More Gloom from Dr. Doom: Marc Faber Predicts “Massive” Asset Price Deflation (Videos)
In April, Marc Faber called the US economy terminally sick and predicted a 20 to 40% crash in the stock market. In a recent interview on CNBC’s Trading Nations, “Dr. Doom” reiterated that US stock markets are overvalued and that there will eventually be a “massive” deflation in asset prices.
Ironically, Faber’s comments came the same day the NASDAQ set its latest intraday record high of 6,341.70. Faber points out that when you break it all down, only a few stocks are really driving the rise. In fact many of these stocks such as Facebook, Netflix, Google, and Apple weren’t even in the index in 2000. He reiterated this point during a Fox News interview.
Stocks like Intel and Yahoo, they’re still about half as high as they were in 2000. Technology is vulnerable to innovation and to new competitors, and we don’t know whether the current stocks, the bank stocks and related stocks that have driven the index higher – the typical stock hasn’t gone up a lot – whether these stocks will still be in business in five or 10 years time.”
Back on Trading Nations, Faber said this is not a particularly healthy sign from a technical point of view
“You know we have a lot of volatility, and when things will start to go down, they’ll go down a lot.”
Faber bases his pessimism on some fundamental problems in the economy – specifically the flow of wealth into the hands of very few people due to central bank actions. He said the imbalance could eventually disrupt the markets as we know them.
Either people with money will be taxed heavily with a wealth tax, estate duties and so-forth and so-on, or we’ll have a massive deflation in asset prices — I repeat: massive. I cannot tell you if it’s from this level, or will the Federal Reserve print even more money and go to QE 99? – all possible. And things go up, but eventually the system will break.”
Faber hasn’t predicted a time-frame for a crash. In fact, he said the markets could lurch upward first.
We could print enough money that the Dow goes to 100,000. All I’m saying is it will end very badly, extremely badly.”
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