It isn’t just the United States economy that critics say is weak, but rather the entire global economy. The fault should be entirely placed at the feet of central banks worldwide, says Marc Faber.
Faber, who is the editor and publisher of the “Gloom, Boom & Doom Report,” told CNBC last week that the global economy, including China and the United States, are not strengthening but rather weakening.
The famous contrarian investor cited the Chinese economy growing only seven percent in the first quarter of 2015, the worst economic performance in six years. Meanwhile, the Federal Reserve is forecasting that the U.S. gross domestic product only climbed 0.1 percent in the last quarter.
According to Faber, the U.S. central bank made a disastrous mistake when it slashed the short-term interest rates close to zero because it “created a lot of unaffordability in the system.” The same level of blame can be applied to other central banks.
“There’s a big bubble in debt, in financial assets,” said Faber. “But the biggest bubble is the belief that central bankers know what to do. They have no clue. That is the biggest bubble.”
Where should you put your money? Surprisingly, Europe. Not the U.S.
“The market in the U.S., from valuation point of view and relative to other markets in the world, is completely unattractive. European stocks represent much better value,” Faber said. “And it’s not true that Europe is slower than the U.S. In the U.S., you have a slow down. Europe you have an improvement in margins. So I think European equities will continue to outperform.”
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