Tom talks with Marc Faber, publisher of the Gloom, Boom & Doom Report, about commodities and America's prosperity
Marc Faber, can we have a commodity boom and general prosperity as well? Or does a surge in commodity prices lead to a negative outcome? The problem is this: Mr. Bernanke decided to print money, and the Federal Reserve has done that for the last 30 years. When you print money, what the central banks can't decide is where the money will flow to. So it flows into Nasdaq from 1997 to 2000. Then it flows into real estate—until the collapse. In 2008 it flows into commodities. And now again it flows into oil and food. As these prices go up, it hurts the majority of the population.
Not all the population? For the well-to-do, your Goldman Sachs (GS) or Citigroup (C) bankers, the percentage that you spend on energy and food is very low, so you don't care.
Marc, you are suggesting investors buy American securities because in a disaster the U.S. wins. I'm just saying the U.S. would go down less than emerging economies.
But the fact is, we keep growing. How do you push against the optimism of half a century? In the 1950s, America was above everything else. Today, relative to the rest of the world, America is nothing. For the first time in the history of capitalism, the emerging world is more powerful than the Western world. That is a huge change. And it brings huge tensions in the world.