystone. Energy independence by new technology for capturing hot air.

Sun, 11/17/2013 - 21:20 | 4163817 GlobalCtzn
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SRSrocco, Yours is the best blog I discovered this year! Excellent analysis and information! Thank you.

Sun, 11/17/2013 - 16:22 | 4163099 Flakmeister
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My theory on why gold got bitch slapped is that marginal demand is being more than satisfied by the massive recycling of scrap in the west and the bump up in production...

The middle class is liquidating its assets....

They has to be unencumbered asssets to convert into physical gold, and those are disappearing fast except for the uber wealthy (who as a rule don't really care about gold)...


Sun, 11/17/2013 - 19:24 | 4163522 hardcleareye
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Gold Daily and Silver Weekly Charts - Claims Per Ounce at 69 to 1

Nothing much of note in the metals today as they continued to bump into overheard resistance.

There was little movement of gold bullion in or out of the Comex warehouses.

I had asked Nick Laird of Sharelynx to check his figures and it turns out that the 'claims per ounce' from yesterday were a bit light at 63.  That did seem very little for a 51,000 ounce withdrawal.

A corrected chart is shown below. 

We are at an all time record of 69 potential claims for each ounce of deliverable gold.

Koosjansen has a new update on 'West To East Gold Distribution'


(jesse's Cafe Americain)

Sun, 11/17/2013 - 23:50 | 4164119 Non Passaran
Non Passaran's picture

Yeah but that ratio is just for Crimex. It was always high there. I wouldn't give it too much significance. I know it, but I don't act on it.

Mon, 11/18/2013 - 11:20 | 4165128 Keyser
Keyser's picture

Eventually physical gold will de-couple from the paper gold market and it's true value will be restored. As long as physical is coupled to paper, short-term trading will effect the price. At 69 to 1, it won't take long for Comex inventories to be depleted when / if customers demand physical delivery. That is when de-coupling will happen. Paper gold will crater and physical will go through the roof. 


Sun, 11/17/2013 - 16:56 | 4163191 prmths2
prmths2's picture

I do not follow Faber closely, nor do I have any significant position in gold. However, after several months of reading ZH I do believe that the price of gold is something akin to a complex number. The real part would correspond to the physical commodity, and the imaginary part corresponds to paper gold. Just as the reactive (imaginary) component of the impedance of an electric circuit can dominate its response under certain conditions, I expect that the price of gold can be heavily influenced by what is happening with "paper" gold, especially in the current environment.

Sun, 11/17/2013 - 18:06 | 4163349 FredFlintstone
FredFlintstone's picture

Can you translate your electrical analogy into a mechanical analogy?

Sun, 11/17/2013 - 18:41 | 4163437 Landrew
Landrew's picture

A valve 

Sun, 11/17/2013 - 23:26 | 4164082 Mr. Fix
Mr. Fix's picture

A sledge hammer.

Mon, 11/18/2013 - 14:40 | 4165985 prmths2
prmths2's picture

I think I see where you are going with this. Something with energy storage components such as springs or pendulums, possibly designed by Rube Goldberg?

Mon, 11/18/2013 - 13:11 | 4165583 nagan
nagan's picture

Paper gold price determines physical gold price.

But soon we may have to worry more about gold because according to Dr Faber the Fed may get wiped out.

Sun, 11/17/2013 - 18:29 | 4163347 essence
essence's picture

Marc Faber is like many old farts. They straddle two worlds.

In the old one they grew up in, there were no 'conspiracy' theories.
In the new .... well let's just say Faber can't come out and call a spade a spade.
That would disrupt too many old ties (either in business or in his head).

I could name a dozen establishment types that are regularly referenced on Zerohedge  that likely know what's happening, but are afraid to publicly go there on account of what that would do to their bottom line (You know, after awhile one gets used to having those mansions).

I respect Faber (hey, he probably smokes herb at night and yet, somehow, hasn't succumbed to 'reefer madness' ). How can that be all you old schoolers?

Still, he's old school. 



Sun, 11/17/2013 - 20:43 | 4163717 Kayman
Kayman's picture

If you met Faber in a bar, you would discover he embraces both schools.

Mon, 11/18/2013 - 08:29 | 4164534 Kirk2NCC1701
Kirk2NCC1701's picture

Some or many of us are related to the types you describe.  But it's probably always been that way, and (alas!) we might end up that way ourselves.  God forbid.

Sun, 11/17/2013 - 20:19 | 4163647 andrewp111
andrewp111's picture

Gold fell from 1900 because its rise to that level from the 2009 bottom was a classic Sornette log-periodic bubble, and in fact modelers predicted the crash quite accurately in advance.  The bubble burst, and gold has traded sideways ever since hitting 1300.  None of this precludes gold from being in a long term bull market, nor does it preclude the opposite.  It just means that gold went too far too fast in 2009-2011.

Sun, 11/17/2013 - 23:47 | 4164110 Non Passaran
Non Passaran's picture

There may be more paper money than before
Or maybe the slightly smaller flow of money has disproportional influence on PoG.
Who the fuck knows. Keep stacking. One day this bubble's gonna end.

Sun, 11/17/2013 - 15:37 | 4162971 rp1
rp1's picture

This isn't something to fear, it's something to celebrate.  Money is worthless. We can all just trade bitcoins or stocks or whatever else for income until the world figures this out.  The fact is that in this day and age nobody needs to work.  Furthermore, the stress of working and trying to find a profit is draining.  We will be a lot more prosperous when everybody can just choose what they want to do and not have to worry about food, shelter, bills, etc.  Embrace the Fed :)

Sun, 11/17/2013 - 17:06 | 4163208 The Gooch
The Gooch's picture

There's a utopian vacancy just for you (!) at 87th and Drexel in Chicago.


Mon, 11/18/2013 - 07:34 | 4164478 the tower
the tower's picture

I don't subscribe to doom scenarios, nor do I subscribe to utopian scenarios.

There will be a massive shift in how production is done, that's for sure. 3D printing will revolutionize and democratize *some* societies. I fear for developing countries though, at least in the short term.

A free basic income will be around soon, Switzerland is putting it to the vote (I'm sure it won't pass though). It's NOT a handout, it's a negative tax, and social security will be scrapped (more or less). It's an interesting concept, it will make employees cheaper, and will de-stress society.


Sun, 11/17/2013 - 15:37 | 4162972 DOGGONE
DOGGONE's picture

How about IT SHOULD END as we know it, at least this status quo severe fooling of the people!

