The debt burden in the U.S. and other Western countries will continue to increase, Marc Faber, author of the Gloom, Boom and Doom report told CNBC on Monday, leading to a "colossal mess" within the next five to 10 years.
Faber argued that the political systems in place in the West would allow the debt burden to continue to expand. Under such a scenario of never-ending deficits, the Western world would rack up huge deficits.
One day, the system would break, he said.
"Eventually, you have either huge changes occurring in a peaceful fashion through reforms, or, usually, through revolutions," he said. The U.S. is getting closer to such a revolution, he said, as is Europe.
"I think the timeframe would be within five to ten years you have a colossal mess … everywhere in the Western world," Faber said. "I think the deficit here (in the U.S.) — irrespective of who is in the White House — will stay above a trillion dollars per annum for at least as far as the eye can see."
Bureaucracies in the U.S., as well as Europe, are far too big, he said, and are a burden on the economy.
"My medicine for the U.S. is: Reduce government by minimum 50 percent," he said. "The impact would be immediately an improvement in the economy."
Oulook for Stocks
Faber believes the Chinese and Japanese stock markets could see a rebound, while in the U.S. the S&P 500 is likely to see a 20 percent downward move.
"I think here we're going to go down 20 percent from the recent top at 1,470. The technical position of the market is poor and the corporate earnings are worsening. And I believe that if the statistics were precise – which they aren't – (…) I think there's hardly any growth," Faber said.
Four months ago, Faber turned his attention to European stock markets, attracted by the low valuations.
"Greece, Italy, Spain, France, Portugal, they were four months ago at the 2009 lows or even lower," he said.
Faber recommended buying European stocks at the time and for the first time in his life bought them himself.
"I did it simply because the valuations were low. Since then, Greece is up 65 percent," he said.
He would no longer buy European stocks, he said. "I expect a correction but no new lows," Faber said.
Now he is focusing on Asia.
"In Asia, Thailand from the 2009 lows is up 250 percent. Other markets like the Philippines, Indonesia, Malaysia, Singapore, are up by a similar amount," he said. The Chinese benchmark index on the other hand was at 6,000 in 2007, now it is at 2,000.
"I think China and Japan could have a rebound here. If Greece could rebound by 65 percent the greatest garbage could rebound by 65 percent," Faber said.