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Dr Marc Faber on form

By JGalt, on May 5th, 2010

Marc Faber on Bloomberg May 3, 2010

Dr Faber at his absolute best: “like I told you before, all paper currencies are doomed…” and in response to how high precious metals could rally: “Well, for that you need to phone up Mr Bernanke and ask him how much he will print…but I can assure you, he will print and print and print!”

By JGalt, on May 5th, 2010 | Category: Big Issues

3 Responses to “Dr Marc Faber on form”

  1. Ed says:
    May 6, 2010 at 15:27

    Hi Guys

    Are you familiar with Modern Monetary Theory? Apparently the central banking system works differently then what we all thought. Here is an very short explanation that explains money creation: http://winterspeak.blogspot.com/2009/09/loans-create-deposits-how-banks.html

    It does seem possible that the system does actually work this way. Related to this is: http://mises.org/Community/forums/t/16503.aspx.

    MMT guys run a blog over here: http://bilbo.economicoutlook.net/blog/

    Any thoughts on this?

  2. JGalt says:
    May 7, 2010 at 10:49

    Ed, yes, familiar with “Modern Monetary Theory”, aka Keynes’ “liquidity preference theory.” Not impressed with it though.

    On the winterspeak article: reckon the analysis is on the right track but is hit-and-miss. Several errors, but note this one: he says “The Fed sells treasuries not to “finance” the deficit, but to drain the system of excess reserves,”. This is wrong, central bank bills are issued to mop up excess reserves, not treasuries. (in SA’s case, SARB debentures http://www.reservebank.co.za/internet/Publication.nsf/LADV/FC5A692E94E1D9C44225722800292F61/$File/Debenture+Prospectus+November+2006.pdf). There is a clear and definite difference between the two, treasuries do finance deficits.

    On your second point: Yes, that is similar to how the system works today. For more accurate and in more understandable terms, read Murray Rothbard’s “What has government done to our money?” (http://mises.org/books/whathasgovernmentdone.pdf) as well as “Theory of money and credit” (http://mises.org/books/Theory_Money_Credit/Contents.aspx)

    Thanks for heads up on billy blog.

  3. Ed says:
    May 7, 2010 at 12:38

    Thanks for the reply.

    Ok cool, busy with “What has government done to our money?” at the moment :)

    That “7 deadly frauds” melts my brain, seems to me this describes a system where there is no boundaries and limits and everything is possible via accounting.

    Cool cool, always good to learn about the other side :)