Dr. Marc Faber of Doom, Boom and Gloom report fame adds to his commentary of the continued threat of inflation. Interesting to note for this video is the time frame that it occurs. I have not heard all his commentary or interviews but I do not recall him mentioning that the final crash could be 5 years out.
I suppose he is assuming that the current stimulus will prop things up for 5 years and then things will crash.
Recent positive stock market news with improved company earnings are not what they appear. There has been tremendous cost cutting going on and this has masked sales that are not increasing at all or are very anemic. There is a reason that his newsletter is called the doom, boom and gloom report and this video supports that.
His view is that there is potentially more inflation in the system because of contined money printing, stimulus and too low interest rates and the market/Fed perception that we are in a deflationary time. Hence if that is not perceived to work they will add even more of the above to the system with catastrophic results.
He has mentioned parallels with what has happened and is happening in Zimbabwe right now with 3 trillion Zimbabwe Dollars required to get a bus rise. Currently that is the equivalent of 50 cents US. I read this recently and the women had to hand 3 stacks of bills to the bus driver as she only had 100 Billion Zimbabwe notes.
Personally, I think I might go on Ebay to buy one of these large notes for framing. I will put it beside the 500,000,000 German Mark from 1923 that I bought last year. I read the book “The German Inflation of 1923″ a number of years ago and recall that 200 Billion marks was required in 1923 to buy a loaf of bread. The same purchase of one loaf of bread in 1919 was 1 mark.
This German inflation wiped out the middle class and unfortunaltely was one of the events that led to the rise of Hitler. People were grasping at anything. Can you imagine what might happen in the states in the same sitation?
I liked his analysis of why the interest rates are being held too low. He states that they are trying to force people out of cash and into the market. Stocks etc. will likely go up not because the prospects of the business are good but because there is nothing else to put their money in. Real Estate is still dropping, interest rates are below even the official rates of inflation–so people feel they have no choice. There is nothing else to invest in other than perhaps precious metals and commodities.
Final advice from Marc Faber. Look at your personal cash flow, evaluate your job security and buy stocks possibly in resource companies and possibly Asian stocks to help you diversify outside the United States. Also own some physical gold, silver and platinum.