Marc Faber On Keynesian Folly, The 'Missing' Inflation, And Bubble-Blowing

Tyler Durden's picture




 

In as-comprehensive-an-explanation-as-we-have-seen of the monetary malfeasance and misunderstanding of the standard Keynesian central-banker, Gloom-Boom-Doom's Marc Faber addressed an instutional audience in the Middle East earlier this year. Faber begins by explaining his (correct) view that 'Keynesian' intervention into the free-market or capitalistic society (with fiscal and monetary measures), in order to 'smooth' the business cycle, has in fact created a more violent business cycle - as they attempt to address long-term structural problems with short-term fixes (or bubbles). His lecture expands from his insight that in 1970 not a single investment bank was public - they were all private partnerships (implicitly playing with their own money as opposed to other-people's - dramatically impacting the risk profile in the world) to the notion that central bank money printing (pushing dollars out the door) does have inflationary symptoms - but they do not necessarily have to show up in wages or CPI in the US (think Chinese wage inflation, or commodity price rises, or Aussie housing bubbles). Central bankers can determine the quantity of money but they cannot determine what we do with those USD bills. Must watch.

Faber covers it all - from macro-economics to energy supply-and-demand and from the consequences of incessant money printing and how to hedge for the long-term.

With volumes still muted, and a general malaise of hand-sitters, it seems now is a great time to spend 45 minutes clarifying your perspective on just what the experimental efforts of our global elite is doing to the world - and whether that is a good thing economically or not... we suspect the conclusion will not surprise you...

 

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Wed, 08/22/2012 - 21:14 | 2729161 otto skorzeny
otto skorzeny's picture

Faber's great- but he has been a broken record for the last 4 years. I do agree  that the velocity of $ is basically nil and puts everything in a deflationary trend

Wed, 08/22/2012 - 21:17 | 2729168 BudFox2012
BudFox2012's picture

It's easy for us to get on guys like Faber or Celente for being a broken record for the last 4 years, but this damn thing SHOULD have collapsed already.  That it hasn't is a tribute to the bullshit artists who run things, and the gullible/blind nature of the general public.

Wed, 08/22/2012 - 21:24 | 2729178 otto skorzeny
otto skorzeny's picture

I'm not saying he is not right but it's hard to fight The Bernank and the PPT.

Wed, 08/22/2012 - 21:43 | 2729202 ACP
ACP's picture

Just have to pick your fights. It's very difficult, but this is a 100% TA market.

The manipulators have the money to fuck with the charts, so if TA doesn't go the way it's supposed to, GET OUT FAST, and re-assess.

Wed, 08/22/2012 - 21:52 | 2729211 Pladizow
Pladizow's picture

The G on the belt must be for Gangster:

"If your a partner at Goldman making $10,mil, you wont spend 50% on food, unless you have a very high consumption of cocaine."

"My cost of living went down 30% because I dumped my girlfriend. Well wait until you see the replacement cost"

Mark is a G!

Wed, 08/22/2012 - 22:18 | 2729251 Surly Bear
Surly Bear's picture

I <3 Marc Faber.

Wed, 08/22/2012 - 22:24 | 2729267 TheSilverJournal
TheSilverJournal's picture

Don't fight the FED. Go long silver.

Thu, 08/23/2012 - 00:26 | 2729410 strannick
strannick's picture

Rome didnt fall in a day. Reinhart and Rogoff say its about 4 years from the onset of currency debasement til hyperinflation. Oops thats now.

Thu, 08/23/2012 - 04:33 | 2729548 AldousHuxley
AldousHuxley's picture

keynes said save during good times and use the savings during bad times.

politicians practiced waste during good times and debt financing during bad times.

shit happens when you only follow the parts you like.

 

elites figured out how to beat the fed.....globalization....take printed money and setup factory in china....profits increase and unemployment stays high making labor competition extreme in US.

 

inflation is here.....education, healthcare, housing, energy....all higher than wage growth....

 

it is either low purchase power employment or low consumer prices with high unemployment.

Thu, 08/23/2012 - 05:38 | 2729560 economics9698
economics9698's picture

Bubbles are generally 3-5 years.  We are approaching year 4.  If this one follows the past you should see deterioration around February and then shit for the rest of 2013.

