Friday, May 19, 2006

Marc Faber's latest

Marc Faber's latest post for is a take on Federal Reserve Chairman Bernanke's options as economic overseer. Faber sees Bernanke following in the footsteps of Alan Greenspan, inflating the money supply wildly at any hint of crisis. Only now, the rate of money printing and credit creation is to proceed at an accelerated rate, leading purchasing power of the US dollar to erode at a similarly increased pace.

As Mr. Faber points out, official reports of "low inflation" may have fooled many up to now, but these claims will fall apart when the value of the dollar and dollar denominated asset prices are measured in terms of gold:

Whereas Mr. Bernanke can print as much money as he likes and, therefore, support the inflated US stock and housing market, he cannot prevent US assets from declining against gold, and over the last one and five years, gold has significantly out-performed US equities.

By the way, I love that he referred to the Bureau of Labor Statistics as the "Ministry of Truth". Classic.