Marc Faber Explains The Shadow Banking System
I have argued for many years that
because of easy monetary policies, we had rapid credit growth in the
Western world and also in other countries, whereby, after the Asian
crisis, there was some de-leveraging in Asia. But in general, if you
look at the world, say compared to the 1950s, 1960s, and even the 1970s,
it is very clear that financial markets, official and less official,
have grown disproportionately to the real economy. In other words, you
have say, a global GDP of $60tr or whatever it is and you have financial
markets that turn $60tr around in a week or less. I believe that one
day this financial bubble will have to adjust on the downside. Either it
will adjust on the downside because we have an inflationary burst or
because we have a collapse of the system. We do not know exactly how the
end game will be played. But in general, I cannot see how the
derivatives market will continue to exist for the next 5,000 years. It
has got to end one day and when it ends one day, either through war or
through a financial collapse, it will be very painful.
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.
