The US risks being hit by Zimbabwe-style hyperinflation and there are signs
that the world's biggest economy risks turning into a banana republic,
Marc Faber, author of the Gloom, Doom & Boom report, told CNBC's
"Asia Squawk Box."

"In
the US, we have a totally new school, and it’s called the Zimbabwe
school," Faber said. "And it’s founded by one of the great leaders of
this world, Mr Robert Mugabe, that has managed to totally impoverish
his own country. And that is the monetary policy the US is pursuing."

The
government's increased intervention in the economy is likely to slow
down economic growth because history shows that every time the private
sector shrinks to make way for the government sector, the economy
suffers, he said.

Asked
whether the US risked being faced with 200 percent inflation, Faber
answered: "Well, not yet. Not yet. But I think eventually. If I look at
government debt in the US, and debt in general, I think the only way
they will not default physically on their debt is to inflate."

The Federal Reserve's policy of printing money and the government's
intervention in the economy might undermine the US's economic and
political clout, Faber warned.

"Well, I wrote two years ago a report entitled 'Is America becoming a banana
republic?' And there are some features that characterize banana
republics- totalitarian states, very strong government intervention
into the economy, and the polarization of wealth," he said.

"And we have all these trends occurring in the US. We are not yet there. And
in theory it could be reversed, but I doubt it will be," Faber added.

Because of these factors, US government and corporate bonds, including that of CNBC parent General Electri, should be downgraded, he said.

"Yeh, I think GE should be a junk bond. But I also think the US government
should be junk," Faber said, adding: "I don’t pay much attention to
rating agencies. The rating agencies have totally failed over the last
3-4 years to identify sick companies."