Marc Faber – Dow Could Go to 100000

For the latest Marc Faber, go to MarcFaberBlog.com – We had a crisis after 2000 when the Nasdaq fell apart. The government reduced interest rates to artificially low levels which discouraged saving and encouraged people to speculate. This caused a housing bubble, which burst more recently. Now we are getting the same treatment, but on a much larger scale. This has only postponed the problem, so the real crisis is still to come. From 2002-2007, we had an inflationary psychology in that all asset prices went up, including bonds. In 2008, we had deflation, as most asset prices fell and the dollar rallied. More recently, we have had inflation again, with all asset prices rising. The worse that the economy performs, the more inflation we will have, because the Federal Reserve will use that as a justification to inject more liquidity into the system. Private sector growth has been replaced by government sector growth. This has been accompanied by large fiscal deficits. If the economy does recover and it comes time to increase interest rates, the Federal Reserve will be very reluctant to do so, because that will increase the amount of their interest debt payments. This will weaken the Dollar, and will in time lead to hyperinflation. Bubbles throughout history that occurred as a result of monetary policy were almost always driven by inflation. During times of hyperinflation, what you don’t want to own is government bonds and cash. Instead of holding cash, people go out and buy …