Marc Faber - Wars Distract From Inflation

For the latest Marc Faber, go to http://MarcFaberBlog.com - By investing in the United States, you may see your assets increase on a nominal basis, but you will probably lose money in real terms. The market won't go up because of favorable fundamentals, but purely because of money-printing. The concern with the Chinese stock market is that we have had excessive speculation in asset classes all over the world. Now, we have even more of it because the interest rates are effectively at zero. This induces people to speculate rather than to hold cash so that they can earn a return on their capital. When markets are going up, they go into assets, and when markets go down, they liquidate into cash. This causes a tremendous amount of volatility. When central banks around the world print a lot of money, asset prices go up. Then at some point, asset prices go down, and the central banks invest more money. This causes huge additional upside moves in asset markets. This makes investing extremely challenging. We currently have markets that are supremely overbought, including in China. Currently, people are bearish on the United States Dollar. This could mean that the dollar will strengthen and equities could experience a correction of 20% or more. Every government over time in the world will inflate. This has never worked in the long run. In order to distract attention from the negative effects of this, the government will typically engage in war. If you increase the money supply at 10% annually consistently, the favorable impacts are neutralized. The government will have to increase to 20%, then to 30% in order to continue to stimulate. This of course leads to a hyperinflationary environment.