Marc Faber: ‘Dr Doom’ Predicts Very Hard Times Ahead For Economy & Financial Markets (PT1)

are you worried about the future if so i can pretty much guarantee you that no matter how concerned your outlook is it's still brightly sunny compared to longtime contrarian macro analyst mark fober editor and publisher of the gloom doom boom report using a global perspective and millennia of historical precedent mark sees challenging times ahead and safety warning if you frighten easily you'll want to fully strap in before watching further maybe for a while like during the bolshevik revolution and maybe during the french revolution maybe for a while it looks better because of money printing and fiscal deficits but in the long run it will lead to disaster welcome to wealththeon i'm wealthy on founder adam taggart welcoming you back for another week of making sense of money and the markets today we're zooming out to look at the macro situation from a global perspective joining us from hong kong is mark fober phd in economics author and long time editor and publisher of the gloom boom doom report mark's well known for his global investment view his skepticism of central planners and his bold and often contrarian predictions mark i just want to thank you so much for staying up so late in your evening to join us for this program no problem actually i live in thailand in the north in chiang mai in chiang mai okay well i know it's still late there so thank you i still have an office in hong kong but i when i'm not traveling i stay in chiang mai and now with all the restrictions we can't travel anywhere i like to start every one of these interviews not introducing any biases on my end so if we could just start with this question what is your current assessment of today's global economy in financial markets well i think i could give a speech for three hours about the state of the global economy because as you know we have different countries and different countries are moving in different directions and we have different financial markets and some markets are going up and some markets are going down so it's a complex issue but in general if we look at the capitalistic system that we had for the last 200 years and the socialistic system and communism that we had especially after 19 after 1918 in russia the russian revolution and then later on communism in the soviet union and then after the fall of the nationalist in china we had the communists in china in 1949 the nationalists had to flee to taiwan and the worst so if i look at this world and i look at the opening of countries like china and russians of course obviously we had huge changes over the last 40 years but one thing that i have to point out to all your viewers is that when i first traveled to socialist countries in the 60s in eastern europe and later in 1980 to russia and at about the same time to china and the late to vietnam what was striking is how much poverty socialist countries were able to generate while western countries including the us and western european countries through the system of free markets and capitalism had all prospered relative to the rest of the world and if we look at the world today we never in history thanks to capitalism had such a low poverty rate around the world relative to the world's population most people today are much better off than they were 30 40 years ago i'm not saying everybody in the us and in europe we have statistics that show that people who now reach 35 years of age they are poor and earn less in real terms inflation adjusted than their parents so i think we have to consider that if we have this move to the left that to my surprise young people want they want the government to do more they want the government to regulate more and to intervene more with all this move to the left we will have very disappointing economic growth rates and the standards of living of those people who follow these left-wing policies that lead to disaster economic and social disaster that these policies are of course ill-conceived and should be rethought very carefully by the voters the government doesn't do anything that the voters want the government is an own institution the bureaucrats take measures that voters mostly wouldn't want to have implemented so let's leave the government out the government no longer represents people the government is evil and as long as we have this trend i think uh the economies will maybe for a while like during the bolshevik revolution and maybe during the french revolution maybe for a while it looks better because of money printing and fiscal deficits but in the long run it will lead to disaster so that is my view of the global economy and we have already a slow down now in the global economy well we do wow okay so that was a great exposition to start this with and uh if i could just sum up you're saying look history has shown us that the more totalitarian the more socialist the state becomes uh generally the worst the population seems to fare and if i can put words in your mouth it sounds like you're saying you're becoming concerned that you're seeing more of those type of policies taking over and that makes you concerned about future growth prospects for the global economy did i summarize the freedom of people and about their standards of living i'm not talking about myself you understand i live comfortably on a property in thailand so i have no particular agenda or objective that i want to follow i was asked about the global economy and i gave you my assessment having lived through countries that were in the stage of socialism and communism and i saw the disasters that these interventionist governments brought about the planning economy where a group of arrogant bureaucrats as we have today in the u.s and some european