Marc Faber is an investor trained as an economist, who has written one of the more interesting financial books in the last year. The book cites the Austrian school, but I believe he mis-interprets the Austrian business cycle theory as an over-investment theory, while it is in reality mal-invesmtent theory. The book is one of the more wide-ranging and fascinating tours of financial and economic history in the investment literature.
Today, Faber has written for the Financial Times today, Be braced for a bust as bubbles look set to burst. The theme of this article is that Greenspan’s bubble and his attempts to defeat the liquidation process that the market is trying to impose on the mal-investments has resulted in a larger, global, series of bubbles. Faber points out that usually different asset classes respond to different factors, so some do well whille others do poorly. What is the sense in the bond market rising at the same time as commodities, while the latter typically indicates inflation which is bad for bonds? The answer, according to Faber, is that the massive wave of global money printing is pushing up the price of nearly everything at the same time.
