Marc Faber Warns The Fed "Will Never End Its Insane Policies"

Tyler Durden's picture

"The Fed will never end QE for good..." blasts Marc Faber, "they may do some cosmetic adjustments, but within a few years, [Fed] asset purchases will be substantially higher than they are today." There will be another weakening in the US economy, Faber warns, and "the Fed will argue it hasn't done enough and will do more... they have been irresponsible for 20 years."

Noting that investors should "not buy stocks but be in cash", the stunned CNBC anchor exclaims "How could you sit in cash when th emarket is on fire and interest rates are so low?" to which Faber blasts, "The market is not on fire, look at IBM, Cisco, and Intel - all lower than 2011; it's on fire if you are in Facebook or Twitter and not everyone owns them."

Use rallies to reduce exposure, he warns, "we will go up until it is over; and when it is over the drop will be larger than 20%"

 

 

On The Fed

"They will never end QE for good... they may do some cosmetic adjustments, but within a few years, [Fed] asset purchases will be substantially higher than they are today"

 

"Do not forget, the stock market and the so-called economic recovery will be in its 5th year... and at some point the economy will weaken again. The Fed will argue it hasn't done enough and will do more"

On Money Printing

If money printing can truly enrich the world, we should all be on the beach! Money printing does not create wealth but that's what the Fed thinks.

On the Fed's ability to spot bubbles,

Faber analogizes the members sat on top of a barrel of dynamite covered in gasoline and lighting a cigar..."and still not notice any danger."

 

"The members of the Fed have never worked a single day of their lives in business" and are blind to the real world impact of the policies.

 

"They have been irresponsible for at least 20 years," by creating one bubble after another and "bailing out institutions that should have failed."

On Stocks,

The S&P will not go up forever, and the happy times will not last forever; use any rally in the US markets from here to lighten up on long positions...

 

We have had a huge run off the lows in the US stock market, "we will go up until it is over; and when it is over the drop will be larger than 20%"

 

I don't think people should buy stocks - they should be in cash.

On Going To Cash,

The most-hated asset at the present time is cash

 

The stunned anchor exclaims "How could you sit in cash when th emarket is on fire and interest rates are so low?" to which Faber blasts,

 

"The market is not on fire, look at IBM, Cisco, and Intel - all lower than 2011; it's on fire if you are in Facebook or Twitter and not everyone owns them."

On the US economy,

In the US, the numbers may look better - but look at who publishes the numbers... globally the numbers have actually deteriorated.

On the Global Economy,

The global economy will not be strengthening next year, it will be weakening as all the Asian economies are slowing

On Gold and Gold Stocks,

Of all the asset claases that I look at, the most depressed is precious metals (and precious metals equities).

 

If money printing continues, which he sees as likely around the world as they "continue their insane policies", these will benefit the most.

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cougar_w's picture

A 20% correction seems wildly optimistic. Maybe 20% in the first 3 days, but it could become 60% before the last dog is hung.

gmrpeabody's picture

" before the last dog is hung"

Coug..., WTF...?

cougar_w's picture

It's a pirate/oldwest reference. One hangs we all hang ...

SilverIsKing's picture

If the FED does a minimal taper for cosmetic purposes and a short while later, ramps it back up higher than it is today, can there be a valid threat of tapering from that point forward?

Of course not.

That is why there will be no taper.  Once they do it and reverse course, they'll no longer be able to use the threat of tapering to control things.

SRSrocco's picture

Why wouldn't Faber be bullish on gold... Hell the U.S. had Record Gold Bullion Exports in the first nine months this year.

 

Record U.S. Gold Bullion Exports Head to Hong Kong & Switzerland

http://srsroccoreport.com/record-u-s-gold-bullion-exports-head-to-hong-k...

MillionDollarBogus_'s picture

And bitcoin..??

Faber, don't forget about the crypto-currency...

frankTHE COIN's picture

I think he is Bullish on Gold, going by his other interviews. Gold dropped with everything else in 2008 because people had to sell their winners to meet Margin Calls. Then it was the 1st one to stop falling and turned around and doubled in price from the previous high. Faber has stated in the past that $ 5000. - 9000 is not out of the question.

ZH Snob's picture

what if there is a method to their insanity?  what if they not only know what they are doing but have actually been planning for it for years?  it is difficult for moral, sane people to consider this, so the first barrier to overcome is to realize these supposed respectable guardians of our wealth are completely immoral sociopaths.

Offthebeach's picture

Marx planned out to the end of history. Hitler a thousand years. The 1700s Wigs & Federalist a couple of hundred.

