The government debt bubble is being inflated

In a recent interview with BNN, the contrarian analyst worried that governments seem to be throwing money at the system, through stimulus packages and monetary easing, with no thought of how to repay that money.

"Government debt will continue to increase as far as the eye can see because of the contingent liabilities that will kick in in five years time from Medicare and Medicaid and Social Security. So I think in the long run, we will have inflation," Marc Faber said.

Faber has suggested that when the economy begins to show signs of accelerating and the time comes for central banks to raise interest rates, they will be reluctant to do so. After all, who wants to be the one to take away the punch bowl at the spending party, turn on the lights, and tell everyone it's time to sober up and focus on the deficit?

Faber has even gone so far as to suggest the inflation problem could come on so quickly, it could lead to the kind of "hyperinflation" seen in Zimbabwe. There, after the government attempted to print new money to pay for its looming debt, the country found itself with an inflation rate at a mind-boggling 200 million per cent.

Source CTV Canada

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