Sun, 11/17/2013 - 15:42 | 4162985 Sudden Debt
Sudden Debt's picture

you're closer to the truth than he is.

To many people still believe in the system.

About everybody thinks it's normal to screw somebody to make a buck.

Nobody hates a fraud because of what they did, they hate him because they didn't think about it first.

There's not a single person out there that wouldn't mind pressing the button for a million dollar if that also meanth that somebody they didn't know would die.

Sun, 11/17/2013 - 16:27 | 4163116 Erus Unius
Erus Unius's picture

"There's not a single person out there that wouldn't mind pressing the button for a million dollar if that also meanth that somebody they didn't know would die."

This isn't 100% accurate. But I think more correct than incorrect. 

Sun, 11/17/2013 - 16:32 | 4163124 Terminus C
Terminus C's picture

Sad state of humanity, though I doubt it has ever been different.

Sun, 11/17/2013 - 17:12 | 4163223 rbg81
rbg81's picture

A million $$?  Oh, please.  It is much, much lower than that.

How many people would still shop at Walmart even if they knew that some unfortunate Third Worlder would have to die producing their $5.99 shirts?  Answer: all of them.  Case closed.

Sun, 11/17/2013 - 17:19 | 4163254 Terminus C
Terminus C's picture

Keeping the slaves killing each other over scraps is not a bug in the system, it is a feature.

Sun, 11/17/2013 - 21:01 | 4163771 GlobalCtzn
GlobalCtzn's picture

Exactly. A rather important feature like a foundation......................

Sun, 11/17/2013 - 20:46 | 4163725 Kayman
Kayman's picture

How about a $30-50 dollar shirt that would last more than one season. Soon Chinese Wall-Mart will have shirts for $1.99 that last for one wearing. What a fucked up world !

Sun, 11/17/2013 - 21:10 | 4163793 TuPhat
TuPhat's picture

I have lived in the third world.  They all want those jobs making $5.99 shirts because without that job they will die of starvation.  Go ahead and buy that shirt at Walmart.  You aren't killing anyone.  Their is enough death and misery in the world without trying to deprive poor people of their means of making a little money.  Americans kill more people by using illegal drugs than by buying cheap clothes.  But I do agree that the death button is less than a million dollars.

Sun, 11/17/2013 - 17:25 | 4163274 Zero Point
Zero Point's picture

Yeah it's not 100% accurate. Most people would do it for 3-4 hundred thou.

Mon, 11/18/2013 - 12:53 | 4165479 Erus Unius
Erus Unius's picture



It originally brought the Milgram experiment to my mind. I didn't bring it up because its more about following orders than for monetary gain. Still slightly applicable I think.

Sun, 11/17/2013 - 17:08 | 4163213 Seasmoke
Seasmoke's picture

i would push the button on some people I KNOW

Sun, 11/17/2013 - 17:51 | 4163321 Zero Point
Zero Point's picture

Shit yeah. For free.

Sun, 11/17/2013 - 17:20 | 4163259 DosZap
DosZap's picture

There's not a single person out there that wouldn't mind pressing the button for a million dollar if that also meanth that somebody they didn't know would die.


Usually I like your replies and humor,but pls when you make remarks like please  this do not include the entire population of this planet.I in NO WAY would ever do such a thing,if your a murderer for mammon,then your still a murderer.That someone you do not know is another human,with the same right to live as you.

That attitude is why we are screwed NOW.

Sun, 11/17/2013 - 17:54 | 4163327 DOGGONE
DOGGONE's picture

Yes, agreed. Along the way, I have phrased your bottom line thus.

The 'Establishment': F___ the people!

Sun, 11/17/2013 - 18:04 | 4163344 Black Swan 9
Black Swan 9's picture

I wouldn't.

Sun, 11/17/2013 - 15:37 | 4162973 Sufiy
Sufiy's picture

US Dollar And Gold This Week - Janet Yellen: "There Are No Bubbles And More To Be Done."

After Janet Yellen's testimony fundamental picture for Gold is very bright, QE is assured "until the economic data will justify the opposite". Even after The Taper, we will have the credit expansion in the monetary base ongoing and, maybe, velocity will increase finally with money flowing through financial system.    Question of Taper is still more than open - with Bernanke in office until Jan 31, 2014 we are very doubtful that he will make any decision on part of the FED. With Janet Yellen coming into the picture we can expect even more accommodation until economy will provide the clear signs of improvement in the real economic growth. The main take out for us from Janet Yellen's testimony is that "There Are No Bubbles And More To Be done."

Sun, 11/17/2013 - 15:38 | 4162976 PontifexMaximus
PontifexMaximus's picture

The same old stories, the krauts like these kind of "Weltuntergangsgeschichten". As long as sou have the CB on the other side of the table, you only can lose.

Sun, 11/17/2013 - 15:41 | 4162982 Confundido
Sun, 11/17/2013 - 15:47 | 4162998 Pretorian
Pretorian's picture

Same story since DOW was 7500 now at 16000 same shit. He ia paid to eat this shit or what?

Sun, 11/17/2013 - 15:49 | 4163004 falak pema
falak pema's picture

Marc Faber is to capitalism what Cicero was to Roman republic.

He fears the end of capitalism like Cicero feared the end of Oligarchical republican Senate, by he who would cross the Rubicon, after having conquered anarchical Gaul. 

The Oligarchs have conquered the world, unfettered in "greed is good" mantra,  which has pushed debt on to the State, aka to the pockets of the 99.9 %%, all the while keeping their own profits for themselves. 

Faber like Cicero is an Optimate, part of the current financialista elite, but for reasons of ethics (or out of rankerous ill feeling due to market manipulation making his hedged investments into loss leaders), he fights against the careening, unethical evolution of his own camp.

Cicero died under the sword of an assassin sent by Mark Anthony for having defied his mentor Caesar. 

Mark, you are marked like Cicero, if the rampant, inexorable Oligarchy, under the spell of "print to infinity" hubris, crosses the Rubicon once again.

Sun, 11/17/2013 - 16:13 | 4163085 bombdog
bombdog's picture

Cicero was a bloody lawyer and politico so your analogy is a poor one. Faber just tells it like it is. To conflate Faber's actions as an independent analyst with the elite is to misunderstand the man completely. Of course if you're a lefty you can't see that because you simply don't understand economics or markets.

Sun, 11/17/2013 - 16:34 | 4163133 Terminus C
Terminus C's picture

-1 for the "lefty" comment.  You still don't get it...

