SubscribeJim Rogers on US Currency Crisis
The dollar’s rally is set to end in a “currency crisis,” investor Jim Rogers said, adding that he may bet on a slide in equities after nine weeks of gains.
The advance in the U.S. currency has been driven by investors covering their short sales, Rogers, 66, said in an interview with Bloomberg Television in Singapore. He may consider adding to his holdings of the yen and prefers the euro to the dollar or the pound, the investor added.
“We’re going to have a currency crisis, probably this fall or the fall of 2010,” Rogers said. “It’s been building up for a long time. We’ve had a huge rally in the dollar, an artificial rally in the dollar, so it’s time for a currency crisis.”
My comment: The US is following the example of other failed empires throughout history. It is spending too much money and is engaging in foreign wars that are sapping it economically. The hubris and lack of historical perspective of the American people and its leaders is staggering. Do people really think we can return to prosperity by continuing to borrow and print money and there will be no consequences? Do people think that more government interference and control of the economy will really lead to better economic outcomes? Where in history has this been true? Are people really that stupid and I mean that not in the clinical sense of having a low IQ but by pursuing policies that are destructive to ones self and to the country as a whole.
As a side note I sold out my position in non commodity plays like Geoeye and Crucell. The bear market rally appears to over and it looks like we may be heading back down to test the old lows. I am not going short as the market is so schizo it could go higher or lower. However the economic green shoots appear to be wilitng so that will be reflected in lowr stock prices in my opinion.
John Polomny
The Real Deal
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Comment by James on 6 November 2009:
Those who insist inflation is a result of too much paper chasing too few goods can take a lesson from the curent crises. In spite of increases in the money supply, declining agregate demand due to high unemployment has kept prices down and lower prices are also influenced by cheaper imports. Increased demand creates inflationary pressure and there are two causes. Cost driven inflation, ie., increased wages and costs of production. The second is classical inflation ( too much paper chasing too few goods).
Declining agregate demand keeps both these causes of inflation at bay but deflation is a more serious threat then inflation because deflation erodes productivity. It costs $30.00 to get a barrel of oil out of the Albeta tar sands. If oil prices are within the 30.00 range,there is a no incentive to extract oil and this the capacity for any business to survive is dependant on demand.
The law of supply and demand cannot be conned. If the current prices of oil are not subject to market discipline, they do not reflect supply and demand and I agree with Profesor Nouriel Rubini, that we are in an asset bubble and like all bubbles they must eventually break.
The Banks are not lending; they are hoarding cash. The Tarp funds were supposed to provide the availability of credit to stimulate agregate demand but Banks are using the Tarp Funds for paying huge bonuses. It is clear that Wall street is not reflecting the main street economy.