Thu, 08/23/2012 - 08:40 | 2729793 TheSilverJournal
TheSilverJournal's picture

The bubble really started 100 years ago with the beginning of the Fed and the beginning of counterfeiting, picked up pace with Bretton Woods in 1945 by exporting the counterfeits at an outstanding pace to the rest of the world, kicked into high gear Aug 15, 1971 by putting the world on an all out fiat monetary system, the turbos kicked in after the .com bubble crashed with lowering rates to 1%, and now we're nearing top speed with QEasing to infinite and beyond.

Wed, 08/22/2012 - 23:11 | 2729329 Muppet of the U...
Muppet of the Universe's picture

that was just amazing.  Wow, so concrete.  I'm gonna go show my idiot parents and get them to buy gold and silver and platinum.  maybe palladium too... i like how its spelled.

Wed, 08/22/2012 - 21:59 | 2729221 q99x2
q99x2's picture

It is not a fight. It has been 4 years of hard work. When the big easy comes we'll all be looking up into a mushroom cloud anyhow. I'm in no hurry.

Wed, 08/22/2012 - 22:26 | 2729272 Doña K
Doña K's picture

@ OTTO

There are still gamblers out there that believe that they can still make money in these markets even though they know it's manipulated, by anticipating the bernank's moves. (So they claim)

GET OUT PEOPLE! Even if you make a bit, it's capital preservation which is now the most important.

STARVE THE BEAST

Wed, 08/22/2012 - 22:35 | 2729281 jimmyjames
jimmyjames's picture

There are still gamblers out there that believe that they can still make money in these markets even though they know it's manipulated, by anticipating the bernank's moves. (So they claim)

***********

There are other types of gamblers out there that know that sooner or later-the market will blow away bernanke and anyone else who stands in its path-

Thu, 08/23/2012 - 03:17 | 2729526 A Nanny Moose
A Nanny Moose's picture

All that other shit is just white noise. Gravity will only be defied for so long.

Sat, 08/25/2012 - 12:46 | 2737111 Paul E. Math
Paul E. Math's picture

Sometimes falling feels like flying... For a little while.

Thu, 08/23/2012 - 03:25 | 2729528 Element
Element's picture

“Don’t underestimate the power of printing money”, Marc Faber, 12th March 2009.

He expressly warned everyone that this is what would occur.

Or have you all forgotten that he did?

Thu, 08/23/2012 - 04:00 | 2729538 common_sense
common_sense's picture

yes, or how create Hiperinflation giving all the money to bankers, oh great political job¡!!, thanks Obama, we will see you and berny in hell very soon.

Thu, 08/23/2012 - 06:22 | 2729568 MSimon
MSimon's picture

He said the region is culturally interesting. Quite so. Mein Kampf is still a top seller.

Thu, 08/23/2012 - 18:20 | 2730571 Eric L. Prentis
Eric L. Prentis's picture

The financial elite social psychopaths, in conjunction with their political sock puppets, keep doubling down their losing bets by electronically printing money—in order to remain in control, which structurally solves nothing. Consequently, the magnitude of the eventual crash is rising exponentially. When the credit crisis end comes, which started in December 2007, the large-corporation controlled media will blame the wrong people and causes.

This is the Great Game played by the greedy financial elite—who feel no noble civic duty, are pathological liars, have no honor, have no empathy with the suffering of others (that they caused), and no conscience.

Wed, 08/22/2012 - 22:23 | 2729266 johnjkiii
johnjkiii's picture

Be patient. It took from 1917 to 1990 for the USSR to blow itself up. Have a beer & a laugh and keep your eyes on the charts.

Wed, 08/22/2012 - 23:02 | 2729310 Dr. Engali
Dr. Engali's picture

I don't get on them a bit. I think most of us are amazed at how long they have been able to keep the music playing. I have no doubt however that the music will eventually stop.

Wed, 08/22/2012 - 23:22 | 2729354 Knightbk
Knightbk's picture

Thats the problem, you assume it will collapse.

In reality, people are fighting to keep it going.

Thu, 08/23/2012 - 13:16 | 2730878 ATM
ATM's picture

Why would anyone presume that TPTB would not fight to keep their place in society? Of course they would do everything in their powers to maintain the status quo and even enhance it. That's what the printing does afterall. It enriches the few at the expense of the many.

But what we have now is a new (actually old) group of authoritarians such as Obama who don't give one shit about TPTB. They seek to end the current structure and install their own. They don't want to steal from the many, they want to rule the many. 

