Keith Fitz-Gerald (Q): There's
a confluence of money flowing into and around China. Do you believe
that the U.S., with all its current problems, will get left out?
Jim Rogers: Absolutely.
The U.S. dollar is a terribly
flawed currency. I'm trying to get all of my money out of U.S.
dollars. I don't know why anybody would put money into the U.S.
dollar, and by extension into the U.S., as we stand here today.
The U.S. is probably the largest debtor nation the world has
ever seen!
The United States' foreign
debts are increasing at the rate of $1 trillion U.S. dollars
every 15 months. U.S. foreign debt is over $13 trillion, and
rising rapidly. It's the official policy of the central bank
to debase the currency. They're trying to drive down the value
of the dollar.
Q: The government has succeeded
wildly, so far.
Rogers: You haven't seen anything yet!
They're trying to drive down
the dollar. I'm trying to be patriotic. I'm trying to sell dollars.
That's what they want. I'm trying to help them drive down the
value of the currency.
All Americans should. There
are certainly probably good reasons to put some money in dollars.
For instance, if you have to buy cotton, you have to have dollars.
But for the most part - I,
anyway - am joining other people who're trying to avoid the U.S.
dollar, because Washington has sent a very clear signal: "We
want the dollar to decline. We're gonna do our best to make it
decline."
Well, everybody has to make
their own decision. I'm trying to do what the Federal Reserve
wants me to do, and I'm selling dollars.
Q: My take is that former
Fed Chair Alan Greenspan and current Fed Chairman Ben S. Bernanke
may go down as the worst central bank chairmen in history. Do
you see it differently?
Rogers: [Bernanke] and Greenspan together will probably
bring [about] the end of the Federal Reserve. We've had two central
banks in America that failed. This third central bank will probably
fail, too, because of Bernanke and Greenspan.
The Federal Reserve last week
put $200 billion more onto its balance sheet of mortgages. Now
I don't know how big they can expand their balance sheet, but
if they keep doing it, there's only so much - [and] they just
bought Bear Stearns.
There's just so much they can
do. Maybe that balance sheet is infinite. I doubt it. And it
can be said to be infinite; they just print money like Zimbabwe
or someplace. But that has to come to an end, eventually.
Maybe Bernanke is going to
get into his helicopter and fly around collecting rents now.
Maybe when they repossess all the property, he's going
to be the rent collector. But then when they eventually take
on all the car loans, I guess he's going to be collecting car
payments, too. And credit card debt, when they take over all
the credit card payments, I guess he'll be hauling us all out
saying: "Your credit card's overdue."
This is insanity.
Q: Is there a circumstance
under which you could see the U.S. recovering, or do you think
this country is doomed to be an economic also-ran?
Rogers: Historically, nations that have gotten themselves
into this kind of situation have only gotten out following a
crisis or a semi-crisis, or some gigantic stroke of luck.
The U.K. got out because they
discovered the North Sea. Now you give me the largest oil field
in the world, or one of the largest oil fields in the world,
I'll show you a good time, too.
So if you have a stroke of
luck [you can escape these kinds of problems], but otherwise,
nobody's ever sorted out these problems without some kind of
gigantic crisis or semi-crisis first.
In America, most people do
not understand there is a problem! The few who know there's something
going on don't understand what it is. Most of them who understand
it actually think it's good that the currency's declining. America's
not going to do anything until things get very, very bad.
Others that offer the rejoinder
to this - that the declining dollar makes America competitive
- [that] has worked in the short term. But no country has ever
restored itself by debasing its currency, not in the long term,
not even the medium term.
Many places have tried to debase
their currency as a solution. It's never worked, other than maybe
in the short-term, for a while.
Q: Are we looking at a Japanese-style
lost economic decade?
Rogers: The Federal Reserve is making the same mistakes
that the Japanese made. They're trying to say: "We won't
let anybody fail. We'll print a lot of money. We'll drive interest
rates to zero. And we don't want anybody to fail. We'll put on
as many Band-Aids as we have to."
