Marc Faber One-on-One Interview - The Mangru Report May 01, 2010

Marc Faber reveals for the first time his unique collection of Mao Zedong artifacts.

Marc Faber :"I do not think that China is a currency manipulator for the simple that China fixed its exchange rate in 1994 against the US Dollar at 1USD = 8.28 RMBs but after 2000 when the US implemented ultra expendituary monetary policies that led to the credit bubble and the housing boom that is non productive but it boosted US consumption above the trend line and a symptom of this over consumption was then the escalation of the trade deficit "
"In my opinion any import duty on Chinese goods will rather be negative for the United States than anything else because according to the trade minister in China 60% of exports from China to the US are actually from multinational companies that have subsidiaries in china , I do not think it is 60% but say at least between 40% to 50% of Chinese exports to the US are manufactured by subsidiaries of multinationals in particular American companies and what it will also do is increase the cost to the US consumer "
"It is very important to understand that the US economic policies and that have been a problem for the United States over the last 25 to 30 years that it has been geared towards stimulating consumption and not geared towards stimulating what I call capital formation , capital formation is capital spending on equipment and infrastructure on education on research and development and on innovation , I think that stimulus in the US is misguided because it always tells the consumer go and spend more when what they should do is actually to save more and to invest in productive capacities "
"well basically cash is not attractive because under Bernanke monetary policies interest rates will stay at zero or below zero in real terms for ever in other words what you could have is essentially one day a FED fund rate of 5% or 10% but by then inflation will be say 10 percent or 15 percent or 20 percent so in real terms by holding cash and US government bonds for sure in the long run you are bound to lose money , so what's next what do people do with the rest of the money if bonds and cash are undesirable they will buy real estate or commodities or equities , now for many people the real estate market is not particularly atractive because A they are already overweight in real estate and under water so they are not going to buy real estate but in equities there is a lot of money that can flow in because that money can come out of money market funds and it could come out of bonds funds and so the equity market could actually surprise on the upside before the next bubble forms and then you have the next collapse which then brings up another even bigger crisis"
Dan Mangru interviews Dr. Marc Faber (author of the Gloom, Boom, and Doom Report) on everything from China currency manipulation, import taxes, interest rates, stimulus, healthcare, and his collection of Mao Zedong artifacts.