For Faber, « spending and consumption does not make a country rich ». « It is production and capital investment that makes countries rich. »
In fact, Faber said, loose monetary policy not only contributed to the housing bubble but led to « overconsumption » that meant a dramatic rise in the U.S. trade deficit. This occurred as consumers refinanced homes for extra cash that were used to buy goods made in nations such as India and China.
On top of the world’s fiscal concerns, there is potential for rising geopolitical tensions, such as which nations are able to continue receiving unobstructed supplies of oil. The positioning of U.S. military bases around the world could eventually become worrisome for some Asian nations, Faber said.
« I believe geopolitical problems will rise in the next 10 years and could have a devastating impact on financial assets, » Faber said. Read more
