Marc Faber : The next Crisis will be much worse

Marc Faber : Well, I think that if you look at the history of crisis in the last, say, thirty years, each one was greater and larger. And, we had to mash that grain down so they printed money and so what did they produce, the housing bubble, and then even the worst crisis and the financial crisis. And, now they essentially give themselves the problems but they say alleviated the symptoms of the problems. And, I think the next crisis will be much worse. But, the question is, you know, as I said earlier, how do you protect yourself in the next crisis? Do you own equities, sovereign bonds, cash, commodities, gold, precious metals, and so forth. And, my view is that you’re probably better off in precious metals and in equities than in cash and in bonds. And I also happen to believe that in some parts of the U.S., notably the south, Phoenix, Atlanta, Las Vegas, where real estate prices are bottoming out. Now can they drop another ten percent? We are sure another drop of ten percent is not the end of the world when you consider that most individuals were in the NASDAQ in 2000 and then it dropped seventy percent. So I’m not saying that real estate will go up substantially, I’m just saying now you can buy real estate in the south of the U.S. at, say, thirty to forty percent discount to the construction costs. So I think it's reasonably priced. I don’t think it's – yeah, actually I think on global standards it's relatively cheap. But, my wider view is, you know, since 1982 we had the colossal asset inflation in equities, in real estate, and since 1998 also in commodities. One day this asset inflation will come to an end. The way the consumer price inflation in the 70s came to an end in, say, 1980 and thereafter we had this inflation. So it may be that the asset price inflation will not vanish altogether but we may be in a period of disinflation so if people are investing money maybe they should adjust to the reality that the returns in the future will not be ten or twenty percent per annum but may only, say, two percent or three percent above the rate of inflation. And, in terms of bonds and cash it will be, say, five percent below the level of inflation. - in Chris Martenson interview
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