A mooted third round of quantitative easing(QE3) in the U.S. and more money printing elsewhere is merely deferring a crisis that will be bigger and could end in war, Faber said.

The Dow Jones Industrial Average suffered its worst losses in three years Thursday, shedding more than 500 points.

"My view is that the market has experienced everywhere huge technical damage," Faber said. "As of today, all markets are extremely oversold, so a rebound is going to happen (Friday) or on Monday, but the damage technically is so great that the rebound, no matter whether QE3 happens right here, it's unlikely to lift markets above the May 2 high of the (S&P 500) at 1370."

Faber thinks that by the end of the fall, the S&P 500 will have slid to around 1150, and investors will be hoping that further round of monetary easing will stabilize markets.

"In general, I would be using rebounds as a selling opportunity," Faber said.

Buying Treasurys as a safe haven is no longer a smart play, he added.

"I think Treasurys are perceived still as a safe haven because everybody knows the U.S. has an endless ability to print money. The interest will be paid," he said. "The trouble is that governments can default in two ways. Either they just stop paying the interest and there is a debt restructuring, like Argentina went through; or they just pay the interest and the principle eventually, in a worthless currency. That's the way the U.S. will likely do it."

Gold and silver have been overbought, and may see a correction in the coming weeks, but Faber believes that should be seen as a buying opportunity as investors begin to shun paper assets.

"Gold miners are hit very hard and the gold price went up. People don't trust paper anymore. That is one of the problems," he said.

However, temporary upturns and the artificial boost to markets given by printing money only disguise the coming threat to the world economy, Faber warned.