The Roubini - Faber Debate
Two of the most provocative and incendiary economic
prophets are Nouriel Roubini and Marc Faber. As with most oracles, the denominational sect of doctrines often determines
the forecasts. This especially applies to economic prognosticators. Roubini has evolved into an establishment darling working
with central bank governors and finance ministers. Faber remains a contrarian investor earning his designation as the genuine
"Doctor Doom". Who is right, depends on the immediate and final outcomes of the international financial
troubles. Money markets volatility and fiscal debt obligations are integral components of commercial transactions and political
The barometric gauge of financial
health and stability has invariably been the price of gold. Often overlooked is that the price is reflected by the exchangeability
into different currencies. Therefore, any valid assessment of the true value of gold must factor in the real purchasing power
within the coinage of local tender.
The Business Insider
provides a summary of Nouriel Roubini: Why Gold Will Plunge To $1,000.
Gold spikes during extreme crises. The
crises are over.
Gold does well during periods when there's
a risk of high inflation. That clearly is no longer a big worry, given how much central banks have unsuccessfully tried to
stoke even modest inflation.
Now with the economy recovering,
nobody wants to be in rocks that don't pay any dividends.
interest rates are rising. That kills gold.
debt issues are selling gold.
Gold was juiced by right-wing
fanatics in the US. That boom is over.
this viewpoint with the Zero Hedge article, Marc Faber: "People With Financial Assets Are All Doomed"
explains, among other things, the fallacy of the Fed's help "the problem is the money doesn't flow into the system evenly,
how with money-printing "the majority loses, and the minority wins," and how, thanks to the further
misallocation of capital, "people with assets are all doomed, because prices are grossly inflated globally for stocks
and bonds." Faber says he buys gold every month, adding that "I want to have some assets that aren't in
the banking system. When the asset bubble bursts, financial assets will be particularly vulnerable."
The preliminary appraisal of what seemingly are contradictory positions is that
both are correct, depending on the current location of the time continuum for world financial markets. The overriding ability
of central banksters to paper over catastrophic crises and deflationary dislocations, seem to be unlimited. Coordinated rescue
plans are frequently disguised by currency fluctuations and equity swings, but the real measure of maintaining financial solvency
requires that bond rollovers and new floats be sold in the marketplace. With the immergence of the Federal Reserve purchase
of government debt, as an essential resort to keep the funding game going, the era of rapid devaluation, has begun.
Does this necessity sound like an environment where the "crises are over"?
As for the "risk of high inflation no longer a big worry", depends greatly on the credibility level of government
reporting statistics. Just maybe Roubini’s incorporation into the Davos jet set means that his distance from middle class experiences reflect his
newly found associations. Where is this vaulted economic recovery and a proliferation in the consumer spending? Dividends
seldom trickle down to the vast numbers who abandoned Wall Street investments. If real interest rates were truly rising, when
will the saver see a better return on their money? Roubini fails to mention that China and India have been buying gold, but in a recent article about Russia – we find out that the biggest country in the World might as well
be the biggest buyer of gold. Finally, gold was juiced by right-wing fanatics in the US! Hence, we are supposed to
believe that the globalists’ paper debt created system is rational and that Austrian School economics are extremists.
So much for the wisdom of Roubini and the reason, the old Dr. Doom finds the moniker wearisome and says it
no longer accurately reflects his opinions.
"So exactly how have the global elite accumulated so much wealth? Well, one
of the primary ways is through the use of debt. There is about 190 trillion dollars of debt in the world but global GDP is
only about 70 trillion dollars. Our debt-based global financial system systematically transfers wealth from us and our governments
into the hands of the global elite. And of course the gigantic banks and corporations that the elite control are constantly
gobbling up everything of value that they can find: natural resources, profitable small businesses, real estate, politicians,
etc. Money, power, ownership and control are becoming very, very tightly concentrated at the top of the food chain, and that
is a very dangerous thing for humanity."
honest person can dispute Faber’s claim - "the majority loses, and the minority wins". What is still debatable
is the timing of the looming break down of the fiat financial structure. The prospects for the inevitable, seems prudent,
"When the asset bubble bursts, financial assets will be particularly vulnerable." How long can 190 trillion dollars
of debt be serviced, when it is impossible to grow the world economy out of a mathematical impossibility?
The overriding issue in not about the current convertibility of gold into whatever
paper species is still solvent. The conclusive finality is that a newly issued medium of exchange will be imposed under a
terminable collapse of the world economy. All signs point that gold will be part of a desperate attempt by central banks to
launch a world currency. The ultimate risk that outlaws gold, as once was the case in the U.S., for private ownership, is
the gravest danger.
The Roubini model excludes the financial
doom that Faber believes to be unavoidable. As long as it lasts, careerist economists will enjoy the payoffs from the paper-banking
establishment. Yet in the end, the authentic "Doctor Doom" will prevail.
James Hall – June 5, 2013
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