Economist Marc Faber, publisher of The Gloom, Boom and Doom report, says Western nations have become financial police states.

"I grew up in the 1950s and '60s … when people were more free," Faber tells the UK Market Oracle. "Now, we have police states in the West, where restrictions are rather onerous."

"Also, back in the '50s and '60s, the Bretton Woods System restricted the potential for severe inflation."

Marc Faber (Newsmax Photo)

Faber says the standard of living for the average US household has gone down over the past 20 years — and, relative to the rest of the world, the peak of U.S. prosperity occurred in the 1950s.

Though Faber believes there will be continued inflation, he says that deflation isn’t any better because, with deflation, the fiscal deficit would deteriorate greatly.

“If you are actually optimistic about the economy, just consider: If the Dow went below 1000, what kind of economic environment would we be in?” asks Faber.

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“We would be in a total economic collapse … and have a complete corporate profit collapse. Tax revenues would collapse as well.”

If that happens, U.S. bonds, which Faber “already considers junk bonds,” would be worth even less.

“Even in the deflationist scenario you don’t want to be in the long end of the government bond market,” says Faber.

The Daily Commercial News reports that lack of clarity about the U.S. inflation rate is a cause of economic uncertainty, as opposed to other parts of the world where higher interest rates are being introduced to rein in too rapid price advances.