The global economy is "imploding" and central banks have "become asylums for economies that have gone insane," says noted contrarian investor and economist Marc Faber.
In an interview with Bloomberg TV, Faber said that investors need to act as their "own central banker" and invest in physical gold assets.
"Worldwide, governments are injecting liquidity and then everything goes up, and some things go up more than others," said Faber.
"You can trade this rally in ETFs, or physical commodities, or derivatives, but, at some point, from January to March, the global economy is imploding. There is not going to be a recovery despite the government intervention."
Faber, who heads his own firm, Marc Faber Ltd., said that international liquidity has to improve dramatically for the economies of the world to settle down.
Faber said he is not interested in industrial commodities because he thinks that capital spending will decline precipitously next year, reducing the need for commodities used in manufacturing.
Right now, he is buying only physical gold.
"I don't trust derivative products. I advise Americans to buy and hold gold assets outside of the United States," Faber warns.
Faber says he disagrees with a government proposal to help bolster banks with consumer debt problems. The bailout of Citigroup this week is a mistake that will only compound the problem and make economic recovery take longer, he said.
"Nobody has asked whether to do nothing would be the best option. Let Citigroup go bankrupt. It will be lost anyway. Let existing shareholders lose. The government could guarantee the depositors," Faber says.
Sen. James Inhofe (R-Okla.), in an article entitled, "Take it Back," wrote in the National Review this week that the greatest threat to the U.S. economy now is government intervention in the free economy.
"By far the greatest threat to economic growth and prosperity in the years to come is the extent to which the government has recently entangled itself in the marketplace," he writes.
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