Amazon shares recently hit $1,000. Bitcoin reached a record high. The Dow Jones continues to stay above the key 20,000 recently hit $1,000. Bitcoin reached a record high. The Dow Jones continues to stay above the key 20,000 threshold. Real estate is surging again. This is the result of a Federal Reserve-fueled economy: bubbles.
Ostensibly, “we have a bubble in everything,” says Marc Faber, editor of The Gloom, Boom & Doom Report.
Speaking in an interview with CNBC on Wednesday, Faber explained that as parts of the economy are going up, debts are also exploding, which will cause a lot of problems in the future.
“We have a bubble in everything. We have global debts as a percent of global GDP that is 30 to 40 percent higher than it was in 2007. All of us and I also own lots of assets. We’re going to lose 50 percent. Either the government will to take it through taxation or expropriation or there’ll be a deflation in asset prices that is surprising most people on the downside.”
Faber specifically alluded to technology stocks as being similar to the dot-com calamity of 17 years ago.
“The bubble is in the most popular stocks. These may be great companies – Amazon, Netflix, Nvidia and so forth – but they are highly priced,” Faber said. “Don’t forget that from October 1999 to March 2000, the Nasdaq 100 doubled, and then it went down 70 percent.”
Declining auto sales is a sign, Faber notes, of a weak national economy.
Ultimately, says Faber, the Fed has only helped those who own assets while everyone else has sputtered.
“The Fed has been very successful in boosting asset prices, but the wages haven’t followed,” Faber averred. “People don’t have enough money to spend and invest.”
When a financial crisis does unfold, where should you park your money? Faber picked European corporate debt, emerging markets and U.S. Treasurys.
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