Marc Faber sees a looming debt crisis and he agrees with the view that the US won’t get out of its 32 trillion dollars public deficit. “The US government will not cut expenditures and it is best to lean on inflation,” he said.

Marc Faber believes that cutting spending and reducing taxation is no longer an option.

“When taxes go up they impact the poor, and the middle class and super-rich always find ways to avoid taxation through all kinds of foundations and charities,” he said.

“The US government will not cut expenditures and it is best to lean on inflation”

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Marc Faber sees a looming debt problem with embedded inflation

“In the end tax increases have a very negative impact on the economy because it hits the people that consume mostly the middle and lower class,” he said. 

Marc Faber thinks the US will have to inflate because of unfunded liabilities- 

Inflation is a tax on the economy.

He thinks inflation and interest rates will exceed the peak we had in 1981 when the 10-year treasury was yielding more than 15%. It peaked at 15.4% in September 1981. He thinks we are going to exceed that.

Marc Faber sees a looming debt crisis where the catalyst is fiscal deficits

“In the 1990s, for a brief period of three years, the US had fiscal surpluses. Since then, it is all red ink. As a result of that government debt going up and more money printing is necessary to finance this mess,” he said. 

He thinks there is no point listening to the Fed. “They are all lying, they never tell the truth. They never tell the public what they need to hear, and their interest is to maintain the financial market at a high level,” added Marc Faber.

“They don’t want deflation in financial assets. They can not afford the stock market to fall 50%, so they will print money,” he said, 

 

“In the end tax increases have a very negative impact on the economy because it hits the people that consume mostly the middle and lower class,”

MARC FABER

Collapsing living standards as Marc Faber sees a looming debt crisis 

“The real income of typical households in inflation terms has gone down. The standard of living for a typical household, in the US and Europe, is going down,” he said. 

He blames the ECB for the persistent inflation which prints as a percentage of the balance sheet even more than the US.

Interest rates were kept negative in Europe. “Give me five thousand years of history where interest rates were negative,” he said. 

“I think what would be best for the world is for the dollar-based system to be gradually phased out. This will happen because the balance of economic power is shifting to the East” – Marc Faber

He thinks Europe is in a worse mess than the US.

If you bailout everyone we end up with a crony capitalist fascist system which is happening in the Western world.

He thinks a multilateral system with different currencies where states trade freely with each other is a better way forward. 

“I think what would be best for the world is for the dollar-based system to be gradually phased out. This will happen because the balance of economic power is shifting to the East,” he said. 

China produces the most cement in the world. India is a larger economy than Britain today. 

Where to invest as Marc Faber sees a looming debt crisis 

He recommends asset and geographical diversification. 

He is worried about overreaching governments during lockdown and fears this could spill over into the financial system with closures of bank accounts, and sanctions on individuals. We saw this in Canada, with people having their bank accounts frozen for supporting the trucker’s anti-vax movement.