March 18, 2012

Marc Faber Blog and the Money Printing’s Unintended Consequences

Not only Marc Faber is worried about the coming inflation due to gigantic money printing in many developed countries, but now it seems that he is worried also about building bubbles in many assets. The problem with that is when these bubbles burst they lead to social havoc. That’s why Marc Faber is defensive these days. He has expressed his caution about the stock market recently due to the huge non-stop rally that developed.

Marc Faber doesn’t believe central banks will revert their purchases of bad assets and comments on inflation:

“First of all, I do not believe that the central banks around the world will ever, and I repeat ever, reduce their balance sheets. They’ve gone the path of money printing and once you choose that path you’re in it, and you have to print more money.

If you start to print, it has the biggest impact. Then you print more - it has a lesser impact unless you increase the rate of money printing very significantly. And, the third money printing has even less impact. And the problem is like the Fed: they printed money because they wanted to lift the housing market, but the housing market is the only asset that didn’t go up substantially.

In general, I think that the purchasing power of money has diminished very significantly over the last ten, twenty, thirty years, and will continue to do so. So by being in cash and government bonds is not a protection against this depreciation in the value of money”.

Marc Faber is a great contrarian investor and publisher of the Gloom Boom & Doom Report. He is well known for his accurace predictions of stock market crashes and other correct calls on different investment assets.