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thank you for clicking this video because today we're talking about the economy and what might just be the biggest threats or challenges facing it and of course i'm here with located in melbourne florida jeff as usual always great to see you it's great to be here dave and we also want to bring in today's special guest economist mark faber he's also the publisher of the gloom boom and doom newsletter which you can get by going to gloom boom doom.com mark thanks so much for being back with us on the income generation well thank you very much for having me on your program mark lately we've seen people in the grocery stores here in america doing the head shake and they're shaking their head looking at how prices have rose so rapidly in this rapid inflationary environment that we have and we know the fed has poured gasoline on the fire of inflation as the form of accelerant so they are really a lot to blame here with this inflationary issue but where do you see inflation going from a consumer perspective can prices just keep rising in this environment well that depends very much on fiscal policies and as you hinted that it will depend mostly on the federal reserve but you understand the federal reserve has abused its power for the last four years for the last four years they have pursued monetary policies that encourage consumption and that encourage asset bubbles and we have evidence of that they created an asset bubble with the housing market between 2003 and 2007 and then after the great financial crisis they started in december 2008 with qe1 at the time i was asked when that would end and i said this is not qe1 it's qe infinity because once you embark on money printing it's very tough to abandon to stop printing money unless you are prepared to take a significant recession and this is now where we are today the fed in my opinion will increase interest rates maybe 50 basis points and over the next six to nine months maybe to one percent maybe one one quarter but then things could get so bad in the asset markets because as you know mortgage rates have almost doubled from the lows that we had 18 months ago so doc dr faber hold on so so you don't think the fed's going to go up to two and a half or two and three quarter percent like they're threatening to do you think you know before the end of the year you think they're going to stop short of that even two and a half or three percent would not curtail inflation because uh we have in california at stanford university and economies john taylor and he established a well-known model to calculate interest rates the taylor rule according to that rule interest rates the fed fund rate should be over nine percent over nine percent do you think the fed will go to nine percent never nope nope absolutely no you know it's like in the 70s everybody laughs about robert burns who was at the time fed chairman and they say well he was a dove and didn't tighten monetary policy but when inflation was as high as it is now he increased the fed fund rate to 11 percent so so this trend that we have of rising inflation and rising rates then is not really transitory in a short-term sense you're saying there's going to be a longer trend and a more aggressive trend towards a rising rate environment unlike anything we've seen in 40 years that's what i hear you saying mark is that what you're saying i'm saying we're headed into an inflationary spiral that is unstoppable for the time being also because of the stupidity of government officials you have to see this esg environment social and governance issue that increases the price of everything and if you have embargoes against russian oil russian resources and so forth and so on you can become of course you can become energy independent we can all have solar panels on the roof and windmills in the gardens and on hollywood boulevard we can have some wind mills as well but the cost is incredible and what is cost efficient nuclear power they don't want that they don't want right right so we start pipeline they don't want i know this is government policies especially under mr biden regulatory environment has become a disaster in the us well it's interesting you know politicians you know they they get desperate they run scared during times like this and they do things they make knee-jerk decisions so that brings me to a question you know do you think that the fed raising rates is this going to send us into a recession or maybe are we at risk of stagflation like we saw in late 70s early 80s yes stagflation was very good because the economy did not contract my view is that we are already in recession now not for the rich people and not for government officials whose salaries will always go up well you bring up all these great points but the world thinks the fed is the financial savior of every financial crisis and it sounds like they may have outdone themselves here since technically they aren't a law abiding institution they've got a blank check and they can do whatever they want and so you're saying that the chickens are coming home to roost then i guess is what you're saying basically what i'm saying is the federal reserve is the arsonist they put on the inflationary fires they put on bubbles they create bubbles and then when everything collapses they come in and says look because of us it's not worse than it already is that's what the fed does the fed and other central banks are criminal organizations yeah it's it's i've said many times that the fed is kind of like uh the arsonist and the firemen all wrapped up together uh so i love that i love that term but so final question um what's your best advice what's your best advice for investors today who are who are nearing retirement who are retired they can't take too much risk but they're worried about inflation let's hear your best words of wisdom well i think my advice is this the world has gone through lots of civil wars it's gone throughout history walls where the participants in the war occasionally change sides and during periods of enormous wealth i was just looking at the history of romania they used to burn down entire villages and cities and so forth i look at the history of the mongolians they used to burn down and flatten like baghdad entire cities and so we have periods of wealth and we have periods of disruptions and i believe the last 40 years we've created an environment of a money illusion where everybody thinks oh everything is going up and they disregarded the fact that yes it went up for rich people and i'm not complaining because i also did benefit i'm in the financial market you understand so i'm not complaining about myself i am complaining as an economist and social observer and student of history that the financial center always applauded the federal reserve and nobody called them and said this is going to lead to disaster yeah and we are there and i would prepare for everybody to lose money now the question is when everything goes up and uh you are not moving up your assets at the same rate say stocks go up i don't know the s p or the tao by 20 and you up only five percent you complain now people should think oh all these fung stocks the meme stocks the specs they're down 70 percent with few exceptions if i'm only down 10 i am doing very well relative to the arrests that's what you should be thinking about how do i lose the least yeah yeah well good good advice i think it's time like this where you know people middle class especially who can't afford to lose as much need to be very very cautious so mark fober jeff small again great being with both of you thank you so much for being here thank you gentlemen thank you for watching today's video if you enjoyed it that ] you
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