As i see it we have two sets of actors. One group doing everything in their power to maintain the status quo and another doing everything to bring about it's ultimate end as quickly as possible. Either way the current system has to end the only real question is how fast the real unraveling will take and who grabs power afterwards.

Thu, 08/23/2012 - 03:21 | 2729527 Element
Element's picture

 

 

It's easy for us to get on guys like Faber or Celente for being a broken record for the last 4 years, but this damn thing SHOULD have collapsed already.  That it hasn't is a tribute to the bullshit artists who run things, and the gullible/blind nature of the general public.

 

Complete nonsense, it was Faber in 2008, 2009, and then again in 2010 who said that it will take over ten years for the US to completely collapse, but that when it does, it will be "an absolute catastrophe".

He also famously said this to all those expecting it to occur earlier, “Don’t underestimate the power of printing money.”, on 12th March 2009, which was said just days after global equities bottomed. 

And as I remember, it was Faber who correctly called the bottom on March 6th 2009, on the very day the decline ceased.

Faber, as always has been eerily correct on the macro picture.

 

 

(Not much interested in Celente, he's too busy trying to sell me a crystal ball)

Thu, 08/23/2012 - 10:09 | 2730113 ecoguitar
ecoguitar's picture

I want to add: 

He accurately predicted the gold price to correct by margin as large as 20% in 2011. 

Thu, 08/23/2012 - 13:20 | 2730891 ATM
ATM's picture

Another good macro-predictor is Scott Minard - the Guggi-Guy of Guggenheim. He has been preaching many of the same themes as Faber for the 8 years I've known him. Prdicted the R.E. collapse, the treasury bubble and the printing. He also predicts an end to the dollar via debasement and the need to own some real assets, gold, art, etc. 

He also put together the purchase of the Dodgers. They're a real asset afterall.

Thu, 08/23/2012 - 03:34 | 2729532 The Navigator
The Navigator's picture

BudFox2012 - you got it exactly right - if it wasnt for the Central Planners interferring with another fat finger, it would have collapsed already - BUT, the can kicking can only go on so long as the road is long, and the road is running out. Those that prepped, stacked, and made plans A, B, C, & D won't have spent unwisely. Just keep updated on the changing circumstances and make adjustments accordingly (ie planting long guns in neighbors backyards).

Semper Paratus

Thu, 08/23/2012 - 08:30 | 2729759 BeetleBailey
BeetleBailey's picture

I agree 100% here.

I'm a veteran trader.....seen all types of markets...had tremendous success in the past. This year? None.

In FX..awful.

I trade on fundamentals - and they don't matter anymore. It akin to me forgetting everything I know and blindly going with it - and for some reason, I cannot.

Wed, 08/22/2012 - 22:34 | 2729282 Libertarian777
Libertarian777's picture

U must hate ron paul then, he's been saying the same things since the early 70's

Wed, 08/22/2012 - 23:15 | 2729337 Muppet of the U...
Muppet of the Universe's picture

ron paul is an illuminati shill.  anyone that argues for the presence of central monetary authority is a fucking shill.  ffs, he goes on tv.  wake up.

Wed, 08/22/2012 - 23:49 | 2729387 NotApplicable
NotApplicable's picture

Ron Paul does not argue for a centralized monetary authority.

To suggest so indicates ignorance or maliciousness.

Shill much?

Thu, 08/23/2012 - 00:30 | 2729421 Muppet of the U...
Muppet of the Universe's picture

ron Paul calls for a reorganization and restructuring of the Fed.  Not its disassembly...  To maintain a system of central authority is asking for corruption.

Thu, 08/23/2012 - 01:47 | 2729451 akak
akak's picture

 

ron Paul calls for a reorganization and restructuring of the Fed.  Not its disassembly...

Oh, so Ron Paul's book "End the Fed" is about what, abolishing Federal Express?

You don't know what the fuck you are talking about, or you are outright lying.
So which is it --- are you dishonest, or merely stupid? 

(Both, most likely.)

Thu, 08/23/2012 - 04:35 | 2729549 AldousHuxley
AldousHuxley's picture

Ron paul is gone in 2012....retiring

 

perhaps forced by corporate overlords for exposing too much truth to the masses.

