Marc Faber Says There is a Gigantic Worldwide Asset Bubble

By on October 22, 2013

Marc Faber - Gloom Boom Doom ReportMarc Faber was interviewed on CNBC yesterday. Faber disagreed with commentary that there is no inflation, explaining there can be inflation in commodities, wages, and also in assets.

Faber lamented the “gigantic asset bubble around the world,” for instance in high end real estate such as the Hamptons, Mayfair London, Hong Kong, and Singapore. There will be massive wealth destruction as Faber foresees, “one day this asset inflation will lead to a deflationary collapse one way or the other. We don’t know yet what will cause it.”

Faber said the Fed didn’t know in 2007, despite their easy money policies, property prices in some areas would fall by 50%. “At the present time in the emerging markets there is practically no growth – growth has slowed down to a trickle.” Faber sees this flat growth in the emerging economies leading to lower demand for oil.

Regarding Fed policy, “the question is not ‘tapering’,” Marc Faber exclaimed to the CNBCs Squawk Box crew, “the question is at what point will they increase the asset purchases to say $150 [billion] , $200 [billion], or a trillion dollars a month.” QE-4-EVA is here to stay, Faber explained. “Every government program that is introduced under urgency and as a temporary measure is always permanent.” Simply put, “The Fed has boxed itself into a position where there is no exit strategy,” and while inflation may not be present in the ‘chosen’ indicators, Faber said, there’s been incredible asset inflation – “we are the bubble. We have a colossal asset bubble in the world [and] a leverage or a debt bubble.”

Back in early August, Faber predicted a 20% stock market decline citing the diminishing number of stocks hitting new 52 week highs [link].

One Comment

  1. Matt Bailey

    October 24, 2013 at 4:28 am

    Faber used to get it right now and then. Bernanke and company have turned him into a dinosaur.

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