The highly regarded editor of the Gloom, Doom and Boom report, Dr. Marc Faber has warned that “the whole financial system will one day implode”.
Speaking on CNBC’s Squawk Box, he likened the global economy to the Titanic.
Dr. Faber believes that arguing over which assets are best in the current environment is akin to re-arranging deck chairs on the ill-fated Titanic. Only last month, Stephen King — chief economist with HSBC— made the same analogy.
“When I look at the whole financial sector … I feel like on the Titanic. We’re fighting about deck chairs -which assets are performing best and we’re fighting over the best tables in the ballroom — but I think it’s worthwhile to have your own safety boat and have your own ladder that will lead you to your safety boat because I think the problem is that the whole financial system one day will implode.”
Faber believes that the Fed and central banks will have no choice but to wade back into another QE program rather than raise rates in an attempt to avert the iceberg.
Such a move would likely have negative consequences for confidence in central banks and paper currencies across the globe. Then, people may come to realise that the central banks are not omnipotent after all and that currency debasement is set to continue and even intensify.
Investors and savers need an escape plan. The safety boat which Dr. Faber has in mind entails a highly diversified portfolio.