Faber's 'Fed Counterfeiting' Remark is Unusual but Not Extreme These Days

Marc Faber: If I Were Bernanke, I Would Resign ... Central bankers are "counterfeit money printers" and Federal Reserve Chairman Ben Bernanke should resign for messing up the U.S. economy so badly, Marc Faber, author of the Gloom, Doom and Boom, told CNBC on Friday. He said Bernanke was one of the main proponents of an ultra-expansionist economic monetary policy that was to blame for the latest financial crisis. "If I had messed up as badly as Bernanke I would for sure resign. The mandate of the Fed to boost asset prices and thereby create wealth is ludicrous — it doesn't work that way. It's a temporary boost followed by a crash," Faber said. – CNBC

Dominant Social Theme: The Fed is triumphing slowly but surely.

Free-Market Analysis: This is fairly unprecedented. A so-called mainstream economist and investor, Marc Faber, has accused the Federal Reserve of "counterfeiting."

While Faber is certainly on the conservative/libertarian side of the spectrum, his views have been popularly disseminated by the mainstream media for years.

For us, such statements confirm the crumbling of the elite's central banking dominant social theme. We predicted several years ago now that the Fed had lost any claim to the moral high ground.

Once it became clear to people that Fed officials were printing TRILLIONS during a time of great financial pain for ordinary people, the Fed, we believed, would become an object of popular anger.

That process is well underway. To see some previous articles on this issue, search the Internet for "Daily Bell" along with the terms "Fed" and "morality" and "inspector general."

This unraveling must be of great concern to the power elite that relies on central banking to fund its push toward one-world government. But we have also predicted that within the context of what we call the Internet Reformation, there would be nothing much the elites could do about it.

We do believe that the power elite has, perhaps, cleverly launched a pure fiat counterattack, acknowledging that the public/private Fed model is probably done for and seeking to sway public opinion toward an entirely government focused option.

The elites, in our view, don't care whether or not monopoly fiat central banking is conducted "privately" or by government entities. Via mercantilism they will control the process of money printing either way.

Nonetheless, an elite meme – the necessity of monopoly fiat central banking – is becoming increasingly hard to sustain. Faber's attacks, while extreme, are merely a symptom of that.

Again, Faber is not to be considered an outlier. He is a man with significant mainstream credentials. Here's a bit of background on Faber.

Dr. Marc Faber was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24 obtained a PhD in Economics magna cum laude.

Between 1970 and 1978, Dr. Faber worked for White Weld & Company Limited in New York, Zurich and Hong Kong. Since 1973, he has lived in Hong Kong. From 1978 to February 1990 he was the Managing Director of Drexel Burnham Lambert (HK) Ltd.

In June 1990 he set up his own business, MARC FABER LIMITED, which acts as an investment advisor, fund manager and broker/dealer. Dr. Faber publishes a widely read monthly investment newsletter "THE GLOOM, BOOM & DOOM" report which highlights unusual investment opportunities.

This bio was posted with an interview we did with Dr. Faber in June 2011. You can see the interview here:

Marc Faber on 21st Century Investing, Why It's Too Late for the Dollar and Why Emerging Markets Look Good

The article excerpted above reminds us that Dr. Faber's perspective on finance and monetary stimulation has reaped rewards for investors as far back as 1987, when he received media credit for predicting the 1987 stock market crash.

What's unusual about Faber's stance is that he's chosen to be even more outspoken than usual. For anyone in the "mainstream" to characterize central banking operations as counterfeiting is newsworthy. But Faber didn't stop there. Here's some more from the article:

"This unlimited QE (quantitative easing), buying mortgage-backed securities (MBS) and continuing operation twist has the implication of simply having asset prices go up and the money flows down to the Mayfair economy," Faber said.

A Mayfair economy is one which benefits the wealthier and better off in society. Faber said this latest round of QE would not help the "man on the street".

"QE helps rich people whose asset prices go up and whose net worth then increases but it doesn't flow to the man on the street who is faced with higher costs of living with price rises. You just have a small economy that is booming but the majority of the economy is damaged by QE," he said.

This is strong stuff because Faber is essentially explaining that Ben Bernanke's approach to the market is not helpful for ordinary citizens. Usually, mainstream pundits go along with the idea that central bank price-fixing provides valuable support for the economy as a whole.

The proximate cause of Faber's statements is the announcement by Bernanke that the Fed would buy $40 billion a month in MBS, in order to unfreeze the mortgage market and give homeowners the chance to refinance.

Surprisingly, Bernanke's announcement has been met with some skepticism within the mainstream. Sorting through the commentary, one is struck by the increasing resistance to portray the Fed as being helpful to the larger economy.

Perhaps the media is merely acknowledging public sentiment, or perhaps mainstream participants themselves are growing impatient.

It is widely acknowledged that the Fed's money printing has boosted stock prices, which have more than doubled in aggregate within the US. But tens of millions are out of work. As much as 30 or even 40 percent of the US workforce probably suffers from lack of employment or unemployment.

Within this context, Faber's statements are unusual but not radical. His sentiments are increasingly echoed by others despite their forceful nature.

"The money printers are responsible for this crisis. If we continue with this expansionist monetary policy we won't be facing a fiscal cliff it will be a fiscal grand canyon," he added.

We try to chart reactions to dominant social themes because they can reveal larger potential changes when it comes to the economy and what actions the top elites may take. It seems to us that the militarism now spreading around the world is a direct elite reaction to the challenges to the modern central banking system and to modern economies generally.

There are various other reactions, too, including perhaps surreptitious elite encouragement of pure fiat, alternative money systems. Analyze elite dominant social themes to support a larger comprehension about where the world may be headed. These memes are the building blocks of directed history.

Conclusion: They are not the only tools that one needs to use but they surely deserve to be part of a larger toolkit as elite memes continue to unravel.