Ludwig von Mises was always very keen on the term ‘crack-up boom’. I was therefore jolted from my mid-morning coffee today when I heard the same phrase being used by Dr Marc Faber, the infamous author of the Gloom, Boom, and Doom report.
If you have a spare few minutes to fill in today, while you’re between tasks, I thought you might also want to catch up on the good Doctor’s latest thoughts, as revealed via Bloomberg:
Here are the highlights:
On President Obama:
“If you want me to be honest I think he’s done a horrible job and I think that will continue. I think he’s basically a dishonest person; intellectually dishonest. And change? Nothing has changed.”
On Washington’s political control of the US economy:
“I think what should happen in the US is for the President to tell the US that you have to tighten our belts. We have to go through hard times for five years to repair the damage that was committed over 20-25 years by the Federal Reserve, the Treasury, and the politicians. Somebody has to tell the truth. But the politicians keep fuelling an illusion that you can spend yourself out of the misery and that by printing money you will improve the economy, which is not the case.”
On Chairman Ben Bernanke:
“Maybe after he will see the disaster he has created he may resign or he may be disposed.”
On why, despite being Swiss, Dr Faber will never be invited to or ever appear at Davos, except perhaps for a little light ski-ing and après-ski after the bigwigs have left town:
“Well I’m not sure the thinkers are in Davos. I think it’s a group of liars and people that go along with the system and perpetuate fraud and abuse and dubious practices in the financial system.”
On the ‘global recovery’, as reported by mainstream news reporters everywhere, over the last two years:
“If you print money and you have huge fiscal deficits, it would be horrible if the data isn’t any better than it is now. So, we have a crack-up boom. And I wrote about this. The question is; how sustainable is it and how healthy is it? It’s not a boom that is driven by capital spending, and savings and, say, factors that lead to sustainable growth. It’s all money printing and fiscal deficits. And one day, the burden of these deficits will have to be paid by someone. Either through inflation or through essentially much higher interest payments on the government debt. And this will be borne by your children.”
On fiscal stimulation:
“The economy has become a drug addict and by injecting more drugs you are not going to solve the problem. You have to put it into rehab.”
And finally, although I hate to upset any gold bugs out there, or indeed even myself, here are the good doctor’s thoughts on gold. Gold bugs may wish to look away, now:
“I like gold but I think it will go down for the time being. There’s a correction — an ongoing correction — and from the top to the bottom the correction could be 20%.”
Just in case I’ve just upset anyone, who was unable to take their eyes away; as the Mogambo Guru might put it, “Excellent, for I’ll be able to buy even more gold at rock-bottom basement prices.”
To read more on the Crack-Up Boom, direct from the pen of Ludwig von Mises, you can read these extracts from Human Action, below:
- XVII. Indirect Exchange: The Anticipation of Expected Changes in Purchasing Power
- XVII. Indirect Exchange: The Limitation on the Issuance of Fiduciary Media
- XVII. Indirect Exchange: The Inflationist View of History
- XX. Interest, Credit Expansion, and the Trade Cycle: The Gross Market Rate of Interest as Affected by Inflation and Credit Expansion [ref 1]
- XX. Interest, Credit Expansion, and the Trade Cycle:: The Gross Market Rate of Interest as Affected by Inflation and Credit Expansion [ref 2]