Thu, 08/23/2012 - 03:41 | 2729533 The Navigator
The Navigator's picture

Sorry, couldn't read the rest of your title, was it

Muppet of the Universe

Muppet of the Unicorns

Muppet of the University of Muppet University

Either way, you win, you are crowned the king of Muppets.

You obiously haven't heard or read anything Ron Paul has said or written.

 

Thu, 08/23/2012 - 03:30 | 2729530 Element
Thu, 08/23/2012 - 09:56 | 2730060 Red Heeler
Red Heeler's picture

He's a legend in his own mind.

Thu, 08/23/2012 - 02:45 | 2729513 Hobbleknee
Hobbleknee's picture

When AAPL makes a huge correction, it will be the wait-wut moment that gets things started

Thu, 08/23/2012 - 06:09 | 2729562 TWSceptic
TWSceptic's picture

I rather listen to a broken record that plays the right music and eventually continues playing a nice song, than to the band on the Titanic that will go down with the ship...

Thu, 08/23/2012 - 09:39 | 2729986 Red Heeler
Red Heeler's picture

"Faber's great- but he has been a broken record for the last 4 years."

My favorite broken record moment is when he says, "Every month buy a little gold."

Thu, 08/23/2012 - 10:14 | 2730142 WhiteNight123129
WhiteNight123129's picture

Ok, but what is the outcome of is call to buy equities at 666 on the SPX and to be in Gold at the same time? How did it work out so far?

I mean if you make a call every 4 years but you double your money, I do not care if you make 100 calls or which 60 % are wrong!

That is quality versus quantity, but I guess the people running the show are about quantity of money versus quality of output. For Keynes, spending  $100 on a broken window has the same effect as LanzaTech developping a way to produce Ethanol using carbone monoxid exhaust flue gases from Steel Plants.

 

Sat, 08/25/2012 - 19:51 | 2737767 Tommy Gunner
Tommy Gunner's picture

Faber has never put a time line on collapse... other than to say at the beginning of the crisis it was within 'years'.   He is no dummy - he knows the central banks will fight this to their dying breath...  so it is impossible to time it.

But his macro picture has been correct and he was one of the guys I was listening too when I decided to sell many of my assets in 2007 and buy physical.   Listening to him allowed me to get in at $800+ instead of 1700... 

I also recall the former chairrman of Goldman John Whitehead stating 'this problem is far too big to fix' - then there was this amusing stickman cartoon that was floating around the net at the time - when i watched this within days I was piling even more heavily into gold http://hongkong.asiaxpat.com/Misc/MortgageCrisis.pps

 

Ya sure one could have played the stock market and done as well... and maybe not ...  but what do you do with your market gains?  Cash, stocks and bonds will be toilet paper - so you could flip into gold now but you're buying at double the price so no further ahead.

 

Better to be early than to be eating dog food (after eating the dog).  We all know what is coming - prepare for it.

 

Wed, 08/22/2012 - 21:16 | 2729166 icanhasbailout
icanhasbailout's picture

"missing" inflation, my ass. I just got back from buying a $1.65 box of pasta that was $1.00 two years ago.

Thu, 08/23/2012 - 00:08 | 2729402 LowProfile
LowProfile's picture

Shit, that means the 100lbs of pasta I stocked up on made a 32.5% gain!

Thu, 08/23/2012 - 06:33 | 2729572 ZeroAvatar
ZeroAvatar's picture

You shoulda seen the tiny box of ice cream my wife brought home the other day. One and a half quarts.  It was so tiny, I had to laugh.

 

Goodbye, gallons.

 

Edit: (Oh, and .50 Cents more, too.)

Thu, 08/23/2012 - 08:27 | 2729744 blueridgeviews
blueridgeviews's picture

Bought hot dogs the other day.  1 less hot dog, and $1 more for the package than a year ago. What do I do with 8 buns now?

Sat, 08/25/2012 - 20:04 | 2737784 Tommy Gunner
Tommy Gunner's picture

Maybe he needs to restate the inflation is missing comment and say HYPERINFLATION is missing (so far)

Thu, 08/23/2012 - 07:49 | 2729651 Offthebeach
Offthebeach's picture

Cherry picker. Haven't you listened to out Fed Overlords? "Except for food and fuel"

Trust the system. The Squid and The Whale are doing good. Why? Because like the Fed prophets say, " He that so believe in The Fed, shall never die."

Besides, muppets pelts have never been lower.

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