“When the turmoil gets really bad the Dollar’s going to get overpriced...I hope at that point I’m smart enough to sell and put my money elsewhere”
Key Points Covered in this Podcast with investment supremo Jim Rogers:
- Major concerns for the US economy
- USD as safe haven and the weakness of JPY
- Why the next bear market could be the worst in decades
- The next moves for gold and Bitcoin
In this edition of our podcast Trading Global Markets Decoded, our host Martin Essex is joined by investment supremo Jim Rogers. A renowned businessman and financial commentator, Jim is currently chairman of Rogers Holdings and Beeline Interests.
The pair talk about the state of USD, and why a deep recession could be just around the corner for the US economy. Can Bitcoin be a medium of exchange or is it just a fad? If the markets slump, what will gold’s trajectory look like? And can JPY really retain its status as a safe haven? Learn all this and more in our discussion with Jim Rogers and listen to the podcast by clicking on the link.
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Is the US economy facing impending crisis? the lowdown
Discussion builds to Jim’s view of the US economy – what are his major concerns just now? “The Fed is probably my major concern,” he says.
“For the past 20 years [The Fed] has printed staggering amounts of money and kept driving interest rates lower; they have never been this low. It’s not going to work and we’re all going to pay a horrible price.”
Jim says that, as the financial crisis brewed in 2008, more banks than just Lehman Brothers should have been allowed to fail. “The way the system is supposed to work is, they get in trouble, they go bankrupt, competent people come along, take over the assets, reorganize and start over.
“However, what’s been happening is the assets have been getting taken away from the competent people and given to the incompetent people who are now expected to compete with the competent people, with their money. It’s not supposed to work that way!”
He contrasts today’s monetary policy with the response to economic problems in the early 1920s. “[In the 1920s] the Fed actually raised interest rates, Washington balanced the budget, we had a horrible year or two, but then we had the most extraordinary decade in the history of the US.”
Meanwhile, today’s stock market is not immune to crisis, despite its current highs, Jim believes. “It may still go up for 20 years – but it’s certainly overdue for problems.”
A safe USD, but just how safe is JPY?
Jim owns a lot of USD as he believes turmoil is coming. “In times of turmoil, people look for a safe haven and USD is considered safe for historic reasons.
“When the turmoil gets really bad the Dollar’s going to get overpriced, it might turn into a bubble, and I hope at that point I’m smart enough to sell and put my money elsewhere,” he says.
Talking of safe haven currencies, Jim does not necessarily see the Japanese Yen as the most obvious choice today. “Japan’s population has been going down for ten years and its debt has been going up for 40 years.
“The Bank of Japan has said it will print unlimited amounts of money. In my lifetime no central bank would ever say something like that, no matter how hopeless they are.”
Recession fears: Could we see the worst bear market for decades?
“Even China has debt now, and it had very little debt 15 years ago. The next economic problem will be exacerbated with things like Brexit going forward.”
Speaking of Brexit, is there any hope for Sterling at all? “Well, the UK has enormous debts. And [the country] has nothing to sell any more,” Jim says. “It does have the City of London and oil, but the City is now going to be under serious duress [following Brexit], and with oil, if the Scots leave, what’s left?”
Gold: Will there be Another Correction?
Whenever people lose confidence in governments and money, people buy gold. “I’ve owned gold for decades but I haven’t bought it since 2010. I’m waiting for a great correction, and if it happens I hope I’m smart enough to buy more,” he says.
In the event of the economic turmoil he predicts, Jim is counting on gold and silver going down for a while as the commodities are sold off. “When that happens I hope to sell my overpriced USD and buy gold and silver in a depressed state.”
Bitcoin: The Future of Payment or Just a Fad?
What of Bitcoin? “I’ve never bought or sold any. Money is moving to the computer and the Crypto guys are smarter than the government, but the government’s got the guns.
“If you were a merchant would you take Bitcoin in payment? If so you’re probably already out of business because of the volatility. Money is different than something based on speculation that goes up and down [so dramatically]."
The verdict? “It has no practical use as a currency and it’s not going to replace stable stores of value and mediums of exchange.”
Talk turns to investment in stricken countries. “If you invest in a country when it’s finished, five or six years later, you’ll be rich,” Jim says.
“Take Venezuela – there’s nothing there now, but it was once the richest country in South America. North Korea, too, is seeing huge change. In my view, at present, it’s where China was in 1981.”
What’s the biggest lesson he learnt? “Don’t believe anything, do your own work and don’t follow the crowd. Think independently, be curious and be sceptical.”