"Recently Paul Krugman wrote a 6,000-word article in the New York Times with the title 'How did economists get it so wrong?'. The title should have been 'How did I, Paul Krugman, get it so wrong?'." So says famed bear Marc Faber, also known as Dr Doom, at AsianInvestor's recent Southeast Asian Institutional Investor Forum in Bangkok last week.

The point Faber was making about the article published on September 9 by Nobel Prize-winning economist Krugman was that there "was not a single sentence about excessive credit growth or excessive leverage leading to monetary and economic instability".

Faber levels a similar accusation against the current chairman of the US Federal Reserve. "Ben Bernanke is a great expert on the Great Depression in 1929-1932," says Faber, "but he was not paying attention to the years of excessive credit growth leading up to it in the 1920s."

Whereas in 1929, global credit represented 186% of the global economy, he adds, that figure now stands at 375%. And that 375% does not even account for future liabilities that will arise from Medicare, Medicaid and Social Security, which are estimated in the US at between $59 and $110 trillion. "If those are included," says Faber, "we would have a total credit to GDP [ratio] of around 600%."

With this level of debt, the US can forget about tightening monetary policy and will go on printing money, with obvious implications for asset markets -- a point similar to the one Faber made at AsianInvestor's Korea Investment Forum in mid-2009.

"It's important to understand the philosophy of the Federal Reserve, which has structured its monetary policy around core inflation," Faber dryly notes. "That excludes energy and food, so as far as I'm concerned that doesn't apply to you [everyone in the audience], because you all eat, and you all fly and use air conditioners."

Making reference to how US expansionary monetary policies, with "artificially low interest rates", have created "the credit bubble, the housing boom, the refinancing boom and the other problems we have today", Faber argues that such policies have been highly destabilising for economic growth and for asset markets.

One of the examples he cites is that of commodity prices: "Had the Fed not slashed interest rates so dramatically after September 2007, we wouldn't have had the CRB [Commodity Index] going ballistic, and in particular oil prices [which rose steadily from around $75 a barrel in May 2006 to $147/bbl by July 2008, before plummeting to close to $30/bbl in the space of six months."

"The easy monetary policies have had a decided impact, because of higher costs for consumers and businesses due to higher oil prices," Faber says. "This crisis has not solved anything; we have less transparency than before."

Indeed, Faber envisages another, much larger crisis, in which not only does the banking system go bust, but several governments are unable to pay their obligations.