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Jim Rogers: We Will All Pay A Terrible Price For Today's Artificial Liquidity

By Staff Writer | May 26, 2014

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In this episode of China Money Podcast, returning guest and legendary investor Jim Rogers, chairman of Rogers Holdings, spoke with our host Nina Xiang in Singapore.

Mr. Rogers shared his views on the world economy and markets, in particular, why people should be concerned about tough times ahead as the unprecedented artificial liquidity comes to an end. He also discussed bitcoins, and why he missed the best opportunity to invest in the virtual currencies. He shared some personal experiences about returning to his hometown of Demopolis, Alabama, and the joy of seeing his daughters excel in the Chinese language.

Read an excerpt below, but be sure to listen to the full episode in audio. Don't forget to subscribe to the podcast for free in the iTunes store.

Q: What worries you the most in today's world and economy?

A: What worries me the most is that for five or six years, all the major central banks have been printing huge amounts of money. It's the first time in recorded history that we have the Japanese, British, European and Americans all printing money at the same time. So we have this artificial ocean of liquidity, which is making markets do well, but it's not doing much for the economy worldwide. When it ends, we will all pay a terrible price.

Q: What's your assessment of the current geopolitics risks?

A: There is always geopolitics risk. We have had wars since the beginning of time, and we will have more. Politicians have always made foolish mistakes throughout history. They will make mistakes again, and we will all pay for it.

Q: Do you see that any potential conflict will be limited to regional and small-scale ones?

A: Let's hope so. Unfortunately if you look back at history, all wars started with small incidents. I would expect we'd see bigger conflicts in the next ten years.

Q: In China, we have seen more frequent terrorist attacks and mass protests lately. Just last week, there was another bombing in Xinjiang province. How big a threat do you see this type of turbulence pose to the economy?

A: Whenever there are bombs going off, people become worried. People tend to get more aggravated or agitated when things slow down. China is slowing down at the moment. But will this mean the end of prosperity in China? I doubt it.

Q: What is the best way for the Chinese government to handle this?

A: Normally, the best way is to try to provide some kind of accommodation, so the Chinese and the Uighurs can be satisfied. Killing each other doesn't usually solve the problem.

Q: Do you think the Chinese government will be able to keep stability and avoid the dramas that are currently going on in countries like Thailand?

A: China will see more social unrest going forward, but I don't see the Chinese government failing.

In fact, we are going to see more social unrest throughout the world, because we are in this artificial situation where a lot of money is being printed, but many people are not participating in the recovery. We are going to see more turmoil in the next decade.

Q: Strangely, I also have this vision that I'm going to experience starvation one day, or worried about being trapped in dark rooms…

A: That's what a lot of people are going to experience, because we are in this artificial liquidity. So, you should go back to that dark room, if you can find it, and put some food in the closet. So when that period comes, you have some extra food, or a flashlight. If it doesn't happen, then it doesn't matter.

Q: You have always said that the RMB will continue to appreciate much more in the long term. So the 3% depreciation of the Chinese currency this year is only a temporary adjustment, right?

A: The market has 3%, 13%, 23% correction all the time. So it's good that the Chinese currency is starting to fluctuate. That's how the markets work. If it's only going up, it's artificial.

Q: Have you invested in virtual currencies like Bitcoin?

A: No, I never learned enough about it. If I were smart, I would have bought it in the early days when people first told me about it. I still don't know enough about it to invest in it.

Q: Do you have no interest in Bitcoin, or because there are so many things to invest in and there is no need to look at it?

A: There have always been plenty of great investments around the world. That's part of it. The other part is that it seemed to be complicated (to me). Of course, I may have missed it. If somewhere along the line, they are down and I learned enough about it, I might invest.

Q: Do you think there is a valid future for virtual currencies like the Bitcoin?

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Comments (1)

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  1. "I'm a local boy who went away and did okay."
    Just a mild understatement.
    Always enjoy and appreciate Jim Roger's insights.

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