Dr. Marc Faber runs his own business, Marc Faber Limited, which acts as an investment advisor and fund manager. He publishes a widely read monthly investment newsletters The Gloom Boom & Doom report which highlights unusual investment opportunities, and is the author of several books including Tomorrow's Gold – Asia's Age of Discovery which was first published in 2002 and highlights future investment opportunities around the world. Dr. Faber is also a regular contributor to several leading financial publications around the world. A book on Dr. Faber, Riding The Millennial Storm, by Nick Vittachi, was published in 1998. In late February, Euro Pacific President Peter Schiff interviewed the eminent economist Marc Faber by telephone from his office in Hong Kong.
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Q: Marc, many thanks for taking the time for this interview from your busy schedule. I'd like to start with some macroeconomic questions, and then talk about some of the investment implications of the larger macro questions. Let's start with the stimulus and bailout, which is very much on everyone's mind. What do you think are the long-term effects of the stimulus and bailout proposals on all the Western countries, including the U.S.?
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MF: Well, first of all, there are lots of academic studies on bailouts and stimuli; and also on money-printing. And, in terms of fiscal spending, bailouts usually don't work. When the government sits in and tries to offset sagging private demand with government demand, it usually does not work. This is the pattern we have seen in the past. The long-term effect on the US economy from all the bailouts and deficits is basically that government's debt will rise very substantially and the balance sheet of the Fed will expand. Many people think that the global recovery will begin in late 2009. I seriously doubt that. I think it will be at least two years from now, worst case maybe 10. And when we do start recovery, interest rates will rise and inflationary pressures will be enormous.
MF: Well, first of all, there are lots of academic studies on bailouts and stimuli; and also on money-printing. And, in terms of fiscal spending, bailouts usually don't work. When the government sits in and tries to offset sagging private demand with government demand, it usually does not work. This is the pattern we have seen in the past. The long-term effect on the US economy from all the bailouts and deficits is basically that government's debt will rise very substantially and the balance sheet of the Fed will expand. Many people think that the global recovery will begin in late 2009. I seriously doubt that. I think it will be at least two years from now, worst case maybe 10. And when we do start recovery, interest rates will rise and inflationary pressures will be enormous.