Sun, 11/17/2013 - 17:09 | 4163217 Groundhog Day
Groundhog Day's picture

I can't believe the junk s anyone who still believe s in the red team blue team bullshit is either ignorant or an idiot and needs an education

Sun, 11/17/2013 - 17:20 | 4163258 Terminus C
Terminus C's picture

It is ignorance, but ignorance can be clung to with ferocity and passion.

Sun, 11/17/2013 - 17:34 | 4163287 falak pema
falak pema's picture

hahaha "the markets"...which one? those of 1913? of 1929? of 1980-2008? Of 2008-2013?

THe only market that behaved decently was the period 1945-1965; the golden age of "the lefties".

Tell me where I'm wrong and what "the righties" did for the market apart from tearing it apart ! 

Mon, 11/18/2013 - 08:46 | 4164552 Kirk2NCC1701
Kirk2NCC1701's picture

In the short run... we can ALL be right.  At one time or another.

In the long run... there is justice for all.

Mon, 11/18/2013 - 03:40 | 4164392 carlin401
carlin401's picture


people like to worship Buffet but the fact is he is a 'vulture capitalist', except he likes to feed on the living,

everybody likes to make 'money' including pension funds, and now the USA is a nation of walmarts and walmart shoppers, and insurance talk about fucking insurance, and you can think mr-buffet for the modern USA insurance racket,

"Collect premium, deny claims', ...

That's all you have to know about mr-buffet.

Mon, 11/18/2013 - 03:42 | 4164394 carlin401
carlin401's picture


Faber is a just an economic-historian,

If you blame the messenger, that is fucking dumb.

Besides, if you bother to read Faber's books he has been consistent back to the 1980's on his ideas.

Sun, 11/17/2013 - 17:30 | 4163257 rbg81
rbg81's picture

The truth is that Capitalism as we know it is dying or dead.  It started dying with the Great Depression and the rise of the Entitlement State via the New Deal.  It got a big boost in the Sixties with the Great Society and another in the 1970s when Nixon let the Entitlement State expand and took us off the Gold Standard.  Reagan, for all the conservatives who worship him, did almost nothing to change course; as a conservative, it is almost embarrasing to say this, but Clinton did more than Reagan did with Welfare Reform (even if it was because a Republican congress forced him to do it).  As for Bush II, he was just one big missed opportunity.  Only slightly worse than his Dad who signed off on the Motor Voter law; though, to be honest, Clinton would have done that too.  At nearly every turn, anyone with the power save Capitalism either punted or actively helped smother it.  Why?  Simply because it was the easiest thing to do politically.  And that especially includes Drs. Greenspan and Bernanke.  The lack of leadership and backbone makes me sick to my stomach.

The difference between Obama and all his predecessors is that Obama is clearly a communist.  He is actively trying to build up the Entitlement State in order to bleed Capitalism dry.  And Wall Street is helping him do it because he is giving them everything they want in the short term.  If you want to see the future of this country, look at what is going on in Venezula.  The plan is to import so many dependent illegals to to this country that the Entitlement state will be impossible to tear down.  The economy down there is being absolutely devastated to keep things cheap for the poor. That will be us in 15-20 years.  

Sun, 11/17/2013 - 20:58 | 4163766 Kayman
Kayman's picture


I am no lefty, but by American Capitalism you are not referring to all the cartels that control virtually every market in America, are you ?

I once worked for a name brand corporation whose first rule everytime they entered a local geographic U.S. market, was to drop prices on everything until all the little guys were dead. That was always aided and abetted, and usually propogated by Wall Street. 

Once the competition was eliminated, prices went up and the remaining few large corporations got to play pattycake all over again.

Ask or watch Buffet or General Electric.  They never invest in any market that is competitive.

Sun, 11/17/2013 - 18:24 | 4163395 chump666
chump666's picture


It's chaos, a rudderless sh*t stream.  No conspiracy any more or less than history will allow and the perpetrators of failing systems are ALL MORTAL.  Rome collapsed, Egypt collapsed, Italy/Spanish/Portuguese 18th century empires all collapsed, the UK collapsed 100 years ago, communism collapsed, Fascist dictatorships all collapsed and America is collapsing.



Sun, 11/17/2013 - 15:48 | 4163009 TheRideNeverEnds
TheRideNeverEnds's picture

Ok, I think we all get it but what to do?  We have been in fantasy land for some time now, whats to say they cannot keep this thing propped up for another couple of years?  Are you going to short them here at 1800 on their way to 5000? 

Sun, 11/17/2013 - 16:04 | 4163053 joego1
joego1's picture

Step up to the table sir and place your bet.

Sun, 11/17/2013 - 15:49 | 4163013 Confundido
Sun, 11/17/2013 - 15:53 | 4163020 Quaderratic Probing
Quaderratic Probing's picture

"The End Of The Capitalist Economic System As We Know It"

We never really knew it.. so we can't tell were it will end or change or even if it's really in any danger at all. Bigger things are at foot.

Sun, 11/17/2013 - 15:53 | 4163023 Fíréan
Fíréan's picture

Is some of the text  a google translation from German ?

Sun, 11/17/2013 - 16:33 | 4163128 DavidC
DavidC's picture

Via Finanzen100 (Google Translate).


Sun, 11/17/2013 - 15:56 | 4163028 q99x2
q99x2's picture

When the Central Banks took control of the Washington D.C. politicians the capitalist economic system died. It just took longer for the fat cats on top to realize it.

But now that they are coming after your money and wealth you start preaching. Welcome to the revolution. May God forgive you.

Sun, 11/17/2013 - 16:02 | 4163047 buzzsaw99
buzzsaw99's picture

faber is full of beans. how can something (capatalistic system) end which never existed in the first place?

Mon, 11/18/2013 - 03:37 | 4164389 carlin401
carlin401's picture

Good POINT, ...

All we really want is 'anarchism', which is NO fucking government of any kind.

Capitalism, is just an extreme form of 'hoarding', animals do it too, 'smart animal', the dumb never hoard, but there is always a minority that hoard.

Faber is just selling his newsletter for $1000/year, the real question is "Why in the fucking hell does ZH post his peat and repeat every few days?"


At no point in my life did I ever see 'capitalism' in the USA, what I saw was like 'ayn rand' said "That which they don't steal from you, they tax".

In pure 'capitalism', your capital could never be stolen by a gubmint.

The power to tax, is always the power to destroy, ... and there are more destroyers in the USA than there are 'makers'.

