Dr. Marc Faber, of the Gloom Boom & Doom Report joins Chris Martenson for a discussion about the global economy, the policies of the Federal Reserve, and the effects of monetary inflation.
As always, Dr. Faber provides important insights that simply cannot be ignored, as the signs for where we’re headed are all around us.
In 2008, after the $700 billion Congressionally approved bailout initiated what would eventually become standard monetary policy for the second decade of the 21st century, we and others in alternative media warned that inflation, and possibly hyperinflation, would become reality within several years. For those paying attention, the end game was clear. The reality of the situation is, that we can no longer make forecasts that inflation is around the corner, because it’s here. We can see it in our food costs, energy costs, and rising prices in pretty much all of our basic and essential needs.
The following excerpts from the Faber/Martenson interview outline some of the most obvious signs of inflation being experienced today, and provides a humorous, but tried-and-true method of identifying price inflation in the open market no matter who your central bankers might be.
Dr. Marc Faber: Yeah, but do you understand itâ€™s very difficult to define inflation. The Federal Reserve essentially targets core inflation. Core inflation has nothing to do with your cost of living increases. And as you know the basket of goods and services that are used to measure inflation can be weighted in such a way that things that go up a lot like health care costs, insurance premiums, energy, in this regard entirely and other items where prices are deflating like a T-shirt are over-weighted.
Chris Martenson: â€¦ yeah, that really â€¦
Dr. Marc Faber: I have a large readership for my newsletter and website and I ask to please send me an email if anyone has the impression that their costs of living increases were less than 5% per annum So far I havenâ€™t received a single email.
Chris Martenson: I donâ€™t think youâ€™d get any emails from anybody whoâ€™s listening to this either. And inflation varies, it depends on your circumstances, so if you have a child about to enter or in college â€¦
Dr. Marc Faber: Absolutely, absolutely, every household has a different inflation rate. All I can say is maybe I buy at the wrong places and I travel in the wrong airplanes and stay at the wrong hotels but my costs of living are going up every year.
Chris Martenson: â€¦ yeah, they absolutely are and we should also note that the official measure of inflation does not include taxes. The entire cost of government â€¦
Dr. Marc Faber: Yeah, absolutely, and in that â€“ hidden taxes, namely fees that you pay to the government and in any event I donâ€™t believe that any one of your listeners will have a wife tell them: listen, you can give me less household money because prices are down. That I donâ€™t believe.
Chris Martenson: â€¦ weâ€™ll try that sometime. I think youâ€™re right. So we have â€“ the theme then is that we actually have a lot of inflation. I mean if you look at a basket â€“ letâ€™s take the entire continuous commodity index and start in 2002 until today: itâ€™s been going up over double digits on a per annum basis.
Dr. Marc Faber: Yes, of course, and also a symptom of inflation is when the currency weakens and a symptom of inflation is the explosion in international reserves, which have grown from a trillion dollars in 1997 to now over $9 trillion. These are all symptoms of inflation and we have to define inflation as an increase in credit and in the quantity of money. And everything else are symptoms as inflation can manifest itself in a global economy in Vietnam where prices are going up letâ€™s say 12% to 15% annual rate. In India and China where prices are going up by at least 10% per annum. So when you print in the U.S. it doesnâ€™t necessarily have to inflate the housing market. That shows the futility of U.S. monetary policies. U.S. monetary policies were designed by the ranking basically to lift home prices but this hasnâ€™t gone up. Other things have been inflating, namely, like oil and food prices, which then hurt the consumer when the policies are actually designed to help the consumer.
Chris Martenson: Â Well is there â€¦
Dr. Marc Faber: I mean Mr. Bernanke often said – and I hate to essentially be outspoken in this way because I think heâ€™s quite a decent fellow – but heâ€™s just ignorant of economics and heâ€™s a victim of his ill-conceived monetary theories.
Our intention is not to come across as sexists, but we simply couldn’t ignore what may very well be the single most powerful indicator for our infinitely depreciating currency.
If you’re ever cornered in an argument with a friend, neighbor or coworker who has inundated you with government statistics and accounting practices when discussing rising inflation, you can stop any myrmidon in their tracks by asking one simple question:
When was the last time your wife asked you for less money when she headed out to the grocery store, or to go hang out with the girls for an evening, or to buy that nice outfit?
This decades’ long anecdotal measure of inflation certainly outperforms the scientific accounting methods utilized by the CPI core inflation statistics and is clearly a much better indicator of price inflation than anything coming out of government institutions and trusted analysts at major financial firms.