Marc Faber : HOW REVOLUTIONS, WARS AND PLAGUES ARE HARBINGERS OF "GREAT CHANGES" IN ECONOMICS

Monthly Market Commentary: March 1st, 2020. By Marc Faber. Francesco Sisci, an Italian sinologist, writes under the title Doom or Renaissance in China after a Plague, that, “large plagues have been harbingers of great changes: the birth of the Islamic world or of the Renaissance, and the death of old institutions, like the old Roman and Persian empires and feudal culture." I also came across historian Walter Scheidel’s book The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century, which argues that, throughout all of human history, only violent cataclysms and plagues have produced significant and long-standing reductions in economic inequality. Last month, I opined that, a severe coronavirus pandemic could tilt the global economy into recession and that therefore, it would be favorable for US Treasuries. Over the last twelve months, the long-term Treasury ETF (TLT) is up 30% and year-to-date 13%. By comparison, the S&P 500 Index is up 6% over the last twelve months, and is down 8% in 2020. US Treasuries remain inexpensive compared to European sovereign bonds and they are a great hedge against a further stock market decline. Near-term, Treasuries are very overbought but I continue to hold them because of my belief that the Coronavirus will tilt the global economy into a serious deflationary recession/depression. In recent reports I have explained that I was reducing my equity exposure to around 20% of assets and increasing my cash holdings. I want to warn my readers not to be complacent. If the Coronavirus is going to be as bad as I believe it will be, I would not be surprised if all asset prices declined. Most importantly, I suspect that the Coronavirus could be the event that pricks the monetary-inflationary credit bubble for good, depresses all asset prices, leads to severe economic hardship, and destroys central bankers. I am enclosing with this report an essay by my friend Kevin Duffy (duffy@bearingasset.com) entitled The Coffee Can Portfolio. It is a great read. Lastly, remember the words of the late Leon Levy: “For most people, the most dangerous self-delusion is that even a falling market will not affect their stocks, which they bought out of a canny understanding of value.” With kind regards. Yours sincerely. Marc Faber.













Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.