Marc Faber Says Global Liquidity Tightening; Bullish for U. S. Dollar

By on October 12, 2011

Marc Faber - Gloom, Doom and Boom ReportMarc Faber, publisher of the Gloom, Doom and Boom Report, was interviewed by Joe Kernan on CNBC yesterday and provided his views on liquidity, the dollar and the Occupy Wall Street protests.

Faber said he is looking for continued volatility although it wouldn’t necessarily be to the downside. He was fairly certain the U. S. dollar would continue to be a good long trade.

Faber mentioned the NASDAQ, housing, stock market and commodities bubbles leading to very high volatility for 10-15 years citing the experience of 1929 and the late 1960’s.

Faber’s opinion was that despite European easing efforts global liquidity was tightening which is bad for asset prices, but good for the U. S. dollar as it was in 2008.

Faber said there is too much government intervention in the Western world making it difficult for their economies to grow substantially. Given the substantial indebtedness western economies, along with Japan, are going to stagnate. Faber pointed out that a frustrated populace will go after minorities and Wall Street is a minority. He laughingly added that Wall Street didn’t create the system, but it was created by lobbyists in Washington and the protestors, “should go to Washington and occupy the Federal Reserve on the way.”

Faber stated a cure for high unemployment would be a flat tax and a reduction in the regulatory environment. He added that net investment in the U. S. has gone down for the last 20 years and is currently negative. He stated, “the capital stock of America is not being replenished, but it’s being replenished somewhere else.” Faber said there has to be less focus on spending and more emphasis on saving.

When Joe Kernan said the protestors might be on to something, Faber said governments in the Western world have “grown like a cancer.” He added the governments keep themselves in power by forming alliances. He said Obama has “no clue” but has said the protestors on Wall Street have a good idea so he can target a minority and buy a few more votes.

Faber concluded by defending the rich saying they want to protect what they work for and what they are paying for. He added that roughly 50% of the people don’t pay federal income tax. He believes it is wrong to say the rich have not contributed anything.

5 Comments

  1. The Sultan of Savannah!

    October 14, 2011 at 3:17 pm

    I think structural imbalances will serve as a catalyst for future risk on/risk off trades.

  2. Barron Maestro

    October 14, 2011 at 4:40 pm

    Fancy words for, “massive debts and malinvestments will lead to volatility which can be exploited by switching between risky and non-risky assets.”

    Thank you for your insights SoS!

  3. TSoS!

    October 14, 2011 at 5:43 pm

    I was just practicing my CNBC monthly buzzwords; I didn’t realize it was so profound. Every time I hear “risk on/risk off”, I think of The Karate Kid… wax on/wax off.

  4. TSoS!

    October 24, 2011 at 11:38 am

    The ECB/EFS leveraged deal necessarily implies a 50% hair cut with an absorbent backstop for the recapitalization plan.

  5. Barron Maestro

    October 25, 2011 at 8:20 am

    TSoS, You are giving me inspiration to post again.

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