Marc Faber: Ruse of Keynesian Economic Central Planning

Marc Faber: Keynesians have Hijacked Economic Theory

Bubba welcomes Dr. Marc Faber the author of Gloom, Boom, and Doom Report a economic analyst and business man based in Switzerland. Todd opens the show asking Dr. Faber what economic school he favors, to wit he responds he is leaning heavily towards Austrian principles of limited government and economic and personal liberty.  Dr. Marc Faber maintains he favors a free market economy that is partial to individual initiatives and the absence of a central economic plan. Moreover, he states that he does not agree with Keynesian tax, spend, and deficit financing policies to wit emphasize government intervention into the private market whenever the economy slows down more than the magical and arbitrary line determined by the Keynesian academics.

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Dr. Faber feels that the combination of politicians and Keynesian policies are harming western society and have literally hijacked the entire economic theory dialog for the past 100 plus years. Dr. Faber states that academics are intelligent but as demonstrated by the endless bubbles, Keynesians lack not only basic street smarts, but are wholly incapable of taking into account the plethora of variable in an economy the size of the United States, let alone the world. Bubba asks Dr. Faber why we haven’t learned anything from the Japanese real estate mess twenty five years prior. Dr. Faber comments that the economy has collapsed precisely due to Central bank intervention, and if left to free market forces, the economy would have recovered long ago in stark contrast to the Keynesian fetish for financial engineering.

The idea of the weaker Yen drawing investments did not work as investments were outsourced to Mexico and China. Bubba asks Dr. Faber what he would have done differently as a business man were the decision up to him, which he maintains that in the late 90’s when the U.S. bailed out Mexico it was really bailing out Goldman Sachs who held the bonds. Dr. Faber states he would have allowed Goldman to fail and not taken a path of of inflating  the NASDAQ tech bubble at the turn of the twenty-first century as were the actions taken by former FEDERAL RESERVE Chairman, Alan Greenspan.

He feels that bubbles are created to benefit few at the expense of many investors and as such, Bubba asks Dr. Faber how he feels the Central bank mess of today will play out. He believes that if the central banks do not allow interest rates to return to a normal distribution the end result will be worse for all people. Moreover, he feels the world’s central banks are manipulating prices and are probably in cahoots with each other so as to protect their financial interests at the expense of the larger population. In addition Dr. Faber shares his strong critique of democracy, especially as seen in large countries as being a farce, and whose failed central plans and policies, will eventually lead to the rise of a dictator, who will step in to “fix” the problems created by the oligarchs of state.