The fol­low­ing is a par­tial tran­script of Jim Puplava‘s great inter­view on Finan­cial Sense with Marc Faber, author of the Gloom Boom & Doom Report. In a wide-ranging inter­view, they dis­cuss infla­tion, China, gold, war, resource scarcity, democ­racy, edu­ca­tion, mar­ket volatil­ity and the impor­tance of diver­si­fi­ca­tion. Click here to lis­ten to the audio interview.

Jim Puplava: Marc, I want to begin our dis­cus­sion with a topic you have addressed in sev­eral recent newslet­ters, which is the decline in moral­ity and ethics within the finan­cial sys­tem and within soci­ety. In your opin­ion, is this the result or con­se­quence of cheap money and cur­rency debasement.

Dr. Marc Faber: Well I think to some extent yes, because it’s cre­ated a tremen­dous wealth inequal­ity and at the same time, it cre­ated tremen­dous power in the finan­cial sec­tor. So the com­bi­na­tion of the two was cer­tainly a con­tribut­ing fac­tor. And if you read about the his­tory of hyper­in­fla­tion in the world, in each case there was a tremen­dous decline in morality.

Jim Puplava: Marc, I have known you for sev­eral years now since we first met at the San Fran­cisco Gold Show. And since I have known you, you have been very con­sis­tent on your views on infla­tion. Given the sever­ity of the finan­cial cri­sis, and the deflat­ing asset prices that we have seen—for exam­ple, real estate in the United States, and now we have seen even the pull back and decline in a merg­ing markets—have you altered your views or changed them in any way, given the recent down­turn in many of the emerg­ing markets.

Dr. Marc Faber: Well if we under­stand infla­tion as a mon­e­tary cause, in other words, you increase the quan­tity of money and of debt, then obvi­ously, we have infla­tion in the sys­tem. Now Mr. Bernanke, he was under the impres­sion that he could just drop dol­lar bills onto the United States and revise the hous­ing bub­ble. But the prob­lem with this view is that if you drop the dol­lar bills, in other words if you increase the quan­tity of money, it does not nec­es­sar­ily have to revive all asset prices, and all prices at the same time. So hous­ing did not respond, but as you know since March 2009 equi­ties have rebounded on the S&P from 666 to now 1200, and at the same time we have sig­nif­i­cant price increases in the sys­tem in insur­ance costs and in edu­ca­tional costs. There was a sta­tis­tic recently pub­lished that the turkey this year for Thanks­giv­ing would cost 13.4% more than a year ago. Nobody can tell me that they think there is defla­tion in the sys­tem. And I see that myself, because I travel a lot that there are leakages—when you print money in the U.S. it does not have to gen­er­ate infla­tion in the U.S., it can gen­er­ate infla­tion in India or China, or in Viet­nam or in Hong Kong, or in Sin­ga­pore. In that sense, there was a lot of inflation.

Jim Puplava: You know, as a believer in deval­u­a­tion and cur­ren­cies, I was recently reminded of this last Wednes­day. Tues­day evening Marc, I read sev­eral well-known respected tech­ni­cians like John Rokes, Stan Winestein, and Paul Desmond. And they were talk­ing about the break­down of the mar­kets. And before I went to bed Tues­day night, the futures were down. Lo and behold, I wake up the next morn­ing to the news of China low­er­ing its bank reserve require­ments, and then we got a love-fest to Cen­tral Bankers and new money print­ing. I thought of some­thing I heard you say, that when­ever mar­kets fall, 20% or more, Cen­tral Bankers will imme­di­ately engage in a new round of money print­ing. And that’s exactly what happened.

Dr. Marc Faber: Yes, I mean the mar­ket keeps going up at the present time because of eas­ing mea­sures and today because of the rumors or the state­ments that the ECB is one way or the other, in one form or the other would essen­tially bailout Europe. So this has not really to do with eco­nomic fun­da­men­tals, which are not par­tic­u­larly good, but it has to do with money printing.

Click here for the full transcript.

Source: Jim Puplava, Finan­cial Sense, Decem­ber 7, 2011.

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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