Why wouldn't the Pharisees of FedReGov not be out a hundred years? Their paychecks, pensions , Gulfstream V are just dandy. And they get Corporate, big Labor, both big gov parties support. Plus we are their econ lab rats.

Unprepared's picture

Everybody knows that stock prices never go down. And the last 5 years are proof.

/snark off

Bananamerican's picture

20% drop?
I think Faber just threw in the towel...

zaphod's picture

I don't understand the logic of these guys. The basic arguement is since the FED is going to print to infinity that stock prices will crash.

Yes businesses and the economy will suffer, but if the FED prints to infinity then there will be a run out of dollars and into anything else (housing, PMs, land) and yes even equities.

Equities will go up in Faber's world, not down. They will go down but only in real terms, not nominal. Wasn't there just a ZH article this morning talking about the flight into equities?

In short, those who predict infinite printing and a dollar collapse, who are at the same time long cash (i.e. long the very USD that they predict will become worthless) make no sense to me.

The main play today is be diversified into various types of real assets with a balance of PMs, land, and yes certain classes of equities.

chubbar's picture

I don't claim to speak for anyone but I've seen scenarios described where the market crash precipitates the rapid increase in money supply and that is what drives your above analysis. I think Faber is describing a defensive move and that diversification into the assets where you will get not only nominal but real gains is what is recommended even though they may take a dive with the market as well. Obviously cash will be king for a period of time should that scenario play out. Just my interpretation of what I thought I heard.

fonzannoon's picture

A 20% drop? Maybe more? WTF is this guy talkin aboot? 

I thought he had a clue. a 20% drop after a 150% gain is just a nice calm correction. 

it looks like he and Hugh Hendry are the next Jeremy Siegels

CrashisOptimistic's picture

20% drop on a sunday night says the markets don't open monday.

 

Then another 20% on monday night and they don't open Tuesday either.

You can be down 60% like this before anyone can trade, other than insiders in Asia moving futures.

Cabreado's picture

Faber has no interest in making % predictions -- he is trying to make a greater point (which has nothing to do with % of anything) and, he is media-savvy too.

 

HardlyZero's picture

Funny bone says HH and MF are both doing the same thing.  They figure if they go in with the wild side then the Kraken will finally be released.

They sly that way, and short all the way down.

Reverse psychology, which may work in a total fiat Bacchanalia.

Got Gold ?

KnightTakesKing's picture

Yes, 20% in the first few days or hours. I would not think about getting into the market until it loses 80% of it's current market value. I think the downside is an overall 90% "correction". 

drdolittle's picture

Could be, certainly if the banksters actually cause deflation (first by boom then by bust) but I think we're zimbabwe, melt up where the dow is 30k but a loaf of bread is $30. Rah rah rah on the sqwauk, most imbeciles can't do the math

rum_runner's picture

So may I assume you have a massive position in SH?

And, as a total aside, HTF do you guys keep track on replies to your comments?  ZH seems to have no such functionality.  Must I reload every thread I've posted in and scan through all comments to see if anybody has replied?

KnightTakesKing's picture

Pretty much. ZH really needs to upgrade their software.

max2205's picture

Feeuck....if its only 20% then I am all in

max2205's picture

What mark meant to say is we'll be up 50 to 100% up from here so what's a 20% dip if thats the case

venturen's picture

unless JP Morgan, Goldman, Citibank and BOA disappear it is going to be more like 80%.....they have so leveraged up this cluster fuck....it is all going to disappear in vortex. Lehman was a warm up act....next time they are going to expect government rescue....but we are so levered, we won't be able to rescue. We are going to be driving 2013 cars in 2050 kind of like Cuba does.Obama is modeling us to be like Cuba!

Bobbyrib's picture

TARP 2 will happen. There is no way the banks do NOT get bailed out. Our elected sociopaths must make sure the TBTF are around forever.

Offthebeach's picture

Agree.
they aren't even banks. They are FedGov national critical something or other. (The term escapes me.)
One of them goes when all of them go, and this present time isn't even stressing The Racket.
Civil War, a little bit,
Loved ever war since, including welfare/poverty war.

Mr Pink's picture

Another day, another warning from Faber, another Hindenburg omen, another gold and silver smackdown, another blah blah blah...

Anyone else getting bored?

zaphod's picture

Yes. The same thing over and over is getting boring.

There will be a SHTF moment, but nobody really knows when or how. What happens is just too dependent on central planning to predict. I am sure there are lots of rabbits to pull out of their hats to come.

Remember, they have the ability to change to rules, so anything is possible.

