Is the United States financial market in one immense bubble? The case could be made that everything that is making headlines right now and on the rise might very well be a huge bubble that could burst at any moment. According to one contrarian investor, the giant bubble includes bitcoins, bonds, stocks and everything in between.
Marc Faber, the editor and publisher of The Gloom, Boom & Doom Report, spoke with CNBC late last week to discuss the economic newsmakers for the past month. Faber, who is known as a bear on the U.S. and a bull on other things like gold, blamed the bubble on “excess liquidity.”
Faber warned that most of the bubble may rise even more than 20 percent before the bubble bursts. “Yeah, it can go up even more, if you print money,” Faber told the news network.
“You have to say that we are again in a massive financial bubble in bonds, in equities, in other assets prices that have gone up dramatically,” said Faber. “Farmland is up 10 times over the last 10 yrs. Bitcoins are up now, and who knows what will go up next. We are in a gigantic speculative bubble.”
He added: “I have no idea whether a bitcoin is worth $10,000, a million dollars, or $50.”
All of this money can be allocated into an array of expensive and speculative goods, such as fine art, classic cars, real estate and diamonds. Faber said that everything that has been sold recently for tens of millions of dollars is an example that “there is a lot of liquidity that just flushes into one speculative sector of the market from another one.”
A simple Google search will show the astronomical amount of money that individuals are spending on art and vintage cars in recent years. For instance, earlier this year, a Pablo Picasso painting was sold for $155 million, while a 1964 Ferrari sold for $14.4 million at an auction last week – classic automobiles have risen in value by 40 percent.
Despite Faber’s suggestion that bitcoins are in a bubble, many bitcoin owners would disagree. Bitcoin proponents have been saying throughout the year that the cryptocurrency – perhaps even the entire cryptocurrency industry – is in a bull market. At the time of this writing, one bitcoin is trading at just under $1,100.
Opponents have been labeling bitcoins as a Ponzi scheme (Gary North), a pump and dump scheme (Robert Wenzel) and Tulipmania 2.0 (Peter Schiff).
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