"The next stage in the rolling crisis ...sovereign defaults!"

Marc Faber: ...the Federal Reserve and other central banks around the world, they think they can essentially steer economic activity by printing money.  This money printing has a number of unintended consequences that will eventually be very costly. 

It’s not the first time the Fed has intervened.  They intervened after the S&L crisis, after the Tequila crisis, after LTCM in 1998, and then after (the year) 2000 when the Nasdaq collapsed.  They kept interest rates artificially low which led to a credit bubble, the housing boom and subsequent collapse. 

You can postpone the problems by printing money, but then the problem comes back to an even larger extent.”

Eric King:  “We’ve been talking about the one quadrillion dollars of derivatives here at KWN recently, Marc.  Does the sheer amount of derivatives risk the danger of a 2008 style collapse?  Is that (risk) still out there?”

Faber:  “Yes.  If you look back at 2007, before the crisis occurred, and today, the level of credit in the world has increased.  The imbalances have also increased.

 

And the sovereign credit of countries has essentially diminished in quality.  Now we have a huge bond market rally because of artificially low interest rates, but I think the next stage in the rolling crisis that we will have will be sovereign defaults.”

Audio interview at KWN