Alternative's picture

If I could spend my time in Thailand, I would also keep sending dire warnings to people who watch me on TV.

vaft's picture

In one of his earlier interviews, he said there should be a 50% drop simply due to the re-election of Obama. Now it's merely a 20% drop when the entire game of musical chairs comes to an end? I think it's just about time for someone to resurrect the ghost of Irving Fisher and claim that the markets have reached a permanently high plateau.

fallout11's picture

St. Louis Fed reports 465% monetary inflation since mid 2009.
http://research.stlouisfed.org/fred2/series/BASE?cid=124

Next stop, Weimar.

HardlyZero's picture

Because Yellen won't let Bernanke pull out (too soon).

Gumbum's picture

"The Fed will never end QE"

If I had a quarter for everytime I've heard Marc saying that....

Oldballplayer's picture

Wait a second. Let me fire up the laser printer and I will print you some.

Au_Ag_CuPbCu's picture

Don't be dissen quarters, there metal content is worth at least $.045.  Paper on the other hand....not so much.

ultraticum's picture

My quarters are worth over $3 bucks.  What year you holdin' there friend?

HardlyZero's picture

New Sterling will be plastic (polymer).  Poor absorption and scratchy fiat.  But you will be able to stretch it some.

Plastic money has arrived.

jefferson32's picture

Well, the Fed hasn't stopped QE since Faber started saying it wouldn't, now has it? In fact he was similarly dismissed when nobody had started counting QEs yet.

Tall Tom's picture

Gumbum...You wrote this?

"The Fed will never end QE"

If I had a quarter for everytime I've heard Marc saying that....

Well I do agree that sooner, or later, QE WILL STOP. Of course on that day THE US ECONOMY DIES. Of course the US Economy is a ZOMBIE Economy on Life Support.

 

Currency, liquidity, is analgous to Blood. Liquidity is the Lifeblood of any Economy.

 

QE is like a Transfusion of Blood,  a Transfusion of Liquidity. The problem is that the US Economy has suffered many Fatal Injuries due to an extravagant, reckless, and an imprudent Lifestyle. The surgeons (Federal Reserve Bankers) cannot repair the injuries as they are too numerous and systemic.

 

Everytime they sew a new suture many other aneurysms (Bubbles) form and are in imminent danger of bursting. The liquidity of QE has pooled into these aneurysms and does not circulate. The Circulatory System has failed and cannot contain the pressure. Very little of that QE Liquidity ever Circulates throughout the Organism (The US Economy) to provide the Nutrients and Oxygen to promote healthy growth and cellular function (a productive employment of the cells).  Thus cells will wither and, eventually, will die off as a result of starvation.

 

The US Economy, the organism, is bleeding to Death. Yes the surgeons can hang more Bags of Blood and pump it in as a vain attempt to maintain Blood Pressure.

 

But they will run out of Blood when the Blood Donors (the Creditors) see the futility of attempting to prop up a Zombie, that which is already a Walking Dead Man on Life Support.

 

Now some Organs are not as affected as others. The Body has responded by draining the lifeblood from the Muscles (the Workforce) to the vital Organs (the Heart and Respiratory Systems) for survival. This is a SHOCK REACTION that every organism does after suffering a catastrophic injury. It is an Instinctual and autonomic activity.

 

So the Heart (Government) and Respiratory System (Wall Street) may not currently be experiencing the same affects as the rest of the organism. Life may be good in the Beltway or in the Hamptons.

 

But the rest of the Nation is DYING. And when it succumbs so will Wall Street and the Government.

 

So they are hoping that a Taper on the Transfusion will serve to decrease the Blood Pressure and buy the surgeons a little more time.

 

But of course that will kill the patient as the predicamaent has degenerated from when the initial injuries happened.

 

Yes I want to see a taper. The organism must die as it is parasitical on the productive. Starve the Beast.

 

Al Huxley's picture

I don't trust the miners - they're either the dumbest bunch on the planet, or they're working with the banks.  Either way, they're fucking garbage.  I'll take the metal on sale at this point.

Al Huxley's picture

Nice to see there's still at least 2 true believers out there who still think the miners are going to come through in the end.

ParkAveFlasher's picture

I can't quit you, miners.  Seriously, why do not think they will come through? 

Al Huxley's picture

Price of gold and silver will be held below production cost long enough to bankrupt the small ones and force the big ones to sell their futures to the banks.

HardlyZero's picture

Its tough, they put their money in the ground, or the money goes away (no finance), or gets taxed.  And then they are captive to their governments.  If they mine it out too quickly its gone.  If they sit on it too long they lose their finanance.  The cost of doing nothing is expensive !   No answers just problems.

DeadFred's picture

Bankruptcy? Most of their loans were made by JPM, I think Jamie wants to own a bunch of small producers before they turn back towards $2000. But I'm a bit paranoid