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Printing Money Solves No Crises: Faber

by Crystal Hsu Taipei Times


Marc Faber, publisher of the Gloom, Boom and Doom report, yesterday reiterated his criticism of money printing practices, which he believes will continue in the US, Europe and elsewhere, causing bubbles such as those seen in the Chinese real-estate market.

“A third wave of quantitative easing by the US Federal Reserve is just a matter of time,” said Faber, a contrarian investor who has been referred to as “Doctor Doom” for a number of years.

Printing money is the way global governments will evade debt crises, such as the one that is gripping Europe, Faber said in Taipei.

That would forestall the crisis rather than solve it, keeping prices elevated for assets like stocks, real estate in some areas and precious metal, he said.

Loose monetary policies, including low interest rates, intended as a short-term fix, can have unintended consequences later, Faber said.

While central banks can inject fresh funds into the markets, they cannot control where the funds flow, he said, adding that money printing has encouraged speculation on commodities whose prices have gone up faster than real demand in recent years.

“Some people will benefit from money printing that deflates the purchasing power of currency … but the middle and lower – income classes are being hurt,” said Faber, an investment adviser focused on value investments, who owns Marc Faber Ltd.

Countries with resources are basking in the trend in light of their sharp increases in international reserves, which Faber said was symptomatic of monetary inflation and a shift in wealth.

The fast-growing economy of China has pushed up its inflationary pressures, with the bubble in the real-estate sector on the brink of bursting, Faber said.

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Dr. Marc Faber [send him mail] lives in Chiangmai, Thailand and is the author of Tomorrow’s Gold.

© 2011 Taipei Times

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