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Marc Faber on the Economy, Gold, WWIII

Marc Faber called the U.S. recession back in September 2007.

By October 2007, he said that Americans were experiencing recession only that they did not know it as yet.

It took one year later by the NBER to declare such truth, thus proving Marc Faber right.

To guess what should happen in stocks at the stock exchanges, what should happen in commodities at the commodity exchanges, a man must look outside such systems.

This is what Marc Faber does. He travels the earth relentlessly visiting the marketplaces for goods, talking to manufacturers.

Marc Faber looks at credit money growth and shipping levels to gain a better picture of what is happening.

Calling a Housing Bottom

Cash Renting (mortgage buying) depends upon INCOME. A lack of Cash Rentees means not enough folks exist with incomes sufficient to both pay to live and to pay to service debt to a Cash Rental Agency (bank).

The condition of offering cash for rent and the deal structure designed to best recover the principal put at-risk depends on the financial state of a bank and the state of the economy -- Efficiency of Money and change in buying power per unit of currency.

When banks suffer from weak financial condition, bankers must act most cautious and rent cash only to those with the highest demonstrated record to pay service on debt.

When the Efficiency of Money -- the ratio of money in circulation (notes, coins) to New Commerical Credit Opportunty -- falls Big Dollar Holders bet on claims to future resources.

When this happens, jobs disappear as businesses lack means to expand or maintain open transaction relationships.

Once jobs disappear potential Cash Renters lack a way to pay for Rented Cash (mortgage).

When buying power of the currency unit falls, folks must give up more claims on their time to foreigners for imports and locals for foodstuffs. When then value of time for workers fall, workers can apportion less money to pay on debt.

Calling a Housing Bottom

Cash Renting (mortgage buying) depends upon INCOME. A lack of Cash Rentees means not enough folks exist with incomes sufficient to both pay to live and to pay to service debt to a Cash Rental Agency (bank).

The condition of offering cash for rent and the deal structure designed to best recover the principal put at-risk depends on the financial state of a bank and the state of the economy -- Efficiency of Money and change in buying power per unit of currency.

When banks suffer from weak financial condition, bankers must act most cautious and rent cash only to those with the highest demonstrated record to pay service on debt.

When the Efficiency of Money -- the ratio of money in circulation (notes, coins) to New Commerical Credit Opportunty -- falls Big Dollar Holders bet on claims to future resources.

When this happens, jobs disappear as businesses lack means to expand or maintain open transaction relationships.

Once jobs disappear potential Cash Renters lack a way to pay for Rented Cash (mortgage).

nation's terms of trade is the ratio of what it must give up to get what it imports. The easiest way to understand the concept, at least for me, is to think of the number of hours of work necessary, at the average national hourly pay rate, to buy a barrel of oil – a real variable compared to another real variable

When buying power of the currency unit falls, folks must give up more claims on their time to foreigners for imports and locals for foodstuffs. When then value of time for workers fall, workers can apportion less money to pay on debt.

What Can Possibly Explain the Price of Oil?

Oil and money are commodities, one in the earth -- oil -- and the other made by man -- (paper) money.

Men swap commodities. Some call this swap an exchange. In truth, men swap rights, one right for another right. With oil and money, men swap the right of owning oil for the right of owning money.

All swaps must have one commodity exchanged for another. When one thing gets calculated in terms of another, we call this a ratio. The result of the ratio, we call it a value. When we use money as one commodity in the swap, we give another name to the word value -- PRICE.

The ratio of one commodity (oil) to another (money) expresses a value, which we call a price (of oil).

A rise in price means a change in the ratio has happened calculated at one time from being calculated at another time.

Only two ways can achieve a price rise:

[1] money rising quicker than oil
[2] oil falling quicker than money

Each year, a RECORD AMOUNT of oil gets pumped. Since the price (the value) of the ratio is rising, only one cause can be true -- a RISE IN MONEY quicker than a rise in oil.

Sellers sell to the highest bidder. When folks have more money bidding for a near fixed amount of oil (slightly growing in amount year-to-year), prices rise.


There isn't a global oil shortage. There's a GLOBAL GLUT of MONEY.

What caused the Global Glut of Money?


Money is the highest form of Credit and Credit is another word for Debt. Credit and Debt are other names for Capital.

As credit (=debt, =capital) grows for bad products that nobody wants, a collapse of trust follows. Deals get broken and folks walk away paying on debt. Yet, the money created for this debt stays in the pockets of some folks.

It is the default on credit (=debt, =capital) that causes problems. This increases money at a rate quicker than credit for good products, good invention.

When credit (debt) defaults rise, the paper money and coins issued go into the pockets of winners. These winners begin to bid up prices on existing things, typically commodities of energy, metals, food.

Why? Simply, these winners cannot find worthy investments to make, which would turn their notes and coins into capital paying a return.

Money flows into oil futures games because those with money cannot find other games worthy to play.