The Long Crisis

Posts Tagged ‘Marc Faber’

Marc Faber is the well known author and editor of the attention getting publication “The Gloom, Boom & Doom Report”. In his New Year’s Day edition this year there was a section on the potential for cyber attacks during the next decade that is scary stuff indeed.

The reason that it is so scary is that we are up against a very smart and determined enemy in Al-Qaeda. We know that they use the Internet to recruit members and to communicate worldwide. No doubt they have a cadre of very computer savvy terrorist operatives, including some top notch hackers. Then there are a number of foreign governments who may someday decide to attack us not with an army of armed forces but with an army of computer geek hackers.

The following is Marc Faber’s take on the possibility of cyber attacks.

“I, for one, am convinced that sometime in this next decade we shall experience successful cyber attacks, which may result in electricity blackouts, airport control tower failures, traffic jams, train and underground collisions, erroneous missile launches, a breakdown of the Internet, and so on.

“And whereas I perfectly understand their entire investment strategy around such highly disruptive events, they should at least prepare themselves for the day, week, month or even year when they may not be able to access or use their credit cards, bank and brokerage accounts, the Internet, and their mobile phones, and when they may have to live without oil and electricity amidst acute food shortages and poisoned water…

“It’s all wonderfully depressing, and some readers will consider me to be an alarmist. But the fact is that the likelihood of one or other of these conditions occurring sometime in the future is actually rather high. Therefore, I advise my readers to take out some insurance (but not with … any insurance company) in term for being prepared for an emergency situation.

“I suppose most people keep a small toolbox in their cars for emergencies, a fifth wheel in case of a flat tire (the Fed chairman doesn’t need a spare wheel because he wouldn’t know how to replace one in the first place), and a small home pharmacy for treating minor injuries. So, being prepared in the event of a major disruption in our lives might be considered prudent (especially if other people, such as small children) and not just an unnecessary warning by an insane alarmist. Hoping that all will go well is just not an option at this stage.”

Yikes! With what we know about the potential for conflict in the decade ahead a bit of preparation does seem to be only prudent. My own opinion is that trial cyber attacks are already being directed against us and more intense efforts will follow. As Al-Qaeda’s stated goal is to bankrupt the US shutting down the power grid would be a huge blow to our economy and would quickly cost us many billions of dollars in lost output and in combating total chaos. Then there are all of the smart computer geeks in Iran. And Pakistan. And Iraq. And our friend for now China. Yikes indeed!

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Famous investment gurus Warren Buffet, Jim Rogers, and Marc Faber all have gone on record over the past few months to say that the U.S. government would start buying its own debt… which would stoke inflation down the road. Today was the start of that dangerous attempt to boost the fast dying economy.

The Federal Reserve announced today that it would buy $300 billion of long-term Treasuries to keep interest rates low and help along the economic recovery. Of course, it is only fiat money. No real work or toil will create the money it takes to buy the debt. The money will be created at the stroke of a computer key. Short-term, it will boost a lot of asset classes but long term, the move is going to be a massive disaster… so get ready. Own gold, real assets, and bet on higher rates not all that far down the road.

The Federal Reserve’s move was one of several actions taken Wednesday aimed at making it less expensive to borrow money. The Fed signaled that it will boost the size of its balance sheet to more than $4 trillion. Today’s moves double the amount of money the central bank has poured into the economy to try to stimulate economic activity. “The Fed has upped the ante on its policy actions, and in a big way,” said Richard Moody, chief economist at Forward Capital LLC in Austin, Texas.

Has the great panic started? It would certainly seem so.

The gold market exploded on the Fed action news and the gloomy nature of the FOMC report,with the spot price advancing by more than $60 an oz. Look for gold above $1,000 an oz. again by the end of next week. The dollar plunged against major currencies. This is the signal that the dollar doom and gloom traders have been waiting for. During the period of deflation which we are presently in the Fed is sowing the seeds for hyperinflation.

The Fed, especially Chairman Ben Bernanke, are foolish to think that they can fine tune the trillions of dollars in cash that they are unleashing. Never in the history of the world has a central bank been able to control events once the printing presses were turned on at flank speed. It appears to be a doomsday scenario for the already fatally flawed US dollar.

The government, lead by the Federal Reserve bank, is on its’ way to creating the worse of all worlds. Russia and the UN are already calling for an end to the dollars reign as a reserve currency. China, our largest lender, for the first time stated publicity that they are nervous about their dollar holdings.

The dollar’s fall from grace as a reserve currency will hit Americans hard and further reduce living standards. America will not be able to spend beyond its means and then borrow to cover deficits nearly as easily, if at all.

If you live in America hard times they are a coming. By far the worse is yet to come. I see nothing on the horizon that will mitigate the long crisis.

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