Marc Faber - The “Great (Monetary) Reset” Will Destroy Cash
With gold trading strong above $1,600, today King World News interviewed one of the greats, Dr. Marc Faber, Editor and Publisher of the Gloom Boom Doom report. When asked if there will soon be a deal on the debt ceiling in the US Faber stated, “Yes, I’m sure there will be an agreement, but it doesn’t solve the fundamental problem of excessive debt and of further, very substantial deficits.
They’ll iron out something with lots of compromises and with spending cuts that are backloaded, in other words they won’t happen immediately. As we go along say in three or five years time when these spending cuts should occur and when the tax increases should occur, nothing will happen in my opinion.”
When asked about how this will impact gold Faber replied, “Well I think investors are gradually realizing that it’s unusual, with all of the problems in Europe that the euro is actually relatively strong against the US dollar. They are realizing US holders don’t want to hold euros because they don’t trust the euro and the Europeans don’t want to hold dollars because they don’t trust the dollar.
So which currency can they buy? They can invest in Canadian dollars, Australian dollars, New Zealand dollars, Singapore dollars and so forth. But basically the ultimate currency and the ultimate safe asset is gold and silver.
...I just calculated if we take an average gold price of say around $350 in the 1980’s and then we compare that to the average monetary base in the 1980’s, and to the average US government debt in the 1980’s...but if I compare this to the price of gold to these government debts and monetary base, then gold hasn’t gone up at all. It’s gone actually against these monetary aggregates and against debt it has actually gone down. So I could make the case that probably gold is today very inexpensive....
When asked about the end game as he sees it Faber remarked, “Well as I look at Europe and I look at the US and especially at politicians and at central banks, I think the way it will play out is that they will have further massive monetary stimulus and that eventually we will have a reset in the global economy.
But it won’t happen right away this reset, and only after the money printing will have essentially exhausted itself, when it reaches a painful level like in Latin America when we had inflation around 70%, 80% per annum or more, it reached a very painful level where reform was then initiated.”
When asked about the eventual monetary reset he expects and how he sees that playing out Faber had this to say, “Well when the reset comes it will be say a hundred dollar bill will be exchanged for a one dollar bill or something like this. Before we have the Great Reset, the government they will increase the war effort under whatever excuse that will be but I think that is the likely course of action...The wealth destruction will be interesting because...the people that suffer the most before the reset happens are actually the cash holders.”
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