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Jim Rogers: Pushing the problem to the future, the Fed's answer to an economy in trouble
Source: BI-ME , Author: Bi-ME staff
Posted: Sat September 4, 2010 2:05 am

INTERNATIONAL. Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers said economies in trouble should be allowed to go under, like bad companies.

Speaking to CNBC earlier this week, Rogers said: “In America, Bernanke just says we'll print more money, we'll spend more money, even though the United States is now the largest debtor nation in the history of the world."

"The things that have worked in the past... will be you go bankrupt then you re-organize and you start over. You have a painful period for awhile, and then you start over. This has been done in the past 3-4 thousand years, and that's the way you do it," said Rogers.

"Trying to push the problem out to the future, and printing money, we just had another example here in the US, it didn't work and it's not going to work."

Rogers said that with central banks "flooding the world with money," the only place for investors right now is in real assets, to protect themselves from central banks debasing currencies.

"Paper money is not going to do it for you," he added.

Rogers said central banks are destroying the saving and investing class. “We’re going to have a lot more currency turmoil over the next 2-3 years because of the huge imbalances that exist in the world.”

"I would prefer the euro, perhaps with the yen second," he said, adding that "there are many technical reasons that I'm optimistic about the yen."

“Mr. Bernanke has never been right about anything,” said Rogers, adding that the Fed chairman "doesn’t understand economics, finance, or currencies and is merely pushing the problem to the future by printing more money," Rogers told CNBC.

He reiterated his view that there's no bubble in gold right now, although he doesn't rule that out in the future.

“I’d hardly call something that is very depressed a bubble,” the legendary investor said.

Right now, very few people own gold, and I can hardly call something a bubble when very few people own it," he said, adding "I expect there to be hysteria in the precious metals markets in 5-10 years.

He said he prefers silver over gold, although he likes and owns gold, simply because silver has the potential of gaining more in terms of percentage, as it is so depressed.

On oil, he reiterated that he owns the commodity, he is not selling , and expects it to go much higher over the years.

Rogers, who predicted the start of the global commodities rally in 1999, recently said “commodities will go above their old high sometime in the next decade even if they only grow 5%-6% annually,”

The legendary investor has been reiterating in recent interviews that there will be another recession, probably in 2012.

While he doesn’t call this a double dip, as “we never got out of the first recession,” he does say that “the next time it’s going to be worse because we’ve shot all of our bullets.”

"With zero interest rates and huge government deficits all around, policy options are definitely more limited," Rogers said.

Rogers has spent a career being one step ahead of mainstream investment thinking.

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MIDDLE EAST BUSINESS COMMENT & ANALYSIS

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