Marc Faber appeared on the Squawk Box this morning. Faber is the author of the Gloom, Boom and Doom report. He has been largely pessimistic in his forecasts and predictions on the US economy but he has also been unerringly correct in his interpretation, a fact even his harshest critics acknowledge.
On the show, Faber was asked about his view on the current depressed economy. Faber posits that there really is no good way. He cites that some people are calling for more interventions but he thinks that is the worst way to go. Faber says there are already too many interventions like subsidies in place. These only add to debt and don’t really improve anything. Moreover, when they don’t work, people, be they in government or the public at large, look for someone to blame and that blame usually falls on the heads of minority groups. Most recently, that minority was Wall Street. Faber said that Occupy Wall Street should have been picketing the Federal Reserve instead of the people on Wall Street because the issues really lie within the system – in other words, hate the game not the player.
Faber is thinks the entire West, which includes Japan, the US and Western Europe, are about to face a period of deep stagnation. The only way he sees to get out of the current economic situation is to create a flux tax. He cites that 50% of the people in the US don’t pay any federal tax at all. If income could be leveraged from the entire US population, albeit to varying degrees, the government might be able to bounce back on the extra income. The government needs to stop coddling the rich. It just isn’t working. Businesses are still leaving and the government needs all the money it can get right now.
Faber also thinks that for all the policies that encourage business in the US and the West in general, there are far too many restrictive regulatory policies to actually do any good. Faber commented that it is no wonder people are taking their business to China and other countries. Changing this could encourage more businesses to stay domestic. As it is, business in the US is in decline and has declined over the last 20 years.
The biggest problem Faber sees in the US is the lack of savings. he is tired of governments advising the people to “spend, spend, spend” when in reality they really need to save. He says the US needs a leader who will tell the people, “listen you lazy bugger, now you tighten your belts, now you have to work more for lower salaries.”