Jim Rogers Exclusive: It’s a “Race to Insanity”

by Joe Oliver, Forex Trading-Pips

Famed investor Jim Rogers on the race to insanity!

 

If you are invested in the lofty stock markets of the United States or Japan, legendary investor Jim Rogers has a message for you …

Euphoric gains always lead to hangover pains – it’s just a matter of when.

“This is artificial, as I’ve [repeatedly] said,” Rogers told Money Morning during an exclusive interview Sunday night. “This is the first time in recorded history where nearly all the central banks in all countries are pumping out lots of money, debasing their currencies, printing money. I’ve never seen this in history, and now we’ve got everybody – or nearly everybody – doing it.”

In a wide-ranging interview from his home in Singapore, Rogers also told us that:

  • The currency-debasing policies of the world’s central banks are a “race to insanity” that will likely do maximum damage to the global economy.
  • Inflation is a much-deeper-seated problem than the “official” statistics show, which means that gold, energy and agricultural commodities are must-have holdings.
  • And that Russia is the most intriguing potential investment target on his radar screen right now.

But a substantial portion of our talk focused on the current bubble in stock prices, which Rogers concedes can continue for some time.

“There are signs of worry,” he said. “You do see breadth sort of changing. You do see potential problems, [like] volume problems. [Although] this is all artificial, that doesn’t mean artificiality can’t go on for a while,” Rogers said. “Remember the dot-com bubble of the “90s … you can look back on any bubble and things … can certainly last longer than I expect and [longer] than any rational person can expect.”

The currency-debasing policies of the U.S and Japanese central banks could continue to prop up the stock markets in both those countries. And those policies could also cushion any sell-off – leading to a situation that Rogers has described in the past as a “slow-speed crash” for the markets, and for the broader economies.

These policies have ended up creating a currency-debasing competition that pits the world’s major economies against one another. When one country cheapens its currency, another must respond – or find itself at an economic disadvantage in the world marketplace. So the next one debases its currency … and so does a third. When the first country then responds anew you have a “currency-wars” scenario in which each country is hoping to cheapen its currency the most.

“The Japanese said “We will print unlimited amounts of money.’ So [U.S. Federal ReserveChairman Ben S.] Bernanke said “Oh my gosh, I can do that, too.’ Then the English said “Well, wait a minute guys, we can play, too.’ So now you have nearly everybody printing a lot of money” – in a competitive way, Rogers said.

Economists refer to this situation as a “race to the bottom.”

Rogers refers to it as a “race to insanity.” And he says he’s highly “skeptical” that anything good will come of it.