Sun, 11/17/2013 - 16:06 | 4163061 bugs_
bugs_'s picture

It is the end of the socialist economies.

It is the end of keynesianism.

what system will exist afterwards?

barter, you work you eat, lets see the coins, etc

so class....what system IS that?

Sun, 11/17/2013 - 16:22 | 4163102 Shad_ow
Shad_ow's picture

----smirky smile all over my face.

Sun, 11/17/2013 - 16:13 | 4163082 Hohum
Hohum's picture

Don't be so sad, Marc. Pretending that infinite growth on a finite planet is reality has had a good run.  And there's still money to be made for some time to come.

Sun, 11/17/2013 - 16:23 | 4163104 Shad_ow
Shad_ow's picture

Infinite growth or infinite theft?

Sun, 11/17/2013 - 18:38 | 4163362 trader1
trader1's picture

There are good reasons to believe that there is no alternative to a new global order of governance that will eventually have to manage the transition to a zero growth economy.  If that is to be done in an equitable way, then there is no alternative to socialism or communism. [David Harvey]

Sun, 11/17/2013 - 16:13 | 4163084 tradewithdave
tradewithdave's picture

Is this a repost from 2008.  Pretty sure it ended with the Lehman moment and Hank Paulson's threat "Do you want your great-grandkids speaking Chinese?"  With the purchase of 1 Chase Manhattan Plaza and a forklift-direct connect to the Fed's vault the joke is on Hank.  They're speaking English pretty well.

Sun, 11/17/2013 - 16:23 | 4163105 Platinum
Platinum's picture

Maybe the holiday sales figures will trigger the collapse after the new year. They're going to be horrific.


Imagine teh sales!

Sun, 11/17/2013 - 16:33 | 4163127 Questan1913
Questan1913's picture

I don't fear the end of 100 years of systematic plunder by an "elite" criminal class and the ever increasing  level of impoverishment it has engendered, worldwide..  And I don't fear the end of the wars of aggression the international bankster class has waged against any country that has defied its power by refusing to becme a a member of their globe spanning central bank cartel.  I don't fear the end of the US fiat money regime  that has fueled the prosecution of an endless sucession of criminal wars of aggression aginst the military and civilian populations of the few wretched little defenseless countries that refused to bow down to the demands of the internatioal bankster class and its attendant financial "elites".  I definitely don't fear the end of their lying, thieving, muderous depredations, and have nothing but loathing for all who have contributed to the imposition and maintenance of this sick system.

Sun, 11/17/2013 - 16:33 | 4163129 Westcoastliberal
Westcoastliberal's picture

Is it me, or does this article deserve a bit of proof reading? ("Incorrect or depressed capital costs can prevent new growth and lead to business transactions operate on, which should give it better") Huh?

Don't disagree with Marc's premise, though.  When it blows it'll be gigantic!

Sun, 11/17/2013 - 16:37 | 4163143 Terminus C
Terminus C's picture

Google translated from German.

Sun, 11/17/2013 - 16:46 | 4163160 Westcoastliberal
Westcoastliberal's picture

Should have know Guggle was involved :)

Sun, 11/17/2013 - 20:34 | 4163692 fedupwhiteguy
fedupwhiteguy's picture

yeah, google translate sux balls!!! i've tried using it to hit on vietnamese girls and they look at me and say , HUH?????

Sun, 11/17/2013 - 16:36 | 4163139 AngelEyes00
AngelEyes00's picture

"That is, there are only those made with the capital investment that is truly an attractive return, so a higher yield than fixed-income investments bring."

Who wrote that, Yoda?

"Incorrect or depressed capital costs can prevent new growth and lead to business transactions operate on, which should give it better."

Uh, can someone translate?

"In every crisis, but the banks increased the dose they took a more expansionary monetary policy."


"How it will actually go out is open."

Maybe someone needs some coffee before tapping the ol' keyboard.  Beyond the hangover (or 2nd language) prose, it does beg the question of how capitalist markets recover after the current bubbles burst.  My contention is oil is too high priced for developed countries like the US, EU and Japan.  So the only game in town is to print baby print and just hope it all turns out well, which of course it won't. 



Sun, 11/17/2013 - 16:37 | 4163142 I Write Code
I Write Code's picture

Capital plays a very different role today than 100 years ago, or even twenty.

That's part of why the banks and banksters are out of control, there is so much loose money sloshing around the world, they let almost anybody play with it.

This is, overall, a good thing, being rich is better than being poor, but all that crap they taught you in school about capitalism is pretty much all obsolete now.  The new rules are - well, still trying to work those out.

Sun, 11/17/2013 - 16:40 | 4163148 reader2010
reader2010's picture

We have tried thus far to describe how capitalism has in fact operated as a historical system. Historical systems however are just that – historical. They come into existence and eventually go out of existence, the consequence of internal processes in which the exacerbation of the internal contradictions lead to a structural crisis. Structural crises are massive, not momentary. They take time to play themselves out. Historical capitalism entered into its structural crisis in the early twentieth century and will probably see its demise as a historical system sometime in the next century. What will follow is hazardous to predict.

- Immanuel Wallerstein,
Historical Capitalism with Capitalist Civilization

Sun, 11/17/2013 - 16:48 | 4163166 ZH11
ZH11's picture

When capitalists start quoting Marx the game is over. Especially when this is the second such occurence is quick succession.

Marx also said at the point of the final crisis the world had two options for solution, Communism or to revert back to being Barbarians.

Interesting but also very ominous.



Sun, 11/17/2013 - 17:01 | 4163203 blabam
blabam's picture

Cummunism = barbarism. 

Sun, 11/17/2013 - 17:50 | 4163320 reader2010
reader2010's picture

Was capitalism in its beginnings revolutionary, did the industrial revolution ever coincide with a social revolution? The answer is no. At least I don’t think so. From its birth capitalism has been connected with a savage repression. It very quickly acquired its organization and State apparatus.

- Gilles Deleuze, On Capitalism and Desire

Sun, 11/17/2013 - 18:35 | 4163414 trader1
trader1's picture

What further complicates the situation is that the rise of blank spaces in global capitalism is in itself also a proof that capitalism can no longer afford a universal civil order of freedom and democracy, that it increasingly requires exclusion and domination. [Zizek, "Capitalism can no longer afford freedom" 2012]

Sun, 11/17/2013 - 23:21 | 4164077 therevolutionwas
therevolutionwas's picture

Viva la rEVOLution!  Anarcho-capitalism!

