Below is a wide-ranging inter­view with Marc Faber on four videos on CNBC TV18 in India in which he explains his views on infla­tion, cur­ren­cies, com­modi­ties, stocks and more, all cour­tesy of Edward Har­ri­son at Credit Write­downs.

Asset-based econ­omy. In gen­eral, he thinks we are in an infla­tion­ary envi­ron­ment, whereas I think delever­ag­ing is sec­u­lar and means any infla­tion is only cycli­cal. But he shares my belief that zero inter­est rates induce money bal­ances to move into con­sump­tion or into higher-yielding assets. He believes this is a boon over the medium term (if not the short or long term) for finan­cial assets, whether they be stocks, bonds, com­modi­ties, real estate or art. And it is some­thing that will con­tinue, he says. Faber believes Bernanke will be loath to raise rates aggres­sively given his prior state­ments and writings.

Cur­ren­cies. Faber takes the view, with which I agree, that the Fed’s easy money poli­cies after 1998 flooded the global econ­omy, espe­cially emerg­ing economies, with liq­uid­ity. This has led to asset bubbles. Hong Kong res­i­den­tial real estate is one exam­ple he cites. As a result, Faber thinks the US dol­lar is no longer over­val­ued at present lev­els. A snap­back rally for the dol­lar result­ing from over­sold lev­els would be bear­ish for asset mar­kets. But, longer term, Faber thinks the dol­lar is weak.

Equi­ties. There has been a huge rally everywhere. He says he is not a buyer at these lev­els. How­ever, as cen­tral banks are going to con­tinue to print money, stocks could con­tinue higher — but he would not bet on a blow-off rally from these levels.

Com­modi­ties. Faber thinks zero-rate lev­els make it extremely dif­fi­cult to value anything. He poses the ques­tion: which would you rather own — the “US dol­lar at zero inter­est rates or a ton of gold or a ton of cop­per or a ton of crude oil?” Of course, com­modi­ties are sup­ply con­strained, whereas dol­lars are not, so there is a jus­ti­fi­ca­tion for buy­ing them. But, he antic­i­pates the com­mod­ity hoard­ing by China is about to end and that is bear­ish for indus­trial com­modi­ties as well as pre­cious met­als. As with other com­modi­ties, he thinks the huge run-up in oil could induce a set­back. Long run, he is an oil bull because of lim­ited supply.

Finan­cial Cri­sis. He is dis­turbed by the fact that a cri­sis caused by exces­sive debt growth, espe­cially as a result of Fed­eral Reserve pol­icy, has been allowed to pass with the same play­ers in con­trol. He says enjoy the ride for now. Longer term, this nec­es­sar­ily means the same bad poli­cies will fol­low, which will lead to a system-wide finan­cial collapse.

India. Faber is bull­ish longer term. Short term, there could be a cor­rec­tion. India is one of the best-protected coun­tries because of less vul­ner­a­bil­ity to the export sec­tor. He also believes the Reserve Bank of India has one of the best mon­e­tary poli­cies in the world — super­vis­ing the finan­cial sys­tem closely, rel­a­tively tight, and mind­ful not just of core infla­tion but also of other price lev­els like asset prices.

Part 1:

Part 2: Part 3: Part 4:

Source: Credit Write­downs, Octo­ber 4, 2009.

Dr. Prieur du Plessis is an investment professional with 26 years' experience in investment research and portfolio management. More than 1,200 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns, including his blog, Investment Postcards from Cape Town. He has also published a book, Financial Basics: Investment. Prieur is Chairman and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and a number of foreign countries. He also serves as Honorary Consul of Slovenia for South Africa, actively developing economic, cultural and scientific relations between Slovenia and South Africa. Prieur is 54 years old and live with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His leisure activities include long-distance running, traveling, reading, motor-cycling and scripophily. Read more from the author/contributor here.

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