Marc Faber delivers speech, takes on Paul Krugman
Economic forecaster of the current global financial crisis and publisher of Gloom Boom Doom Marc Faber delivered a speech in Hong Kong on Friday and took on nobel-prize winner Paul Krugman's latest article "How Did Economists Get it So Wrong?"
by Andrew Moran
27 September 2009
Speaking at the CLSA Asia Pacific Markets investor conference in Hong Kong this
week, economic forecaster and Mr. Doom himself, Marc Faber, spoke to investors
about the global financial situation, the steps currently done by international
bodies such as the Federal Reserve and Nobel-prize winner Paul Krugman’s latest
article “How Did Economists Get it So Wrong,” according to The Wall Street
Journal.
It is quite hard to find someone who is as pessimistic as Faber, who even
acknowledges this himself, “You can’t find anyone more negative about the world
than I am.”
One of Faber’s thoughts on Krugman is that he “thinks it would be very good to
have another bubble in the world and deal with it later on.” It is true that
Krugman has been advocating for strong government stimulus and large deficits in
order to jumpstart the economy again. Nevertheless, however, Faber believes
Krugman should have named the article “How did I get it so wrong?"
Faber, like Peter Schiff, Ron Paul and Jim Rogers, believes the Federal Reserve
is the primary culprit of this financial crisis because of the massive increase
in credit and he further stated that Krugman failed to understand that the
“borrowing boom” would create this economic pandemonium.
Furthermore, he went on to blame the Federal Reserve’s last two Chairmen; Alan
Greenspan and Ben Bernanke, “You have to give credit to [Ben] Bernanke and
[Alan] Greenspan. They have achieved something no central bankers have achieved
in history. They created a bubble in everything…The only asset that went down
from 2002 to 2007 was the U.S. dollar.”
On Wednesday, former Alaskan Governor and 2008 Republican Vice-Presidential
candidate Sarah Palin gave a similar address on the Federal Reserve, which made
her sound a lot like Texas Congressman and 2008 Republican Presidential
candidate Ron Paul. The former Governor blamed the central bank for the current
crisis and disagreed with the current administration with giving the Federal
Reserve more regulatory and financial powers than they already have.
“The government ordered the loosening of lending standards. The Federal Reserve
kept interest rates low. The government forced lending institutions to give
loans to people who as I say, couldn’t afford them. Speculators spotted new
investment vehicles, jumped on board and rating agencies underestimated risks.
So many to be blamed on so many different levels, but the fact remains that
these people were responding to a market solution created by government policies
that ran contrary to common sense.”
During his speech, Faber told attendees that stocks will continue to rise to
around 7 per cent per year, however, all those gains will be gnarled by
inflation, which is the increase in the United States money supply.
Earlier in the summer, Faber told Bloomberg News that the United States wil
become like Zimbabwe where inflation is at annual rates of quintillion per cents
and stating “[Zimbabwe] was run by a money printer, Mr. Mugabe, a mentor of Mr.
Bernanke.”
Nevertheless, Faber, once again similar to Schiff and Rogers, advises the
investors to put their money into Asia, specifically into commodities. He also
advised the financial businessmen and women to put their money into real gold
outside of the United States just because gold was confiscated throughout the
Great Depression.
Faber conclude his speech with, yet again, a gloomy outlook of the current and
future financial state of the US, “The dollar in the long run is a doomed
currency. This is the short of the century…The government’s policy is to make it
worthless."