Sun, 11/17/2013 - 18:38 | 4163425 trader1
trader1's picture

There are good reasons to believe that there is no alternative to a new global order of governance that will eventually have to manage the transition to a zero growth economy.  If that is to be done in an equitable way, then there is no alternative to socialism or communism.  Since the late 1990s, the World Social Forum became the center for articulating the theme “another world is possible.”  It must now take up the task of defining how another socialism or communism is possible and how the transition to these alternatives are to be accomplished.  The current crisis offers a window of opportunity to reflect on what might be involved. [David Harvey, "Organizing for the Anti-Capitalist Transition" 2010]

Sun, 11/17/2013 - 19:43 | 4163553 essence
essence's picture

And in this new system you espouse TRADER1, it will be determined that your best use to humanity will be to clean toilets in outer wherever. It's also been determined (by a committee funded by insiders associated to central bankers) that you're a moron and should never be allowed to mate and procreate.

Eat your own dogfood.



Mon, 11/18/2013 - 02:32 | 4164329 trader1
trader1's picture

so, if i copy/paste some words, then it means i agree with them 100%?

wow, the linear thinking of some ZH commenters never fails to impress!

has it occured to some that the intent is to stimulate thinking?

btw, i've already secured my immortality.

Sun, 11/17/2013 - 22:48 | 4163999 ZH11
ZH11's picture

Nice quotes trader1.

Lenin famously stated that 'Fascism is democracy in decay' thus with the revelations about the NSA, the banking system frauds and the ever expanding catch-all of terrorism legislation Zizek's gaps and Harvey's paraphrasing of Marx's 'inevitability' all point to something much more regressive being just around the corner.

As the comments against you and the voting down show, the adherents of capitalism would rather barbarism than communism which is disappointing but completely predicable and indeed it looks as though their leaders are working hard to deliver it to them.

"The advance of the capitalist production develops a working class which by education, tradition and habit looks upon the requirements of that mode of production as self evident-natural laws. The organisation of the capitalist process of production, once fully developed, breaks down all resistances"

Capital Vol I Marx 1867



Sun, 11/17/2013 - 17:06 | 4163209 Whats that smell
Whats that smell's picture

Are we there yet? We gotta be getting close.

Sun, 11/17/2013 - 17:15 | 4163238 Terminus C
Terminus C's picture

Marc keeps telling us we are there (just about) every week.  I don't think he is wrong in his general ideas but...

Are we there yet?

Sun, 11/17/2013 - 18:57 | 4163472 Deacon Frost
Deacon Frost's picture

"Markets can remain irrational a lot longer than you and I can remain solvent."

from A. Gary Shilling, Forbes (1993)

Sun, 11/17/2013 - 17:14 | 4163236 Last of the Mid...
Last of the Middle Class's picture

If i pay for my doctor's office visit with bitcoin will I get a digital exam????

Mon, 11/18/2013 - 08:36 | 4164542 Kirk2NCC1701
Kirk2NCC1701's picture

That's what you probably get now under your current insurance, and will undoubtedly get under Osamacare, should you bother + succeed in signing up.  ;-)

Sun, 11/17/2013 - 17:15 | 4163237 Last of the Mid...
Last of the Middle Class's picture

If i pay for my doctor's office visit with bitcoin will I get a digital exam????

Sun, 11/17/2013 - 17:40 | 4163268 Radical Marijuana
Radical Marijuana's picture

The world is organized as nested toroidal vortices of the flows of energy. Within that context, every energy system necessarily exists as an entropic pump, or heat engine. Abstractly, "capitalism" fits into that model. However, what we used to think of as the political economy of "capitalism" ONLY can operate within the frame of reference of a relatively sane and stable sovereign power, which can enforce its rule of law. However, that was NEVER the full-fledged frame of reference within which we operated. Instead, the fundamental principles of "capitalism," in the abstract sense of self-sustaining entropic heat pumps, actually DO operate in a much bigger "free market," which is the effectively free market in murder and fraud.

The relatively sane and stable sovereign power that provides its rule of law for people to operate within that context, through the "free market" and "capitalist" systems, which those enable to partially exist, was always the original product of the previous competition taking place in a literally free market of murder, based on deceits, backed by destruction. That process is what created the relatively stable sovereign power, with its relatively ability to enforce the rule of law, in the first place. Most people took that for granted, and did not understand that, and did not want to understand that, but rather got on with their lives within that context.

However, the bigger context is that government is ALWAYS organized crime, operated by the best organized gang of criminals, because that is the way that the laws of nature allow for there to be a de facto "free market capitalism" to operate according to the principles and methods of organized crime. The ability of a sovereign power to provide a rule of law, within which there is some relative free market capitalism under that aegis, is embedded in the original ability of that sovereign power to survive and triumph through the history of warfare. Since warfare is simply organized crime on a larger scale, the sovereign power created in the crucible of conflicts, through the history of warfare, became the context in which there was some rule of law, providing the framework for there to operate what we used to think of as "free market capitalism" inside of. However, what has actually happened is that the systems of organized crime, on various different fractal levels of expression, are continuing to manifest, in ways by which the previous sovereign powers are being taken over by similar fundamental methods of organized crime that created them in the first place.

There is no doubt whatsoever that we are looking as the decline and fall of the civilization that we were used to. That is somewhat similar to the rise and fall of empires in the past, however, this time it is different, because the advances in sciences and technologies have become so many orders of magnitude greater, that there are profound qualitative changes, which we have not yet seen go through far enough to change the state. The historical processes have been acting through different systems of organized lies, operating organized robberies, where the selection pressures upon those systems selected for the emergence of War Kings, that created the powers of sovereign states, which could provide the context of a rule of law, within which economic activities could be conducted. However, that system of sovereign law was still subject to the continuing application of the methods of organized crime, which primarily became the ability of the Fraud Kings, the private banks, and the corporations that grew up around those banks, to more and more take over control of the powers of the sovereign, and thus take over control of the rule of law.

Therefore, we have ended up with a hyper-complicated emerging system of embedded toroidal vortices, which feed back upon each other. The power of government to rob, and to kill to back up that power to rob, has been almost totally privatized. The corporations that the government chartered have taken over the government, while, at the same time, other corporations that the government mandated have taken control of those corporations that the government originally chartered, in a looping ouroboros of incorporated robbery. More and more, the runaway triumph of the application of the methods of organized crime being able to dominate the political processes, and thereby take control over the powers of government, have resulted in the power of government to rob, and to kill to back up that power to rob, being privatized, and to end up serving those corporations, which, in turn, are actually more owned by other government mandated corporations than by individual families of flesh and blood anymore.

