Marc Faber

(Newsmax photo)

Alarming: Is a Second Great Depression Bearing Down on Us?

Marc Faber, editor of the Gloom, Boom and Doom report, says the United States must go through "a devastating crisis" before a meaningful recovery can begin."An economy is like the human body. There are periods when rest is required," Faber told Barron’s. "In economic terms, that is a recession."Faber also says there's no gold bubble forming."Not to own gold is to trust the value of paper money and the government's integrity," says Faber. "No one in his right mind could trust the U.S. government any more. The government's economic statistics are distorted and there is no consensus on how to solve the budget crisis."So people should own some gold, even though the price can correct by $100 or $200 an ounce, but investors should buy it as an insurance policy."The world is grossly underweight gold," Faber says. "It is flooded with U.S. dollars.""Investors might be bearish about the U.S. dollar, but international dollar reserves exceed $9 trillion. Compared to that, there is very little gold."Faber notes that the world has a dual economy. “In the economy of the super-rich, Bentleys and Rolls Royces and Ferraris and Porsches sit in front of fancy hotels,” he says. “At the same time, the economy of the workers and lower middle class is doing very badly.”“Wage increases don't match cost-of-living increases. One symptom of inflation is a weakening currency.”__________________________________________________________________________________________________________Bloomberg reports that the current-account deficit in the United States increased less than forecast in the first quarter as the country's income surplus climbed to a record. Economists forecast a $130 billion deficit, according to the median estimate in a Bloomberg News survey.Meanwhile, others share Faber's dire prediction.Economist, author and Yale University Professor Robert Shiller sayschances are 'substantial' that the United States is headed back into a recession.A weak U.S. housing market and a murky global economy indicate that the country is at a "tipping point" at the edge of a fresh economic contraction.Even though economic models suggest the economy is on the path to recovery, the United States is in unchartered territory, which makes models less valid due to all the unknowns lurking on the horizon."Forecasting models would say no" on the question of whether the U.S. will face a double-dip, Shiller tells The Wall Street Journal. "But I’m seeing signs that encourage me to worry about that."Meanwhile, warns former Sen. Alan Simpson warns that a crisis will strike the U.S. economy within two years if politicians don't roll up their sleeves and address fiscal spending like they did in the 1990s.Simpson, a Republican who co-chaired President Barack Obama's National Commission on Fiscal Responsibility, says the United States faces "the most predictable economic crisis in history" by 2013. His remarks echo comments made by his partner in studying deficit reduction, Democrat Erskine Bowles, according to CNS News.The tipping point "will come when the rating agencies find out we Economy, Alan Simpson, Erskine Bowles have no plan" to seriously address federal spending and the national debt, Simpson says.Ratings agencies such as Standard & Poor's and Fitch have said the United States could lose its top-grade ratings if it cannot manage its debt burdens and ensure timely payments to bond holders.