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People who buy gold do so as a safety measure because they are holding something real. And they avoid paper assets. For paper investments, they buy Nvidia and Tesla. Interest costs are over a trillion dollars each year. And they won't decrease in the foreseeable future , as interest rates won't fall significantly anytime soon .
So you find yourself in a situation where the government or the Fed will be forced to print money to pay the interest on the debt. And then you get into a death spiral. A deadly spiral. In today's unstable macroeconomic environment, uncontrolled expansion of the money supply severely distorts the financial landscape, making it impossible to accurately value real estate or stocks.
This persistent monetary inflation massively benefits the wealthy, while average households struggle with the rising cost of living. Mark Faber, a seasoned financial analyst and contrarian investor, outlines the dangerous trajectory of current fiscal policy. He clearly states that the global financial system is rapidly approaching a catastrophic point caused by staggering public debt.
With government interest spending set to continue to exceed a trillion dollars annually, interest rates are unlikely to decline significantly anytime soon. To survive this looming financial crisis, the Federal Reserve will be forced to print more fiat money to service its obligations. He boldly predicts that this relentless cycle will drive the economy into an inevitable debt death spiral.
Furthermore, he firmly predicts that while asset inflation in the stock market is finally coming to an end , everyday consumer inflation will soon accelerate sharply, radically reducing purchasing power worldwide. If you found this analysis helpful, please like it , . Given that we don't know what the world will be like in 5 years, tomorrow, or ever, I recommend that people diversify.
Have some assets, real assets and some financial assets. I am de- emphasizing financial assets, and I can explain why. Let's say the price of gold is approaching a new high. But what did paper assets, stocks, do? They didn't move anywhere. They actually performed worse than everything else. So, people who buy gold do so as a safety measure because they are holding something real.
And they avoid paper assets. For paper investments, they buy Nvidia and Tesla. I can compare the prices that existed in the 50s and 60s. And then I look at the price of gold. The price of gold until 1971 was $35 per ounce. And now it's around 2,700. So, in my opinion, gold has actually retained its purchasing power.
You know, the price of bread didn't increase as much as the price of an ounce of gold. This was just an example. But the price of insurance premiums may have increased more. That's why I think people should own certain precious metals. I like platinum right now. I think platinum is relatively undervalued .
And in a bull market for precious metals, it can grow. But what I wanted to say about gold—I do n't think it's that cheap. But then I look at the entire financial system. You see, when I started working on Wall Street, the US market capitalization was only 25% of GDP. Mhm. Now it is close to 200, about 170%.
Oho. And the entire bond market in America was less than a trillion dollars. It was about $900 billion. Then I say to myself, " Can we determine whether gold is expensive or cheap?" According to one statistic, I could say that gold is not expensive. According to another, I can say that it is expensive.
But I can do the same thing, say, by looking at the prices of soybeans, wheat, corn, sugar, etc. Is it expensive or cheap? It's more expensive than before, but still depressed, relatively speaking, compared to other prices that have increased much more. Mhm. The problem I want to explain to you and your viewers, the problem with monetary inflation, is that it distorts everything.
Everything becomes very unclear . It is very difficult to say: "Is my house expensive or cheap?" due to monetary inflation. I don't change my asset allocation drastically from year to year. I tend to keep about 25% of my assets in real estate. Perhaps this share has decreased slightly over the past 2 years because real estate prices have not increased.
And in some cases, my assets even fell, like REITs, but now they've started to recover a little bit . And then I have 25% in stocks, 25% in cash and bonds, and 25% in precious metals . This does not change dramatically. Can one asset class rise by 30% while another falls by 20%, and so on ? Yes, but I don't change significantly because I have enough money, I don't need more, and I'm happy with what I have.
In times of monetary inflation, when the government prints more and more money, it becomes very difficult to determine whether I have become richer or poorer , since soon everyone will be a billionaire. It will be a billion, like, say, in Zimbabwe. You can make this calculation. You can, in fact, measure GDP growth this year.
As I said, this is an indicator that needs to be adjusted for inflation. But let's take GDP growth, let's say, 3%. And then we measure how much the national debt has increased. If the national debt grows by more than 3%, then I can argue that this growth was actually fully financed by the government.
And is it sustainable? Now, economists of modern monetary theory will say that it doesn't matter. There was this clown on TV the other day , a financial advisor, of course, and he said it doesn't matter. Well, in the US it's already starting to matter, as interest costs exceed a trillion dollars each year.
And they won't decrease in the foreseeable future , because interest rates won't drop significantly anytime soon . So you find yourself in a situation where the government or the Fed has to print money to pay the interest on the debt. And then you get into a death spiral. A deadly spiral. To navigate an unpredictable economic environment, it is important to create the most diversified investment portfolio possible.