Basically, the powers and capabilities of sciences and technologies which are trillions times more powerful are attempting to channel themselves through the previously established social and political systems that were never designed to do that, because those technologies that are many orders of magnitude more powerful never existed before. However, almost none of that is understood, or barely even thought about, by the vast majority of people. Human realities have ALWAYS been organized systems of lies, operating organized robberies. What we used to think of our our preferred political economy through "free market capitalism" was no more than a phase of that development. Tragically, the vast majority of people have been too effectively brainwashed to think in terms of false fundamental dichotomies, and their related impossible ideals. However, theoretically, the only good way to change our politics to perhaps cope with what is happening to the social pyramid systems being pumped up to becoming trillions of times bigger is to start using unitary mechanisms to understand human realities, and to respond to our problems through that way of perceiving things.

After one adds murder and fraud to "free market capitalism" one gets a runaway fascist plutocracy juggernaut, that is turning most people into its road kill. Not even the few flesh and blood human beings that own significant shares of the corporations that have been able to privatize the powers of government, to enable them to rob and to kill to back up that robbery, are immune, nor safe, from the monster that they originally created. Instead, we should go though a series of profound paradigm shifts, in the basic ways that we think about energy systems, and evolutionary ecologies, so that we can use that approach to understand the ways in which organized lies, operating organized robberies, are the universal basics, while those phases of relatively stable and sane sovereign states, that provided a rule of law, enabled a relative period of "free market capitalism" for some of the people within those systems, in those times and places.

While Marc Faber is right about what is going wrong, and right to speak out about where that is headed, as it continues to go wrong that way, nothing that I have encountered from him penetrates more deeply into these problems, and therefore, nothing I have heard him say provides a better way through these dilemmas. There is no doubt that the Fraud Kings, the central banks, have been able to take over control of the powers made by the War Kings, in the form of the sovereign states. There is no doubt that the triumph of those Fraud Kings is destroying what we used to think of the range of possible free market capitalism, made possible by the powers of the sovereign states providing a relatively sane and stable rule of law, to most of those individuals that were living within that system.

However, clearly, the Fraud Kings were able to systematically and persistently apply the methods of organized crime, in order to effectively take over control of the government and to privatize the powers of the government to rob, and to kill, in ways which benefited those Fraud Kings, the private banks, within the system of Central Banks, and the Bank of International Settlements, etc.. In the USA, the Federal Reserve and the income tax were the two most significant ways that the Fraud Kings were able to take over control of the sovereign powers of "We the People" to rob them blind, and to kill any of them who resisted being robbed in those ways. Furthermore, a series of developments enabled corporations to gradually end up with more rights and freedoms than flesh and blood human beings. Together, that created the overall system I refer to as the ouroboros of incorporated robbery.

The deeper problem that I perceive is that almost everyone who opposes that system continues to operate within the same frame of reference of false fundamental dichotomies, and related impossible ideals, when proposing their kinds of preferred solutions.  The sciences and technologies which have made our powers and capabilities become trillions of times greater than ever before in human history were based upon paradigm shifts towards understanding unitary mechanisms in order to achieve that. However, there is still nothing like that in the realm of politics, where old-fashioned religions, and ideologies, based on false fundamental dichotomies, and their related impossible ideals, continue to be the basis upon which most people understand the problems, and continue to propose their kinds of "solutions" which are obviously not working, and theoretically never could work.

The false fundamental dichotomy between government versus organized crime has enabled the best organized gang of criminals, the international bankers, to take over control of governments in ways that the vast majority of people do not understand and do not want to understand. Furthermore, those few who do wake up more to those social facts then usually tend to urge that we should go backwards, to return to their preferred impossible ideals, still based on those old false fundamental dichotomies as the way to better resolve those political problems. There is NO doubt that the established systems have become the runaway triumph of financial frauds, which is an extremely dangerous foundation for everything else to have been built upon. Therefore, there is NO doubt that "Investors should nevertheless take the warning seriously, because the end result will be a violent crash in the capital markets."

However, "investors" should go through a series of profound paradigm shifts to better understand their position as toroidal vortices in the flow of energy, which they are nested within, as too, others are nested within them. The same goes even more so for the "citizens" that should understand that they are actually members of an organized crime gang, called their country, which in their ignorance they have allowed to be taken over by a very small organized crime gang operating within the heart of that. However, neither those investors nor those citizens, are going to make any progress dealing with these problems as long as they continue to rely upon false fundamental dichotomies and impossible ideals to use to understand their problems, and what they should do about their problems. Instead, to get with the program of the progress that has been made in science and technology elsewhere, we should apply unitary mechanisms to understand political economy.

Sun, 11/17/2013 - 17:43 | 4163305 Carl Popper
Carl Popper's picture

What a doofus.

Panics, depressions, hyperinflation, fiat repudiation.....all that can occurr in any system even China. It is not just a feature of herding behavior in free market capitalism.

I thought you guys were austrians. These depressions and monetary collapses cleanse the system. They are inevitable.

Pricing and price discovery can only be distorted temporarily. It cannot be abolished even by the most powerful dictator.

Capitalism wont die at the next collapse. Capitalism and trade are intrinsic to human nature. Jeebus. You bunch of chicken littles

Sun, 11/17/2013 - 18:17 | 4163368 TrulyStupid
TrulyStupid's picture

Maybe so ... but the markets can remain irrational longer than you can remain solvent... in fact that is the end game in action. What will eventually collapse is Monopoly capitalism, the system under which we now live.. and the dire enemy of free markets.

Sun, 11/17/2013 - 20:05 | 4163617 andrewp111
andrewp111's picture

Capitalism won't die, but the current financial system could come to a very sudden end. One day, the collateral chains will implode and the system fails so quickly that no one gets out. Your bank accounts and EBT cards simply stop working as big bank after big bank defaults on its collateral calls and shuts down. With today's corrupt cronyist socialist governments, I can only imagine the faintest outlines of horror that will replace the current system. I believe the world's governments will cobble together some all-electronic "mark of the beast" currency in the middle of the emergency caused by the collapse of the current system, and probably are already making plans and implementing contingency systems that will be activated during the emergency.

And the new system will function a hell of a lot better than the ObamaCare website.