Well, putting Band-Aids on
a cancer patient is not a good solution.
So whether it's like the '90s
in Japan, or the '70s in America, remains to be seen.
[One-time U.S. Federal Reserve
Chairman] Arthur Burns, who headed the central bank in the '70s,
did exactly what Bernanke's doing. He raced in and printed money
and said: "Oh, everything's gonna be OK."
But the economy never recovered,
inflation went through the roof, and the dollar was under duress.
Eventually they had to bring in Paul Volcker and interest rates
went over 20%. And eventually they killed inflation and they
solved the problem.
They're making exactly the
same mistakes that Burns made. For whatever reason, though, this
problem is going to last longer than previous difficulties in
America. And it's probably going to be worse.
Because, now, America is a
debtor nation. Now we're the largest debtor nation in the world.
At least in the '70s, we were still a creditor nation. Japan
could survive because they were the largest creditor in the world
at the time. So they didn't fall off the face of the earth.
America's now the largest debtor
the world has ever seen. What's happening in the U.S. is not
going to be fun.
Q: Should the Fed be stepping
in like it has in recent months?
Rogers: It's outrageous that Bernanke's sitting there.
You know, I've read the Federal Reserve Act. Nowhere does it
say [the central bank is] supposed to bail out investment banks!
Nowhere does it say you should bail out Wall Street. Their mandate
was to have a sound currency, and then it was later expanded
to have employment - to help employment. But nowhere does it
say: 'Bail out investment banks.'
Investment banks have been
failing for centuries. The world hasn't come to an end even when
investment banks have failed. They just caused a setback, and
so what!
Recessions are usually good
for the system. They clean out the excesses. And my God there've
been excesses on Wall Street in the past 10 years. You don't
see a bunch of 29-year-old cotton farmers driving around in Maseratis
and flying in private planes to exotic locations. Well, you see
a lot of guys on Wall Street doing that.
And the idea that we're now
supposed to bail them out is ludicrous! I don't see any of those
guys sending their bonus checks back.
Huge amounts were made in the
debt markets. We now know [that money was made] at least incorrectly,
if not fraudulently, and yet, now we're supposed to bail them
out. It's bad enough they get to keep their money. But the outrageous
part is that it will cost more to try to prevent a recession
than to have the recession.
We have safety nets in place,
now. We did in the '70s in America and the Japanese did in the
'90s. I think there's good evidence that it will cost more to
try to prevent the problems than to have the problems.
Q: That's a very interesting
thought that had not occurred to me before.
Rogers: Well, we'll see if it's right. In
nature, there's the natural phenomenon of forest fires. The forest
fires are pretty terrible when they're going on. But nature invented
them to clean out the forest so that the forest could then come
and grow from a new, sound foundation. That's what recessions
do, too. They're a natural phenomenon.
Nobody likes it when we have
them any more than anybody likes a forest fire. But in the end,
everybody's better off. Bernanke thinks he can stop this; he's
going to very well destroy the system by trying to save it.
Q: Could you see a segment
of the financial system surviving this? Or do you think that
there will be such catastrophic change that we won't recognize
it till several years from now?
Rogers: Ask me again in five years, 10 years. That
was true after the '30s, certainly. It was true even after the
'60s. Very few people went to Wall Street in the '70s, very few.
A whole generation ignored Wall Street in the '30s and in the
'70s.
Will that happen again? Probably,
because of things we've been discussing.
So there will be big changes,
of course. If you're in the field that deals with - and works
out - bankruptcies, you've got a great future - on Wall Street,
or in the legal profession. If you're in commodities, you have
a great future. Some sectors of the financial community are going
to do well. Many others are going to disappear and/or do badly.
Q: How low could the dollar
go?
Rogers: I have no idea. You just have to watch it as
it evolves. Politicians and bureaucrats can do unbelievably stupid
things, and have [done so] throughout history.
They will usually do things
that are so stupid nobody can believe them, but it happens. You
have to watch and see as it goes.
Keith Fitz-Gerald is the Investment Director
for 