Marc Faber the Swiss fund manager and Gloom Boom & Doom editor predicted the US fiscal deficit will remain very large and it will mean that over time the US dollar will lose its purchasing power, more money will have to be printed, and additional easy measures will have to take place.
Speaking in an interview with Insider Monkey during the recent Ira Sohn Conference, Faber blamed big government and Barack Obama for the current tumultuous period, characterizing the US President as "by far one of the worst Presidents the US has had" because "none of what he said he would do, mainly change, has actually occurred".
"The priority would be to essentially make the US competitive, but by pursuing expansionary fiscal policies that enlarge the government, you atrophied the private sector," he said.
"The private sector is hurt by too much government involvement, Faber added.
Asked about the next election cycle, Faber said he expected Obama to be reelected "because we have some kind of a tyranny of the masses."
"You have essentially more people getting handouts than large tax payers. And so they are huge voting bloc. Then you have the unions, also large voting bloc. And then you have the government officials. They don’t want to have cutbacks in government and be fired".
"It’s very difficult to cut entitlements. In other words, social security, Medicare, and Medicaid because nobody wants to do that. so essentially the fiscal deficit will stay very large and it will mean that over time the US dollar will lose its purchasing power, more money will have to be printed, more quantity of easy measures will have to take place, and so forth," he told Insider Monkey.
Where should investors be?
You shouldn’t own cash and government bonds but you should be in assets like real estate or equities or precious metals or in commodities, Faber advised. "The more negative you are about the world and the geopolitical trends which will lead to war, the more likely it is that you will do better in equities than say in bonds and cash," he stressed.