Jim Rogers, Chairman of Rogers Holdings and author of “Hot Commodities,” recently spoke with PeakProsperity.com in an in-depth podcast interview Saturday regarding inflation, the United States dollar, precious metals and the saving class. Rogers noted that there is growing uncertainty in the global economy due to the reckless policies of central banks across the globe.
Rogers, who has been an ardent critic of the Federal Reserve System, stated that nearly all of the central banks around the world are printing money at vast rates and debasing their currency at the same time.
“How it’s going to work out, I don’t know. It just depends on which one goes down the most and first, and they take turns,” said Rogers. “When one says a currency is going down, the question is against what? because they are all trying to debase themselves. It’s a peculiar time in world history.”
Although the co-founder of the Quantum Fund owns the U.S. dollar, he does so not because it’s a sound currency but because he expects more financial turmoil. At times like these, investors see the U.S. dollar as a safe haven, even though it isn’t. Due to this reasoning, Rogers expects the dollar to go up.
Rogers noted that he owns precious metals, commodities and agriculture. However, there are no real risk-free or worry-free investments right now. Even gold, which has remained relatively stable throughout the Great Recession, is experiencing its own set of troubles.
“Even gold: the Indian politicians are talking about coming down hard on gold, and India is the largest buyer of gold in the world,” explained Rogers. “If Indian politicians do something — whether it’s foolish or not is irrelevant — if they do something, gold could go down a lot. So I own it. I’m not selling it. But everything has problems.”
With all of the economic and financial concerns, Rogers’s biggest fear is the potential wiping out of the saving class. As central banks maintain policies of low interest rates and inflation, prudent individuals and households are being damaged, while those who are irresponsible are being saved.
As history has shown, people who save and invest their money are the ones that grown an economy.
“In America, many people saved their money, put it aside, and didn’t buy four or five houses with no job and no money down. They did what most people would consider the right thing, and what historically has been the right thing,” stated Rogers. “But now, unfortunately, those people are being wiped out, because they are getting zero percent return, or virtually no return, on their savings and their investments. We’re wiping them out at the expense of people who went deeply into debt, people who did what most people would consider the wrong thing at the expense of people who did the right thing. This, long-term, has terrible consequences for any nation, any society, any economy.”
Rogers concluded the interview by citing Germany as an example of a government that wiped out the savings class in the 1920s with hyperinflation.
“There were plenty of countries where it wiped out the people who saved and invested for their future. It’s usually a serious, political reaction, desperation in some cases, and looking for a savior and easy answers is usually what happens when you destroy the people who save and invest for the future.”
The numbers confirm what Rogers espoused in the interview. Economic Collapse News has reported on data that has illustrated that American households are cutting their savings rates in order to spend more. Meanwhile, the national savings rate is at roughly four percent – these rates are much lower than what is seen elsewhere around the world.
Furthermore, individuals are not really being encouraged to save, whether it’s because of inflation or low interest rates. Inflation persuades individuals to spend now because the value of their currency may be lower tomorrow or the price of goods and services may be higher next week. When interest rates are at zero, there isn’t an incentive to save because the person will not obtain much money.
Austrian economist Murray N. Rothbard noted in “Making Economic Sense” that it’s not the fault of Americans that they’re not saving enough, but rather it’s the problem of the federal government because of taxation and federal, state and local spending.
“All government taxation and spending diminishes saving and consumption by genuine producers, for the benefit of a parasitic burden of consumption spending by non-producers. Restoring tax deductions and repealing–not just lowering–the capital gains tax, would be most welcome, but they would only scratch the surface,” wrote Rothbard.
“What is really needed is a drastic reduction of all government taxation and spending, state, local, and federal, across the board. The lifting of that enormous parasitic burden would bring about great increases in the standard of living of all productive Americans, in the short-run as well as in the future.”
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