Top Three Videos – August 15, 2023

Quick Summary Bullets:

• Marc Faber suggests that the current economic conditions resemble the German hyperinflationary environment of 1918 to 1923, raising concerns about potential inflationary risks.
• The elimination of the dollar as a reserve currency is a matter of time, according to Marc Faber.
• “Your food expenditures as a percentage of your income is much higher with you with the income of a hundred thousand then with the income of one million or ten million because uh someone who is well to do is not going to eat 10 times more than the poor.” – Faber argues that wealthier individuals do not necessarily consume more food, debunking the assumption that higher income leads to higher expenses.
• “Rising food prices and necessities like health insurance and school fees hit the poor guy much more than the rich.”
• “Interest rates on 10-year Japanese bonds is still only 0.59 percent, so in real terms inflation-adjusted interest rates in Japan are still extremely negative.”
• “If you look at 1970, the price of gold was $35 an ounce. It’s now over $1900. And it’s been kind of easing off a little bit lately and it may ease off more. But it was a reasonably good inflation hedge considering what is the risk of owning gold you understand.”
• “It’s only a matter of time until the dollar is eliminated as the reserve currency.”
• “The natural development is that eventually Chinese and these countries will bypass the dollar and settle either in Chinese Yuan or rmbs or in Nigerians nairas or whatever so this is natural and it will happen.”

Transcript Summary:

• 00:00 Marc Faber started investing in stocks at a young age and emphasizes the importance of resilience, while also drawing parallels between current economic conditions and the German hyperinflationary period of 1918-1923.
  • Marc Faber discovered investing and economics at a young age through watching sports results and later started investing in stocks with his savings, with the goal of taking a year-long holiday if he made money and working immediately if he lost it.
  • The speaker discusses their experience of buying stocks and the importance of resilience, and mentions that they see similar economic conditions today to the German hyperinflationary environment of 1918 to 1923.
• 03:10 The FED is deceiving the public with false tightening policies, benefiting the wealthy and corporations while harming the majority with debts, leading to increased inflation and decreased wages.
  • The FED is misleading the public by pretending to tighten monetary policies, but in reality, they are pursuing policies that will increase inflationary pressures and depress real wages, likely favoring Wall Street and wealthy individuals.
  • The increase in interest rates benefits the wealthy and successful corporations, but negatively affects the majority of people who have debts such as credit card debts, student loans, and mortgages.
• 06:34 Real wages have been declining since 1979, with rising costs of living disproportionately affecting the poor, while the speaker criticizes the Federal Reserve and highlights the benefits of investing in gold and silver as a hedge against inflation.
  • Real wages have been down since 1979, and even though wages can go up, the cost of living has increased significantly, with higher-income individuals spending a smaller percentage of their income on food compared to lower-income individuals.
  • Rising food and necessity prices, along with transportation costs, disproportionately affect the poor more than the rich.
  • Faber discusses how the standards of living for most people have been declining, despite claims of a strong economy, and criticizes the confusing and meaningless statements made by the Federal Reserve, suggesting that both governments and central bankers lie and manipulate people.
  • The US has had a series of central bankers, with the last good one being Paul Faulker, as subsequent ones like Bernanke and Yellen printed money excessively, leading to criticism from economists like Anna Schwartz.
  • Real estate prices in Japan are increasing significantly, inflation is higher than officially reported, and negative interest rates have an inflationary impact, while in the US, higher interest rates are negatively affecting lower income recipients.
  • The rich are unaffected by rising costs of living, while gold and silver have historically been a good hedge against inflation and a relatively safe investment compared to banks.
• 15:08 The US dollar’s status as a reserve currency will decline and eventually be eliminated as more countries shift their trade away from the G7 countries and towards China and other emerging economies.
  • Faber criticizes the endorsement of socialism and communism, highlighting the historical evidence that the private sector outperforms the government sector, and emphasizes the preference for the private sector in Eastern Europe due to the negative experiences with communism and the belief that people work harder when they have incentives.
  • The creation of new currencies by BRICS nations, backed by gold, could potentially threaten the US dollar as a global trade instrument.
  • The US dollar’s importance as a reserve currency will diminish and eventually be eliminated over time, similar to the Spanish peseta and British pound, as more countries shift their trade away from the G7 countries and towards China and other emerging economies, leading to a decrease in the use of the dollar for settlements.
• 19:09 Faber believes there is a buying opportunity in Latin American stocks and predicts money will flow out of overpriced US markets into depressed sectors like Latin America, which is a relatively safe place to diversify.
  • Faber believes that there is a rare long-term buying opportunity in Latin American stocks, and they plan to increase their position in Latin American assets due to the potential for growth.
  • He believes that the US market is overpriced compared to the rest of the world, and predicts that money will flow out of high-priced sectors and into depressed sectors and countries, including Latin America.
  • Latin America is a relatively safe place to be if you want to diversify and believe that World War III is a possibility.
• 23:58 Faber criticizes government control through pandemic declarations, questions claims about Venice’s future, emphasizes the need to adapt in uncertain times, warns of government plans creating uncertainty, and discusses the convenience of internet communication.
  • Faber criticizes the WHO pandemic Accord and expresses concern that governments may use the declaration of a new pandemic, such as climate change, as a means to gain more control over citizens.
  • Venice’s water levels have remained the same since 1910, contradicting claims that it will be underwater in the next five years, and historical sources should be approached with skepticism due to differing interpretations and reliance on sources that emerged years after the events.
  • He discusses the advantages and disadvantages of high temperatures and concludes that in an uncertain environment, both politically, geopolitically, and economically, it is important to adapt and thrive.
  • Investors should be aware that government plans create uncertainty and make it difficult for private entrepreneurs to plan, and individuals should recognize that government policies may not be implemented everywhere, as demonstrated by the example of travel restrictions in Thailand.
  • Faber discusses the convenience of being able to work and communicate from home using the internet, but also mentions the ability to continue writing by hand if the internet is not functioning.
• 30:32 Faber emphasizes the need for self-sufficiency and asset diversification to avoid government control, particularly in relation to travel restrictions and vaccination requirements, suggesting a low-profile lifestyle in rural areas as a means of protection.
  • Faber discusses the impact of government regulations on travel and the importance of having a self-sufficient community to rely on, particularly in relation to vaccination requirements and access to shops in large cities.
  • To avoid government control, it is advised to diversify assets and live a low-profile lifestyle, especially in rural areas, to avoid being targeted by others.
• 33:29 Faber discusses the Gloom boom and doom report, a monthly report that addresses long-term and cultural issues, as well as a more timely report geared towards retail investors, and provides a link to the website for further information.