Marc Faber: Fed Won’t Raise Rates; Helicopter Money More Likely (Video)

With the release of the Federal Reserve’s April meeting minutes, it’s all of a sudden a forgone conclusion that the Fed will raise interest rates in June.

Marc Faber, publisher of the Gloom Boom & Doom Report, thinks it’s all a bunch of hot air. He appeared on Kitco News yesterday and argued that the Fed isn’t going to raise rates. Instead, it will end up engaging in even more extraordinary monetary policy:

My impression is that the Fed will not increase rates any further this year – my impression is that the economy is actually weaker than the statistics would suggest and that they will refrain from increasing rates. My impression will also be that eventually there will be some type of helicopter money in the US, or the launch of QE4.”

Faber’s point of view is similar to Peter Schiff’s. As Peter pointed out in his most recent podcast, they haven’t actually raised rates. They just talked about it. Peter made a good case they are crying wolf and won’t likely follow through. He said, it’s not impossible, but it’s just not likely given the current economic climate.

We’re getting lots of bad economic news from the retailers; we’re getting bad economic news in general in the government statistics; we got bad news coming out on the labor market. Yet everybody who heard this immediately said, ‘Oh, the Fed is going to raise rates!’ Why? They didn’t say that. They said, ‘If the economy improves,’ which it’s not. ‘If the labor market continues to strengthen,’ which it’s not. ‘Then it may be appropriate to raise rates. And we may do it.’ This is the same-old, same-old they were doing all last year. They kept crying wolf on a rate-hike all year last year, and they finally did it in December. Now they’re starting to do the same thing again.”

(Scroll down to listen to the complete podcast.)

During his interview with Kitco News, Faber also discussed the future of precious metals, saying they still have significant upside, and he weighed in on the US presidential race.

Highlights from the interview:

“The gold price is probably cheaper than it was at the end of the 1990s. When you compare gold to the quantity of money, the quantity of credit in the world and the dismal outlook in terms of further money printing by central banks – they will continue to do so – so, I feel that actually the gold price…still has a significant upside potential.”

“Financial institutions hardly own any precious metals, and I think I wouldn’t look at precious metals being driven by industrial production or industrial demand. I would look at precious metals as sort of a currency where people say, ‘OK, here we have the central banks that are going to print money. The purchasing power of money will go down.’ I think more and more fund managers and wealthy individuals…these people will say we want 5 or 10% to 20% in gold, silver, and platinum.”

“What will also drive demand [for precious metals] is an increasing loss of confidence in central banks.”

“My impression is that the Fed will not increase rates any further this year – my impression is that the economy is actually weaker than the statistics would suggest and that they will refrain from increasing rates. My impression will also be that eventually there will be some type of helicopter money in the U.S, or the launch of QE4.”

“My interpretation of the election is that ordinary people in the US are fed up with Congress, and they’re fed up with the elite and the establishment. These are the Clintons or the Bushes. And they like an outsider. This explains the popularity of Bernie Sanders. I think actually Sanders is intellectually quite intelligent. I disagree with his policies that lean strongly toward socialism. But Hillary Clinton and the others are similar in the sense that they buy votes by handing out and making promises to people.”

“I think Trump is a – I wouldn’t call him a loose cannon – but at least he dares to challenge the establishment. That I give him credit for. He’s a courageous person. I’m sure a lot of people would love to kill him. But at least he has the courage to stand up and has some common sense. Whether he would be a good president, I don’t know. But given the other options, I’d rather take Trump.”

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