BOND MARKET AND SOVEREIGN DEBT TIME BOMB: Marc Faber’s Urgent Message on America’s Financial Future

It seems America’s government and central bank are back to their old habits: running up record deficits and keeping the stock market afloat at all costs. The Federal Reserve’s U-turn in 2019 sent a clear signal that they’re back to their policy of loose money and infinite liquidity, leaving investors to wonder how long this regime of folly and irresponsibility can continue.  

It’s a valid question that deserves real answers. And so, Portfolio Wealth Global sought the perspective of Dr. Marc Faber, author of the widely read monthly investment newsletter “The Gloom, Boom & Doom Report,” available at GloomBoomDoom.com. Marc Faber has made the field of investment his forte, and his policies of non-conformity and against-the-grain strategies of contrarian investing have garnered worldwide acclaim.

Along with his report, which highlights investment opportunities for investors wishing to capitalize on short- to medium-term asset market moves, Dr. Faber is also the author of several books, including the Amazon bestseller Tomorrow’s Gold – Asia’s Age of Discovery, which warns that today’s richest cities and clusters of wealth are unlikely to retain their exalted positions in the future.

Born in Zurich, Switzerland, and currently living in Hong Kong, China, Dr. Marc Faber obtained a Ph.D. in Economics (magna cum laude) from the University of Zurich at the age of 24. He gained worldwide renown due to his prediction of the global stock market crash of 1987, as he advised his clients to get out of the market before the precipitous collapse.

Courtesy: Marc Faber

A regular speaker at various economic seminars, Marc Faber is well known for his bold brand of contrarian investing. He is also associated with a variety of funds and is a member of the Board of Directors of numerous companies. Dr. Faber is also a regular contributor to several leading financial publications around the world, and is known far and wide for his daring and highly accurate market calls.

Seeing bond yields under pressure while the stock market climbs the proverbial wall of worry, Portfolio Wealth Global sought Dr. Faber’s clear-headed outlook on the markets and the greater economy. According to Marc Faber, what’s happening is that the U.S. bond market is beginning to sense that we’re being shepherded back into a quantitative easing regime in order to finance the indefinite deficits we’ll continue to have in this country.

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Speaking frankly, Dr. Faber stated that he doesn’t see how the U.S. government can balance its budget anymore: the budget deficit is so large that it’s not even a question of whether they can reduce it, but only a question of whether they can possibly contain it at this level.

Courtesy: Marc Faber

According to Marc Faber, the bond market will react one day, and instead of creating a better economic environment, the Modern Monetary Theory (i.e., the policy of indefinite and unlimited government spending) will actually cause an increase in interest rates, which will only make it more difficult for individuals and governments to repay their debts.

It might seem like an old-fashioned notion, according to Marc Faber, but his solution would be a provision in the Constitution to require a balanced budget. And as for the Modern Monetary Theory, Dr. Faber agrees with Larry Summers that its implementation would lead to very high inflation rates, just as we saw in Latin America in the 1980’s and more recently in Zimbabwe and Turkey.

In the final analysis, the best solution to America’s economic problems is to have a balanced budget, according to Marc Faber. Instead of that, we’ve only had a continuous program of quantitative easing and debt accumulation, which has succeeded in raising the prices of just about everything: stocks, bond prices, home prices, and even art and collectible prices.

Courtesy: Marc Faber

And yet, quantitative easing has failed to meaningfully raise the standard of living for ordinary people. So now, adjusted for inflation, millennials have less and earn less money than previous generations did at the same age – clearly, something is not right with the system that we have in place.

It’s a compelling argument that every investor and every citizen need to hear, so be sure to listen to Portfolio Wealth Global’s complete interview with the legendary Marc Faber. We also suggest that you avail yourself of Dr. Faber’s widely read newsletter, “The Gloom, Boom & Doom Report,” which is available today at GloomBoomDoom.com.

Portfolio Wealth Global consistently brings you hard-hitting truth and analysis from market insiders, and we encourage you to download our comprehensive report on the legendary Dr. Marc Faber, as well as our informative and revealing reports on intelligence expert Robert David Steele, longtime commodities maven Bob Moriarty, defender of democracy Charles Hugh Smith, and ultimate Washington insider David Stockman.

Best Regards,

Tom Beck
Research Partner, PortfolioWealthGlobal.com

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Legal Notice:

This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.

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