Sun, 11/17/2013 - 17:42 | 4163308 no more banksters
no more banksters's picture

Official: financial crises favor banking cartels

Sun, 11/17/2013 - 17:58 | 4163331 GeorgeHayduke
GeorgeHayduke's picture

There is a difference between capitalism and freedom with free markets. At its current level capitalism involves parasites who's only contribution to the world is money they've likely stolen from others (or inherited from ancestors who likely stole it from someone or everyone) and they loan out their money for businesses who use it in the hope of crawling out from under the thumbs of the capitalists themselves.

Freedom and free markets can exist without capitalists IF the money used in the system isn't created and controlled solely by capitalists to rig markets and political systems that always favor them and their greedy desires.

All this worrying about capitalism is good for the owners who like having compliant serfs that fight for their right to be good serfs. You gotta wonder what an alien species would think after watch this shit for years.

Sun, 11/17/2013 - 18:13 | 4163360 ramacers
ramacers's picture

aka, "the cleanse".

Sun, 11/17/2013 - 18:54 | 4163462 Future Jim
Future Jim's picture

Faber sounds like he is making a rather obtuse version of the following argument:

Before we can solve a problem, we usually must understand the cause; otherwise, the unintended consequences could be worse than the original problem. In fact, the solutions of the past are the cause of most of our problems today.

Given that those who are most successful tend to be those who are least principled, we can see why every other problem is the result of unhealthy interventions at the top, but how did it get to be this way?

After a few generations of unhealthy interventions from the top by men who may or may not have been principled, we can see how their bad solutions created a perverse incentive structure that rewards bad behavior and punishes good behavior. Just like bad parenting creates a spoiled child who suffers from arrested development, now an entire people are increasingly spoiled children who suffer from arrested development.

The Soviet Union had a system that rewarded unprincipled people, and it crumbled from within.

Everything afflicting the people (that wasn’t caused by evolution) is caused by dishonest banking and a dishonest money supply, and the watershed of problems are self reinforcing.

Dishonest banking and money are caused by:

  • Central banking
  • Fiat currency
  • Fractional reserve banking
  • Quantitative easing
  • Zero Interest Rate Policy (ZIRP)

Central Banking: The Federal Reserve is a private bank with a government granted monopoly on currency creation; whereas, money is a product just like any other, and thus would benefit from competition just like any other product. Why do you think the Federal Reserve refuses to be audited? Central banking was universally considered dishonest until the 20th century.

Fiat Currency: What most people still don’t know is that all of the money in America is created from nothing and backed by nothing except confidence, and thus it is referred to as fiat currency. Fiat currency was universally considered dishonest until the 20th century.

Fractional Reserve Banking:  The main cause of fiat currency is that banks can lend at least ten times as much money as they receive in deposits, and depending on the type of loan and type of deposit, it can be even more. Over time, the government has been making it increasingly easier for banks to create more unearned money out of nothing. This is known as fractional reserve banking, which was universally considered dishonest until the 20th century.

Quantitative Easing: In addition to fractional reserve banking, under Obama, the Federal reserve has been creating a much larger than usual amount of money and loaning it to the government and the banks. This is known as quantitative easing, which was universally considered dishonest until the 2oth century.

ZIRP: The federal reserve has reduced the interest rates to nearly zero percent on money it loans to the government and on money it loans to those banks who own the Federal Reserve.  This is known as Zero Interest Rate Policy (ZIRP), which was universally considered dishonest until the 20th century.

Consider that any entity who borrows money at zero interest has little incentive to ever pay it back, and will in fact have much incentive to keep borrowing. That’s a very corrupting influence.

Bailouts: Before Quantitative Easing and ZIRP, the government tried bailouts. Does anyone believe that the crash of 2008 and many of its prerequisites would have happened if all the self-proclaimed Elites had been certain that bailouts were an impossibility? It is almost as if bailouts were part of some plan.

Bailouts are unconstitutional, but they happened anyway, so we see that it is really just the character of the American people that gives the Constitution its power, and the American people lacked the character to stop the bailouts. It is almost as if character devolution were part of some plan.

Bailouts were universally considered dishonest until Obama.

Cronyism: Dishonest banking causes the government and the big banks to receive a flood of unearned money, which then finds it way to their closest cronies, which thus tempts cronies to become closer cronies and which tempts honest entities to become first-time cronies. This is called cronyism, and although it has been growing for a long time, it was universally considered to be dishonest – until Obama became the President.

Government rewards cronies with bailouts, contracts, tax breaks, regulations that help the crony and/or hurt honest competitors, and with selective enforcement of laws and regulations. Once the media became cronies, then media bias also helped other cronies and hurt honest competitors.

Once cronyism took hold at the top of government, the cronyism trickled down to the local level. Cronies in local government thus have the support of the cronies directly above them.

A system that favors cronyism makes it increasingly difficult for honest individuals and honest businesses to compete with cronies. It also manufactures more cronies by corrupting honest people. Furthermore, the dwindling number of men of principle limit their success by avoiding doing business with cronies.

Dishonest bankers corrupted honest banking, which then corrupted government, which then corrupted the free-market, which thus corrupted the people, which thus reduced entrepreneurship, innovation, efficiency, and honesty.

Inflation: Newly created dollars make each existing dollar worth less than before, and thus a reason to be first in line for the new money is the ability to spend it before each dollar has become worth less than it would have been worth – had the new money never been created. This is called inflation, which was universally considered dishonest until the 20th century.

Inflation is like a tax of several percent a year on every dollar in existence. It makes prices permanently higher than they would have been. The recipient of the inflation tax is whoever received the new money before it inflated prices. Inflation is theft.

Therefore, inflation tempts honest people to compete to be first in line.

Misallocation of Capital: More than ever before, there is a flood of new money at near zero percent interest rates. This new money often starts off in investment banks and thus much of it naturally finds it way into financial instruments, which thus creates even more incentive to bet the rest of the new money on financial instruments such as stocks, bonds, hedge funds, derivatives, collateralized debt obligations, credit default swaps, and options.

Consider the alternatives available to anyone who had access to unlimited new money at zero percent interest rates. Would he spend the effort to evaluate and fund your idea for a product which has a 50% chance of making him 10 million dollars in five years, and which is in a field he knows nothing about, and which will have even less chance of success than before – given inflation, cronyism, and the increased interest in financial instruments? – OR – Would he instead invest in financial instruments and in bribing politicians given that those have the potential for more profit and faster profit, and that he is already intimately familiar with such investments? If he loses, he can always just borrow more at zero interest.

