Thursday, April 22, 2010

The Investment Biker Knows All: Heed His Wise Words

Jim Rogers: Next Recession Is Coming and It Will Be Much Worse
Tuesday, 20 Apr 2010 02:55 PM

By: Dan Weil
The Great Recession that may have just ended will amount to nothing compared to the next one, says commodities expert Jim Rogers.The huge fiscal and monetary stimulus is what will cause the crisis, he says. Rogers notes that the United States suffers a recession every four to six years on average.“When it (the next one) comes, it’s going to be much worse, because Washington can’t quintuple its debt again,” he told Newsmax.TV Money. Video — Rogers: Next Recession Will Be Much WorseFederal Reserve Chairman Ben Bernanke is a big part of the problem, says Rogers, chairman of Rogers Holdings. “Mr. Bernanke can’t print much more money again. The world is going to run out of trees.”Rogers recommends that we abolish the Fed, because it’s causing the problems. “We’ve had three central banks in American history. The first two disappeared. This one will too,” he predicted.That’s thanks to the mistakes made by Bernanke and his predecessor, Alan Greenspan. “They’ve taken on gigantic amounts of debt that you and I are now responsible for. The central bank is making it worse,” Rogers said.Bernanke’s low interest rate policy is a terrible mistake, Rogers says. “He’s essentially ruining the U.S. economy in the long run and ruining the U.S. dollar as well.” The dollar’s safe for now, Rogers says, noting that he owns it himself. “But in the longer term, the dollar is a terribly flawed currency.” Inflation already is here, he says.“We know that prices are going up, whether it’s insurance, entertainment, education or fuel. The price of everything is going up, and it’s going to get worse because Mr. Bernanke and the people in Washington are spending gigantic amounts of money that we don’t have.”That inflation is reflected in higher oil prices, and the surprise will be how high oil rises over the next decade, Rogers says. “Known reserves are declining at a steady rate,” he points out. “Unless somebody finds a lot of oil very quickly, the price of oil is going to go much higher.”Stocks aren’t in imminent danger, Rogers says. “Stocks are doing OK, and probably will for a while, because all this money is being flooded into the economy. It has to go somewhere.”There’s a very good chance that some governments will default on their debt in the next few years, he says. While some insist that fate will befall the United States and United Kingdom, Rogers says he doesn’t know enough yet to judge. “I do know that they’ve run up staggering debts in Washington, and that usually leads to problems down the road.”

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