The strategic combination of physical real assets with traditional financial instruments creates an important safety net against systemic market instability . While paper assets, such as technology stocks , often stagnate or significantly underperform over long periods of time, physical gold has successfully maintained its purchasing power since the 1970s.
Investors continue to accumulate precious metals as a conscious safety measure to avoid serious risks of fiat currency depreciation. While some agricultural goods remain relatively cheap compared to the skyrocketing cost of living, as massive budget deficits stimulate excessive money printing, every price hike in supermarkets is a direct symptom of prolonged systemic inflation.
Tangible physical assets consistently provide reliable long-term financial stability in such turbulent times. Now let's get back to the interview. We must be very careful in investments, as two scenarios may arise . The first is, let's say, the 2000 scenario . When the Nasdaq index fell, it dragged everything in the world down with it.
Not for long, but within two years everything fell apart . And then the mining stocks and the commodity cycle went up, and commodity-related stocks performed well . Or we could end up in a situation like '89. Japan was the dominant market. 50% of the world's stock market capitalization was made up of Japanese stocks.
When Japanese stocks fell, I thought they would drag everything down with them, but that's not what happened . I was wrong. Money flowed out of Japan into other markets, particularly into technology stocks in America. Between 1990 and 2000, technology stocks skyrocketed. The overall macroeconomic picture is not very encouraging.
I mean , we also have to distinguish between statistics that the government publishes and private statistics that may show a different picture, because in democratic countries, unfortunately, government agencies like the Federal Reserve or the Bureau of Labor Statistics, etc., they don't tell people the truth.
Let's say, if we take the US economy as an example, statistically it is still growing, but provided that inflation—and by inflation I mean the increase in the cost of living— exceeds what the Bureau of Labor Statistics calculates. Today, the Bureau of Labor Statistics claims that the cost of living is increasing by 2.7% per year.
But let's assume they grow by 5% or 10%, as some private economists suggest. By my estimates, your cost of living, my cost of living, and the cost of living of your viewers is increasing by somewhere between 5-7% or more. So, assuming that the numbers the government is using are not correct, then we are not talking about economic growth , but actually a contraction in real terms, taking into account inflation .
In other words, if you look at 70% of U.S. households, they are barely making ends meet . But the Fed's money-printing policy has significantly increased the living standards and wealth of the top 1% of the population, as house prices and stocks rise. So all these people became much richer than before, including me.
I don't borrow money. I have deposits. For me, it's a holiday every time interest rates rise. But for poor people who have outstanding mortgages or consumer loans, every time rates go up, it's a disaster. So, the Fed's policy has actually, as it always has in the past, favored Wall Street and the wealthy at the expense of the middle class and the lower classes , the low-income people.
This is the state of the economy not only in the US, but throughout the world. You can go to Germany or England. Simple people, ordinary people— they all experience difficulties, absolutely everyone. And I can say this because I often go to bars and see how much people spend. There are no big spenders there .
And there are two aspects of inflation that I need to clarify. Most people say that when stocks are rising, we are in a " bull" stock market. When housing prices rise, they say, "We're in a ' bull' real estate market." But when the price of potatoes, tomatoes, chicken, and now, in particular, eggs increases— they are close to a historic high, or in some regions already at their peak—they say, "This is inflation." Any price increase is a symptom of inflation, and the cause of this increase is the budget deficit and money printing.
In some cases, more budget deficits, in others, more money printing, or both . But whether the price of a house is rising, or the price of eggs, beef, or corn, it is a symptom of inflation, excessive monetary expansion , period. The Fed has never taken into account asset inflation. We are talking about two things here.
In one case, the money printed by the Fed and the Treasury goes into assets, and asset prices rise. We call this asset inflation. And in other cases, they are directed towards goods, such as agricultural products, food, and services, such as insurance premiums. I think asset inflation is coming to an end, and consumer price inflation will accelerate.
In other words, the cost of living will continue to rise. I mean, I see it as a shareholder in the hotel. What are they doing? Occupancy is falling —they are raising prices. The broader macroeconomic picture reveals a deep and disturbing gap between official government statistics and everyday financial reality.
Although federal authorities regularly report modest annual cost of living increases of about 2%, the economy is not actually growing. It is shrinking sharply in real terms, taking into account inflation . This hidden economic recession explains why ordinary citizens around the world are desperately trying to make ends meet .
Current central bank monetary policies favor elite institutions, artificially inflating housing and stock markets, forcing low- income groups to bear the devastating consequences of high credit rates. Governments are printing huge amounts of money to pay the ongoing interest on their growing national debt.
Eventually, pure asset inflation ends , and its place in all modern markets is taken by rapid consumer goods inflation. Protecting your wealth means tracking these systemic market changes over time . If this was useful to you , please hit the "like" button, share with those who are following the situation, .
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