countries they think that they know and that they should take economic policy measures well it's exactly that global perspective uh which is why i wanted to have you on here so i so appreciate you sharing it and you said something that i want to kind of try to use an analog here and you tell me if it's appropriate or not but when hugo chavez took over in venezuela um you know he did a lot of raiding of the wealth of the country and for a while everybody felt great right um but then uh the unsustainability of those policies kind of caught up with things and of course we all know where venezuela is today do you see an analog there with all the money printing and stimulus that's that's being pursued so aggressively in the major economies right now well in particular with the period that covered the french revolution 1789 to about uh 1796. uh it was a period where first they printed money through the so-called assinia system and it led to some near-term prosperity but then inflation caught up and prices went up it's like now in the us i would say that the majority of people say more than 50 they had now price increases of food energy health care educational costs rents and the affordability that went down in other words they had cost increases of the cost of living that vastly exceeds their wage gains vastly so in real terms inflation adjusted their standards of living will go down the standards of living of people like jeff bezos and i'm not criticizing him i'm just stating the standards of these people of living is vastly increasing because their companies are doing very well in an environment where you're closing down small shops absolutely so um uh as we um you know bloomberg just published an article today showing that the uh cost of a house in the u.s is up 23 year-over-year you mentioned a bunch of other essentials for living food health care rents they're all up double digits in the past year but uh you know real wages in no way shape or form or or matching pace to this right so um a question i ask a lot here is sort of how much longer can the average citizen stand this and when do the torches and pitchforks come out but do you see going forward from here in the major economies like the u.s like europe are are just sort of ever higher prices and ever rising inflation is that just going to be the new normal going forward or do you see them hitting some sort of deflationary limit at some point here where we see a big contraction well this is a very good question and we don't really know the answer based on the completely incompetence of the bureaucrats that sit at central banks who have zero historical knowledge zero business experience but sit in glass buildings building all kinds of models they themselves don't really understand and to then take the monetary measures that essentially have since the 1980s led to larger and larger stimuli packages and larger and larger monetary ease that these people will continue to print money and if the inflation picks up more and at the same time as i suggested the economy weakens in other words you have a situation of inflation and economic weakness they will say these academics that are overpaid and do nothing and know nothing that these academics will tell the people well we didn't print enough i guarantee you this is going to be the case and i followed bureaucrats for a long time because i'm interested in history the three latest faith chairmans bernanke yellen and powell are about the lowest great bureaucrats i've seen in history wow that's quite a that's quite a question of policies so you understand there may be slaves of someone behind them who tells them you do this that is what i suspect okay so it sounds like uh you know you see and it's no real surprise right when whenever um you know anybody in government is faced with a decision today they are largely always going to choose to inflate because it it gives a chance at least of kicking the can down the road a bit where if you tighten you immediately get negative response from the people who are losing their jobs and the companies that are shutting down et cetera um so i get it i get it a bureaucrat's going to bureaucrat most likely they're going to take the easy way out in in print um all right so um there could be an exception to this rule and that would be but it's difficult to envision a situation where the u.s dollar would collapse against other currencies you understand if it collapsed against say european currencies or the japanese yen and so then maybe there would be pressure on the us to actually tighten by the international holders of government bonds in the u.s that could be essentially the case but the other central banks do the same they also print money and so what we will have is a depreciation of paper money overall in the world not just in the us but overall people who hold cash when i grew up in my grandfather's household what was safe is to hold cash with a bank nowadays to hold cash is not safe because your deposit rates say six months deposit rates in the us are less than half a percent and the inflation as you as the government publishes is more than four percent so you have negative real interest rates of more than three and a half percent but this is what the government is publishing the reality is that the inflation at the present time and i'm not saying it will continue forever at this rate it may accelerate it may come down but at the present time inflation in the u.s depending on your situation in life it's been say between four and a half percent to 10 in my view well i think anybody at least living in the u.s over the past year you know i mentioned some of those double-digit increases in the just the the essentials of living they would agree with you um it definitely feels much more closer to ten