Thoughts of Marc Faber on IS3 when (and QE4, 5, etc.) Will Take Place

Marc Faber gave a stellar 30 + minute interview for The Commentary weekly McAlvany.  You can read the transcript of the here and listen to it here.

Of the many interesting (and unique) Faber made points that stuck out was his claim that 80% of the US budget is basically untouchable:

David: What measures could the Fed and Treasury used to defend the bond market, as it is so essential for the financing of our deficit and our way of life in America?

Marc: I think that they do not necessarily wish to support the bond market, because the issuance of debt is so enormous, they almost have to monetize the part of the debt.  I have read the reports of the Treasury Board in 2010 by Tim Geithner said that the U.S. government debt have increased to more than 2 trillion dollars during this period of time.  Mathematically, the deficit, in my view, cannot come down, because 80% of the budget is compulsory expenditure, in other words, you cannot cut.  Legally, they must be respected.

The remaining 20%, you can cut a little, but not many, because then services to collapse.  In my view, budget deficit of the United States remain approximately 1½ trillions of dollars that the eye can see and perhaps even to attend 2 or 2½ trillions of dollars, and then back interest on debt expense.  Therefore, in fact, over time, in my opinion, unless taxes are significantly increased, and expenditures are cut significantly, not by a little here, a little there, the budget does will never be balanced, and will then require tempsQE-III, EQ - IV, and V QE.  Taxes can be increased dramatically, because if you increase them very significantly, we are going straight back into a recession.

Say that it all together in our best voice Faber: "Mr. Bernanke is a silver printer!"

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