Moonwalking With Faber
by Simon Osborne
by Marc Faber
Recently by Marc Faber: The Frame of Mind of American Economic Policymakers
The markets are reviving, and by the analysis of investor and commentator Marc Faber, speaking in Korea at the AsianInvestor Institutional Investment Conference this week, we saw the bottom when the S&P500 Index hit 666.
The terror on the screens may be over, but it comes at a price, and that price is paid in the debasement of the currency.
Markets may continue to soar, says Faber, but if the dollar in your pocket is going to depreciate, it's a scant consolation. In real terms, investment values may move backwards.
Faber feels our central bankers are moonlighting as money printers, and any man in the Fed who tries to halt the presses, and put up interest rates to mop up the voluminous liquidity, is going to find himself jobless.
"The Fed's monetary policy has made things more volatile," he observes. "Had they not cut rates, financial institutions would have started deleveraging earlier, instead of continuing to build their balance sheets, prompted by the cheaper rates."
US debt to GDP is now at 37% and that doesn't include all its future promises and obligations, which could see it balloon to 600%. With $8 trillion in government debt, Faber believes it is an impossibility that monetary policy will be relaxed.
July 4, 2009
Copyright © 2009 Haymarket Media Limited