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Marc Faber on the Next Bubble, It's Government Spending and Debt

Economics / Liquidity Bubble Jul 19, 2009 - 06:56 AM GMT

By: LewRockwell

Economics

Best Financial Markets Analysis ArticleJulie Crawshaw writes: Some economists think that another bubble is what’s needed to get the economy moving again.

Gloom, Boom and Doom publisher Marc Faber said this is ridiculous, and that the Federal Reserve – which he holds responsible for creating the housing bubble – wants to do it all over again.


The central bank should not encourage excessive credit growth, Faber tells Moneynews.com's Dan Mangru in an exclusive interview.

Between 2000 and 2007 the total U.S. credit market debt increased at five times the rate of nominal gross domestic product.

Unfortunately, Faber said, the next bubble is already here. This time it’s government spending and fiscal deficits that Faber thinks will double the government’s debt during the next six years or less.

“The U.S. government is largely deranged,” he said. “The private sector is the dynamic one, and that’s why I object tremendously against building up fiscal deficits because (they) shift economic activity into unproductive government instead of leaving it in the private sector.”

Another stimulus package would only make matters worse.

“In the Depression, they had one stimulus after another and it didn’t help,” Faber said. “What helped was World War II.”

The problem with bubbles, Faber said, is that they only temporarily stimulate the economy.

Dr. Marc Faber [send him mail] lives in Chiangmai, Thailand and is the author of Tomorrow's Gold.

Copyright © 2009 Newsmax Money

    http://www.lewrockwell.com

    © 2009 Copyright Newsmax Money / LewRockwell.com - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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