Sunday, September 18, 2011

Marc Faber On Nuclear Bombs, War And The Logical Conclusion OfKeynesianism - Business Insider

Marc Faber 82" />Remember when Paul Krugman made the ultimate Keynesian argument -- that a fake alien invasion would be great for the economy?

Marc Faber comes up with a less savory example to show how absurd Krugman's theory really is.

From King World News:

If you follow through with his thoughts then you should actually drop nuclear bombs onto the US and then you’ll have a booming economy because everything will have to be rebuilt.  That is his view, but that is not the way economics works.  You destroy something and the debt level will still be there.

Faber goes on to explain why government spending worked in WW2 but won't work now.
When the US went into World War II, total credit as a percentage of the economy was 140%. We are now, without the unfunded liabilities, at 279% and with the unfunded liabilities, probably around 800%.
The Swiss investor recommends buying gold and silver before declining standards of living and social unrest really do lead to war.