Consider the alternatives of an MIT graduate who could invent a product that could attract investment capital. He could make an engineer’s salary, and then maybe someday invent something that would make him a couple of million dollars after years of saving or after increasingly difficult competition with financial instruments for investment capital. – OR – He could work for Goldman Sachs and make three times as much right away, and have three times the opportunity to make a couple of million dollars, and do it three times sooner.

Suppose government has more money to spend. That means more labor is directed toward government projects and less labor is available for projects that are capable of earning enough money from voluntary customers to pay for themselves. At the same time, inflation resulting from government borrowing reduces the value each dollar spent on projects capable of earning enough money from voluntary customers to pay for themselves.

These are examples of misallocations of capital resulting from interventions in the free-market ,and are caused by dishonest banking. Misallocation of capital was universally considered unhealthy until the 20th century.

The Seen vs. The Unseen: Misallocation of capital is very hard to detect because of “the seen vs. the unseen”, which is a phenomenon first identified by Frederic Bastiat in 1850. Whereas, we can easily see the jobs created by the new money at zero interest, only one man in a million can see the jobs that were lost or never created because of the new money.

An additional hurdle is the bias of a crony media cheering for the new money projects and ridiculing those one in a million who can see the lost jobs and who can see that they were higher quality jobs because they would have been making something for which people would have voluntarily paid enough to generate a profit; whereas, crony jobs were created as a result of cronyism, taxes, bribes, and free money.

The “seen vs. the unseen” was universal knowledge – before government schools.

The Broken Window Fallacy: One way to penetrate the media bias and “the seen vs. the unseen” is the broken window fallacy, which is another idea from Frederic Bastiat in 1850.

Consider that progressives claim that all government spending, such as war, helps the economy as much as, and usually more than, any private spending. The progressive argument is another version of the argument that if a kid breaks a window, then that helps the economy because the capital spent on fixing the broken window created more work for the carpenter and more work for the window maker.

Whereas, we can easily see the jobs created by the capital spent on fixing broken windows, we cannot easily see the jobs that would have been created by that same capital if the windows had never been broken. Both labor and physical resources were obviously wasted in such a misallocation of capital.

Sooner or later the capital would have been used create something the owner thought customers would voluntarily pay enough for to earn him a profit. If the owner couldn’t think of any use for his capital, then he or his bank would loan it out to any borrower who did have an idea to create something the borrower thought customers would voluntarily pay enough for to earn him a profit and pay the interest on the loan.

The broken window fallacy so easily penetrates the seen vs. the unseen that it made it difficult for governments to borrow such great sums of money, and thus great effort has been spent by economists and other cronies to deny or circumvent the broken window fallacy. The pressure to deny reality has corrupted many economists because the surest path to obscurity in economics has been to embrace reality.

Mon, 11/18/2013 - 02:22 | 4164324 Bear
Sun, 11/17/2013 - 19:53 | 4163596 Low Beta
Low Beta's picture

In the end reality always wins.  That is the superset of Lady Thatcher's observation.

So the only question is the price.  We could. should, have stopped Hitler in the Sudetenland for 50,000 lives.  Instead we stopped him at Normandy for 500,000.  The added loss is the carrying cost of deferring action.

Back to the point, the free market economy is where we will always revert.  The sole issue is how expensive will the socialist diversions be.

Sun, 11/17/2013 - 19:53 | 4163599 GeorgeHayduke
GeorgeHayduke's picture

Perhaps "The End Of The Capitalist Economic System As We Know It" isn't such a bad thing. I mean it's trashed the planet's environment, made economic colonies of most countries, and made war and destruction an essential element of the economy. It's doesn't have to be either capitalism OR socialism, although capitalism in its current form IS socialism for the upper 1%.

Sun, 11/17/2013 - 19:54 | 4163600 jim249
jim249's picture

Faber is getting worried there is no place to hide his wealth. Confiscation time?

Sun, 11/17/2013 - 19:58 | 4163606 robertocarlos
robertocarlos's picture

It doesn't look like Faber feels fine.

Sun, 11/17/2013 - 21:05 | 4163784 yrbmegr
yrbmegr's picture

Marc, we don't actually know the current system.  So, meh.

Mon, 11/18/2013 - 01:59 | 4164307 One of We
One of We's picture

If I was a multi billionaire who'd had my fill of hookers and blow I'd start throwing some life rafts to the muppets I'd need to shine my shoes, press my slacks, grow my food, etc....

Mon, 11/18/2013 - 03:28 | 4164385 carlin401
carlin401's picture

Really fucking STUPID,

Faber is in THAILAND, and spent most of years in HONG-KONG ( real capitalism ),

I don't think there was ever real capitalism in the USA, ...

The USA was constitutional republic, with on the rich white land owners having a say,... its still that way,

They simply had to keep bringing in immigrants to keep wages low, and of course this became and unmanageable welfare state,

But say Singapore(rogers), or even Thailand, or HongKong, ... these Asian country's have been doing 'entrepreneuralism' for +10k years,

It's impossible to be an entrepreneur in the USA, unless your daddy is a big lawyer like Gates,... unless your connected its impossible to build a biz anymore in the USA,

But in Asia its still possible, but most people are too busy looking for the 'easy-job',

In the USA most people are getting a check from the gubmint, in ASIA the 'iron rice bowl' [welfare] was broken 50 years ago.

In summary for Faber to talk about 'capitalism in america' is fucking bullshit, there is NOTHING capitalistic in the USA, its 100% FASCISM-CORPORATE-WELFARISM.

Mon, 11/18/2013 - 07:01 | 4164467 smacker
smacker's picture

"..there is NOTHING capitalistic in the USA, its 100% FASCISM-CORPORATE-WELFARISM." has nevertheless managed to completely fool the populace for a very long time into believing that it was true free market capitalism at work.

In fact it is state capitalism (corporatism, aka fascism).

But - due to distorted education, govt & economist propaganda and MSM disinformation - vast numbers of people cannot understand the difference between capitalism and corporatism. The former being subject to healthy free market competition, limited regulation, winners and losers and no such thing as corporate welfare. The latter being a centrally controlled nightmare like we see in the US, UK & EU.

When central planning & control fails - as we now see - the State's solution is to impose ever more central planning & control. Rinse and repeat until matters slide into the abyss and it becomes necessary to expand fascism into every nook and cranny of society to control a population that has finally worked it all out and gets angry.

Anybody recognise this model?

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