Friday, September 18, 2015

Marc Faber: "I believe we are going to see QE4"

Bloomberg Interview with Marc Faber:
September 17, 2015

“I know exactly what they [the Fed] will do today. They will either leave rates where they are, or increase a quarter of a percent. I think they will probably do nothing… Number two, I think the damage has already happened. People simply don’t remember that Greenspan deliberately created the Nasdaq bubble. Then the bubble burst, then deliberately – and this is written in statements – created the housing bubble in the US, built on credit. The credit bubble in the US burst and produced essentially the greatest recession crisis since the Great Depression of the ‘30s. But people say, ‘Mr. Bernanke saved the system in 2008, 2009.’ And yes, indeed. They cut interest rates to zero in December 2008, so in three months time we will have the anniversary of almost seven years of almost zero interest rates. What I’m saying is that this has created a lot of distortions in the system, and I believe we’re going to pay for it…

“One of the problems with these artificial low interest rates is the following. We all know that one of the problems is the size of governments in the Western world. They have become larger and larger within the economic system. This was enabled essentially by very low interest rates, because the governments could borrow more and more money. In the US, for the last 10-15 years, the interest payments on the government debt have not gone up, although the government debt is up three times. Because the government pays less and less on its outstanding bonds and paper, treasuries, they essentially didn’t suffer from it…

“I think precious metals are relatively attractive. I believe we are going to see QE4. I like gold, I like platinum, I like silver. I think even if they increase rates a little bit here, it’s not going to be a trend. What would really be surprising for investors if the Fed said, ‘We are going to go from one quarter of a percent to 1.5% in, say, 12-18 months time. And we’re going to stick to this policy.’ But that they will not do. They will say, ‘We will increase a quarter of a point or nothing. We are data dependent.’ Based on the US, there is an argument where rates could go somewhat higher. Based on international economic developments… there’s no way to increase rates at the present time…”

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