percent than than four percent uh and i think you were being generous by saying that banks will give you a 0.5 percent return in most cases i think it's substantially less than that right now so i agree in switzerland do we have negative interest rates in germany as well yeah you've got negative nominal interest rates which is just mind-blowing right exactly all right so so the bankers are criminals they steal the expropriate honest people's savings by implementing zero and less than zero interest rates well so i i want to get to the the actionable part of the story but you you just put your finger on something that i talk about a lot here and i'd love to get your opinion on it which is right now in terms of the official narrative you know the central banks are the hero in this the heroes in the story right they are they are the ones providing the essential liquidity that kept the economy from from staying in recession when the pandemic hit um they are keeping rates low uh to be able to help people afford their mortgages i'm not saying i agree i'm just saying this is that's a story i understand i understand so what is it going to take for the masses to start seeing the central banks as the villain in this story well i think a lot of people see them all already in an unfavorable light but you have to understand in academia let's say you're a professor at the university the question is you want to keep your job or you want to get sucked you want to give keep your job shut up and just accept you're an employee of the federal reserve better shut up don't expose anything that could be wrong you're working for chase manhattan bank or jp morgan or whatever it is shut up the best nowadays in the current job situation that we have and in the current uh politically correct atmosphere just shut up because if you expose the villains and you tell the truth they're gonna shut you up that i mean a lot of academics have been sacked because they made some remarks that were inconvenient to their colleagues and in academia you know in business we have business rival reasons of course and people uh compete with each other but in academia there is much more jealousy among the people sitting at the university they all hate each other they hate each other today's economies how many economies have you heard recently quote david ricardo adam smith schumpeter or even a more recent economist like milton friedman who argued for freedom and capitalism and small governments and free to choose they never quote him they hate him because he argued for small governments and for the government to stay out of the way of the economy it's a disaster the the level of economics in terms of sophistication unlike say mathematics and physics that have made huge strides forward over the last 30 years in economics we've gone back to practically the stone ages okay so we've got a regressive academic environment uh that is ruled by the tyranny of the majority here and i've got to think we also have on the the business side the corporate side and the political side we have the powerful players who are making tons of money from their unfair advantage right now feeding from the trough and they don't want the system to change correct no they don't want this a perfect system for academia they can be incompetent at the fed then they leave the fed then they advise a hedge fund and that's it and they earn much more or they write the book by a ghostwriter yeah it's that uh it's that you know revolving door uh you know i can tell you going to citadel i i know several for former fed employees fed voting members larry lindsay he was sucked by greenspan in the late 1990s because he opposed to the easy monetary policies all right well look so let's get to the practical side then so we've got this um this power structure that you think is going to continue to just debase currencies going forward um and i get the logic it's hard to argue with so the rational investor should then want to put their capital uh into assets that cannot be their intrinsic value cannot be inflated away obviously the mind immediately goes to precious metals love to hear your thoughts on them and then are there any other asset classes that you think provide a safer haven for capital than the traditional cash obviously but even even maybe equities and whatnot at these high prices well i wish it was as simple as you pointed out adam but the complication arises that's with that with the current policies the government will sooner or later run kind of out of money do you understand and then you have to take the money from somewhere and get the the financial conditions again in good orders certainly compared to other countries and so the taxation will go up you understand that is usually step one printing money step two the people that enjoy the money printing you start taking away something so you have sort of a wealth tax or you impose duties the way the political system has been in the us all tax increases have fallen on the middle class and the lower middle class and the poor people it never falls up the hundred richest families the tax cuts always benefit the hundred richest families and the tax increases hurt the poor people so but in future that may change you understand we have huge political changes not just in the u.s but elsewhere and we have this leftists and so forth so i i wouldn't rule out that it will become quite bad say i have assets okay i have assets in real estate i have assets in precious metals and in some stocks because in europe if i can get companies with a dividend of three four percent and the cash has a negative yield then the companies with the three four percent yield over ten years will go up by thirty percent uh if everything stays more or less the same whereas cash will lose value