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Marc Faber vs Mish on Inflation Vs Deflation

Economics / Economic Theory Mar 13, 2010 - 05:54 AM GMT

By: Mike_Shedlock

Economics

Best Financial Markets Analysis ArticleI had the great pleasure of meeting Marc Faber in person over the past couple of days after having exchanged emails with him about various things for the past several years. Marc is not only extremely knowledgeable about investments and strategies, he is also a lot of fun to be with personally.


Marc was in Madison Wisconsin for a speech in front of an investment group, CFA Madison. We arranged a couple of Market Tickers with Aaron Task and Henry Blodget at a local ABC affiliate station while in Madison.

Marc took the inflation side of the debate and I the Deflation side. Here are links to the Tech Tickers as well as the videos.

Marc Faber: Don't Expect Another Crash ... Bernanke Won't Allow it

"I would rather be lightening up on positions in the next couple of weeks than heavily buying in here," says Marc Faber, editor of the Gloom, Boom and Doom Report.

Accompanied by Michael "Mish" Shedlock, the man behind the economics blog, MISH'S Global Economic Trend Analysis, Faber tells Tech Ticker there's very few opportunities to make money in the market right now.

"Mish" who also thinks it's time to take profits, goes even further, predicting a "50-50 chance the bottom is not in yet."

Faber, however, is confident we won't "see 666 on the S&P 500 ever again." He says "if we go down by 10-20% on the S&P 500, our money printer Ben Bernanke will flood the market, weakening the dollar," and thereby driving up stock prices.



If you are going to put money to work in stocks both market watchers think Japan is the place to be. After a 20 year bear market and despite high-debt-to-GDP levels, the pair think the market has become too cheap to ignore. Always a contrarian, Faber believes the lack of interest in Japanese stocks makes it one of the most compelling buys in the world.

-- Stay tuned for more from Faber and Mish: In forthcoming clips the two debate the fate of the U.S. and if inflation or deflation will cause the our downfall.


The Great "Inflation or Deflation?" Debate: Mish vs. Dr. Doom

Here is part two of three: The Great "Inflation or Deflation?" Debate: Mish vs. Dr. Doom

Which is the greater threat, inflation or deflation?

In Marc Faber and Michael "Mish" Shedlock, we found two market watchers ready (and able) to champion both sides of this great debate.

Shedlock, an investment advisor with SitkaPacific Capital and author of the economics blog, MISH'S Global Economic Trend Analysis, made the case for deflation: Credit is contracting, despite Ben Bernanke's best efforts to flood the financial system with liquidity.



"The money supply is just sitting there as excess reserves on bank balance sheets," Mish says. "Bernanke can print this money but unless it makes its way into the real economy we're not going to see inflation."

In addition, he predicts "another leg down" in housing and commercial real estate, more consumer loan defaults, and notes state and local governments are (finally) cutting back on spending in the face of falling tax receipts and budget deficits. All these trends will contribute to the deflationary force of credit contraction, Mish declares.

But Shedlock is missing one critical factor says Faber, publisher of the Gloom, Boom and Doom Report: "When the economy's bad, governments pile up these fiscal deficits and they print money" to offset the deleveraging of the private sector, he says. "They're going to print and print and print."

If the economy sours again and especially if deflationary forces take hold, we'll have "even more stimulus packages and even more printing," Faber says. "That will bankrupt western governments - not just in the U.S. but everywhere. "

Faber and Mish: We're Doomed and Washington Can't Do Anything About It

Part 3: Faber and Mish: We're Doomed and Washington Can't Do Anything About It

Washington is patting itself on the back for having orchestrated an amazing economic recovery. But Washington lawmakers are a delusional bunch of boneheads, say Marc Faber and Mike "Mish" Shedlock, editor of the Gloom, Boom, and Doom Report and investment advisor at SitkaPacific Capital Management, respectively.

The economy is NOT recovering, they say, and the U.S. faces a depressing "eventuality" of either crushing deflation (Shedlock) or runaway inflation (Faber). The timing and type of this eventuality is uncertain, say the gurus, but they are certain it's too late for America to change course.

"It's beyond repair -- it's too late," to avert fiscal disaster, Faber declares.

Mish agrees: "The day of reckoning has arrived. The question is how long it takes to play out."



This grim outlook doesn't mean you're helpless. Faber recommends individuals prepare for doomsday by buying gold, owning assets abroad and buying property outside of major cities.

Thanks Marc, That was a blast!

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2010 Mike Shedlock, All Rights Reserved.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Jery
15 Mar 10, 08:30
Unemployment

March 15, 2010.....I work with unemployment and haven't seen any articles on the fact that the Fed hasn't put in place any extention of unemployment benefits..This means when peoples benefits run out this time, they're done! The only thing that has been extended is people's oppotunity to apply for the current extention that ended a few weeks ago...Have I missed something or have writers decided not to write about this?


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