Marc Faber forecasts what destiny could hand us during these turbulent times of bank runs, protests, global riots, food hyperinflation, and the escalating war in Europe.
For treasury investors, 2022 was the worst in 250 years, worse than the 1929-1939 Great Depression.
Last year, 2022, was brutal for investors, with 30 trillion US dollars wiped off portfolios as central banks’ vain attempt to fight inflation collapsed bank liquidity and collateral, and triggered two high-profile bank collapses in the US, SVB and Silvergate Bank.
“Last year, 2022, was brutal for investors, with 30 trillion US dollars wiped off portfolios”
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Contagion is spreading to Europe, Credit Suisse collapsed, and Deutsche Bank could be next as the German economy deindustrializes, due to high energy costs and a worsening recession.
Banco Santander’s exposure to US auto loans is also of concern.
Europe could be in a house of pain. Germany, the motor of Europe, has been starved of gas as the Nord Stream pipeline, a joint multi-billion-dollar Russian-Germany energy infrastructure project, lies in ruin, a tangled mess of concrete metal flooded with corrosive salt water and now beyond repair.
Make no mistake about it, this is a stab to the heart of Europe and a deliberate act to force the EU, a $16.6 trillion GDP trading zone, away from trading with Russia and pivoting to the east. In light of the above, the EU, stagflation, falling GDP, and rising prices could worsen.
“Europe could be in a house of pain”
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Marc Faber forecasts widening global civil unrest
“Some of my friends believe in the WW3 scenario where countries go to war. I am not sure about this, but we may have civil wars,” he said.
Marc Faber said he is no fan of Macron, but he also thinks that social security needs to be cut, with the retirement age raised.
“Look at France, when social security was created, in the 30s, life expectancy was much lower than now.
When social security was introduced, in the US, you could retire at 65 years, but your life expectancy was 66 years.
Now life expectancy for men is 79 to 80 years, and for women, 83 years.
In the US it is 77 years 78,” he said.
“The current generation, inflation-adjusted, do not earn as much as their parents when they were 35 years and have less money” – Marc Faber
Marc Faber also noted that those doing physical work (real work) , garbage collectors, construction, roofing, and tilers’ bodies develop back and knee pains and these workers will be too worn to work in their 50s.
“The Population is uneasy. We have demonstrations in Israel and Turkey, and there are demonstrations everywhere,” he said.
He thinks the media is lying about the cause of protests, which he believes has to do with people’s rapidly deteriorating living standards, the cost of living crisis, and the realization that many will not have accumulated enough savings to retire and will keep working to their grave.
“The current generation, inflation-adjusted, do not earn as much as their parents when they were 35 years and have less money,” he said.
Asset prices of homes and autos have risen so fast due to currency debasement that they can no longer purchase items they aspire to own.
Millennials Dominate Insolvencies in Canada as credit cards, student loans, and other debts pile up.
In the US, subprime auto delinquencies are surging to levels not seen since the 2008 Great Recession. Millennials are the largest group falling behind in auto loan payments.
In Europe, particularly the south, adult children have been unable to leave the family home due to the high level of youth unemployment and the worst cost of living crisis in a generation.
“If you told me that you can invest in gold over 10 years, I would choose gold”
– Marc Faber
Will it go with the Sri lankan option where everyone is uprising against the country because the system is not working for them?
Marc Faber’s forecast for the US is more upbeat.
“Fortunately, the US has reserve currency, so Americans are more sheltered from a cost of living crisis. But that will come to an end, as we all know.
Printing of money to fund the deficit will end the US privilege of owning reserve currency,” he said.
He thinks people born post WW2 experience an unprecedented period of wealth, in a period of relative peace, but he sees that golden period coming to an end.
Marc Faber forecasts the USD will be difficult to topple as a reserve currency
“Will it be a currency of BRICS countries? Who knows because the BRICS countries don’t trust each other.
It could be a currency based on crypto technology or gold. I think this is the most likely outcome.
The reality is that wealthy people in India, China, Argentina, Brazil, and South Africa still hold accounts overseas in USD, that is the reality.
Until I can go to a wealthy Indonesian, Thia, or Malaysian family and say, you should invest in this BRICS currency. It will take a lot of persuasion. If I go to them and say, you should invest in gold. They will do it. But they will also say gold is not a good investment. We make a lot more in our stock market,” he said.
“If I had the option to buy a 10-year Japanese sovereign bond at a 5% yield or 10-year treasuries yielding 4%, I would choose the 10-year US treasury.
If you told me that you can invest in gold over 10 years, I would choose gold,” he added.
Whatever scenario, he likes gold.
“Say we have deflation, and everything collapses, including wages. It would be a complete calamity. I would rather be in gold than dollars because debts will not get paid if our real estate collapses by 30% massive bankruptcies. The commercial vacancy rate in New York is 22%,” he said.