anyway and i have also uh precious metals that i said real estate stocks and some bonds have high yield bonds in emerging economies but my concern is that one day the government will come and say well mr faber first of all maybe you have too many assets we need to take something away from you so we'll take 50 and number two mr faber i think it would be good to send you to a re-education camp you know so that you can be in peace and rethink the world according to our socialist um ideologies and so the government well the government you may look at me with big eyes about sending people to camps well they already closed your business they closed millions of people in the world lost their small shop lost their hairdressers alone the tattoo salon everything these were small entrepreneurs that don't have a lot of capital behind them and so they lost their jobs they lost their businesses small restaurants coffee shops everything never before in history has a government taken these type of draconian measures and this in a system that claims oh we have democracy and therefore we have freedom bs the democracy was hijacked and has restricted people's freedoms i love about you mark is you are crystal clear on your thoughts there's no uh there's no questioning what you think about the situation so here it's clear that you predict tighter government control going forward as the system begins to um break under its unsustainability you foresee that the the leadership is going to basically become more uh extortionary in terms of um the demand places on the populace to make up for the difference and eventually it could get as bad as you're saying is confiscatory taxes uh business shutdowns etc whatever so just trying to keep our viewers from sticking our heads fully in the oven um what what type of steps do you recommend for the concerned investor listening to this right who doesn't want to become uh collateral damage to the you know ongoing process of currency devaluation um and perhaps has some concerns about risk confiscation um whether through taxes or or more brutal forces do you have any advice for those people well i think that in life if i look at people who were under extreme stress for extended periods of time to be realistic was the better attitude towards the difficulties then to just say oh i hope it will get better do you understand i think we need to realistically appraise the situation and instead of saying it will get better also consider that it may get much worse as mr faber thinks and under the condition of much worse you have to say to yourself okay all of us will endure a more challenging environment for our standard of living so what precautions do i take do i do nothing or do i say okay it will get much worse in this case i better have another beer or another smoke or another joint you understand these are things if you have money instead of being stingy and saving everything maybe you should start to enjoy a little bit your life because it may get much worse and forget about traveling anytime soon you may be able to travel but under very difficult conditions and so forth and under a lot of headache that may make your trip unpleasant so i would say financially i'm of course in favor of owning precious metals that there's no question about it that precious metals are an avenue to maintain your purchasing power but it is not guaranteed that they will not be taken away from you that is the risk also your shareholdings could be taken away from you in different ways as well as your cryptocurrencies and so forth in the french revolution about which i'm writing at the present time they didn't take your gold and silver away but they declared that anyone who accepts gold and silver as payment will be put to the guillotine will be sent to the guillotine you couldn't use it on the free market yeah risk of death so the first advice i have for your viewers is once to get from google's a picture of a kioti because it's not particularly pleasant to be taken to the kyoti but in france in the french revolution they actually took most of the original revolutionaries the revolutionaries in france were not simple people they were not uneducated people they were aristocrats highly intelligent people they took them to the guillotine themselves all right mark remember i told you to help me get the people's heads out of the oven not not not further in but i get you i get your point there and um i'm gonna put some words in your mouth tell me if they're wrong but it sounds like what you're saying is in addition to some of the financial steps and i want you to share any more that you have like own some precious metals but you're really saying you know invest in resilience which is a theme that i and others have talked a lot about as being an important component of wealth because the money there's no guarantee that money is going to come even under the best of scenarios right but you're saying look times might get tougher investing in your emotional resilience beforehand so that you can react to the adversity rather than get crushed by it would be good i see you nodding here and then there's another important form of resilience as well which is social resilience right which is um really investing in the relationships around you so that if times indeed get tougher you're not a lone wolf trying to you know fend the pack off by yourself uh you've actually got people that you have trusted relationships with where you're supporting each other during the tough times as opposed to turning on each other would you agree with that is that a fair assessment yes the problem in periods of extreme hardship people turn against each other that's why there were always informers and denouncers and so forth throughout you know periods of hardship but in general your