Marc Faber: “Fed’s Neo-Keynesian Clowns… Are Holding The World Hostage”

Courtesy of ZeroHedge . View original post here.

Submitted by Tyler Durden.

"There is nothing safe anymore, because the money-printing distorts all asset prices," is the uncomfortable response Marc Faber gives to Thai TV during this interview when asked for investment ideas. Faber explains how we got here "massive money-printing and ZIRP creates a huge pool of liquidity that does not flow evenly," as it washes from Nasdaq stocks to real estate to emerging markets and so on. Each time, "the bubble inflates and then is deflated as the capital (liquidity) floods out." The Fed, based on the doubling of interest rates since they began QE3 "has lost control of the bond market," Faber warns; adding that while he expects some "cosmetic tapering," the Fed members and other neo-Keynesian clowns will react to a "weakening US and global economy," and we will be a $150 billion QE by the end of next year, as the world is held hostage to US monetary policy.

The interview is interspersed with Thai translation but is well worth the time (starting at 1:25):

How did we get here (1:25):

"What we've had in the world is a crisis in 2008 that was caused by excessive leverage and excessive debt brought about by excessively low interest rates.

For the last 4 years the Fed Funds rate has been essentially at zero and we have massive money printing – monetary inflation. This creates a huge pool of liquidity.

The problem is that this liquidity will not flow evenly. It can flow first into NASDAQ stocks until March 2000, then in the US housing market, then in commodities, and gold, and then in emerging markets

You have one bubble after the other. The bubble goes up and then is deflated when the capital (liquidity) moves out. That is the problem of money-printing by central banks."

On China (3:25)

"For the global economy, what happens in China is more important than what happens in the US."

On the Fed's Failure (3:43)

"QE3 and QE4 – the Fed's bond purchase program – began in September 2012. The goal of the Fed was to lower long-term interest rates… but

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