assessment is correct and number two i would say the best is to diversify because you understand what usually happens in financial stress is the imposition of foreign exchange controls you are no longer allowed to invest outside the u.s you can't get your money out and i think it's a very careless of anyone who has assets to only hold assets in one country i think for me it's incomprehensible because the people that were the richest people in russia and eastern europe when the communists came they lost everything everything and the last tsar who was actually a relatively innocent bystander he was not an evil man and his children they were all slaughtered by the communists all right so important point there which is um consider diversifying internationally yeah so and i would imagine you would say diversification by asset class and then diversification by geography on top of that correct but the diversity by geography has to take into account that if you hold assets say you're an american you hold assets in asia the custody shouldn't be in the us because the u.s government can then force to sell it you understand to liquidate it but even if you hold it in another jurisdiction if they put the knife on your head and say look or they put on the knife on your girlfriend or daughter said and they say to you you either bring the assets back or we slaughter you this happened to the most famous philosopher of the 20th century uh wittgenstein the family had a huge fortune in gold parked in swiss in a swiss bank and because wittgenstein although he was he was catholic okay he was buried as a catholic but by blood he was three quarters jewish and hitler regime they came to the family and said either we send you to a nice country club camp where labor is required or you give back the gold that you have overseas the wittgenstein family was pre-german right in the austrian hungarian empire the wealthiest family built on steel and now wealth is friends with carnegie and so forth yeah all right so i'm just telling you the governments are evil and when i look at your politicians in the u.s i only see evil and greedy people they don't care about the people they couldn't care less they care about themselves how much money they can extract out of the system the budget in america the government expenditures is a four trillion dollars a year every government the most honest deals five percent the most dishonest 100 percent the usd subway in between so even if they steal 10 in the u.s on 4 trillion it's 400 billion dollars that they steal well you know one of the things i appreciate about you mark is your command of the scope of history here and i know that your comments on what you see today are rooted in patterns that you have seen over and over again with different governments different regimes etc and it is it is very sobering so um again just to as we begin to wrap things up here to make things as actionable as possible for people um you know it sounds like you're saying look um you see tougher times ahead you see the government taking a greater share of our wealth through both currency debasement and maybe eventually actually you know expropriating it um i i remember following your work you know right before and right after the the global financial crisis and i think you were still pretty pessimistic back then about our prospects but you had said you know if you got to keep your money in the system somewhere you got to do something with your money and i recall that you kind of said look if you put a quarter of it in global equities a quarter in in uh global bonds um a quarter in precious metals i can't remember if the other quarter was real estate or whatever it was real estate uh and that that actually performed pretty darn well over the past 10 years um do you have any sort of general framework like that you know in the near term for for folks to consider or is it just is this the time to put it all into precious metals and ideally precious metals nobody knows where they are i wouldn't put everything in precious metals because if we look at the performance of assets over very long periods of time stocks have tended to outperform precious metals we hope you've been enjoying this discussion with global macro analyst mark fober the interview continues in part two where mark provides his preferred investments and recommended portfolio allocation for the future he sees coming to watch part two just click on the link provided in the description of this video below or go to youtube.com slash wealthyon but before you go please don't forget to hit the like button and then click the subscribe button below if you haven't already as well as that little bell icon right next to it it only takes a second and it really helps us out as the more subscribers this channel has the more big name experts we can attract on this program in the future oh and if you'd appreciate a free no strings attached portfolio review by a financial advisor who can help manage your portfolio with the risks that mark warns of in mind just go to wealthon.com and we'll set one up for you okay i'll see you over at part two of our video interview with the one of a kind mark fober you

Channel: Wealthion

Views: 274,307

Keywords: Marc Faber, dr. doom, marc faber interview, stock market, stock market crash, stock market news, financial crisis, inflation, investing in gold, gold, silver, 2021, Gloom Doom Boom, Market correction 2021, when will the next stock market crash happen, us debt, Fed, economic stimulus, Invest in gold, Investing, Stocks, Bear market, market crash 2021, stock market analysis, us economy, financial markets, stock market today, wealthion youtube, dr marc faber, dr doom, adam taggart

Id: fDf24HkFXKE

Length: 39min 32sec (2372 seconds)

Published: Fri Aug 13 2021