Podcast

Interview with Jim Rogers: Why Inflation is Raging Worldwide and He Shorted US Treasury Bonds*

Thursday, January 27, 2011, 3:22 PM

"I see more inflation and more currency turmoil as we go forward. There are huge debt imbalances in the world. U.S. is the largest debtor nation in the world and all the assets are in Asia. The largest creditors in the world are China, Korea, Japan, Taiwan, Hong Kong, Singapore – this is where the assets are and the debts are in the West. Those imbalances have to be resolved. They frequently lead to more currency turmoil. We’ll see more inflation, we’ll see more governments fall. We just saw Tunisia fall – more are coming because the world is going to continue to have these problems, and especially inflation that is going to cause more social unrest."

So said investing legend Jim Rogers when he spoke recently with PeakProsperity.com about the inflationary pressures rising dramatically around the globe, despite some governments' best efforts to downplay them. Jim shares his "outside in" perspective on US monetary and fiscal policy, and how international players find themselves forced to react. He sees a lot of fundamental imbalances that need to be corrected for, as well as shortages of almost everything developing. In his words, "It's going to be a real mess before it's over."

In this podcast, Jim explains why: 

  • Inflation is ramping up worldwide, though many governments are trying to downplay the risk. In fact, the Fed is 'throwing gasoline on the fire' with its prodigious money printing.
  • Higher interest rates are inevitable, which will lead to a lower standard of living for everyone - except those who have recognized the risks and invested accordingly. 
  • Dangerous supply drawdowns are occurring across the commodity landscape (including oil). This will increase the upward pressure on prices.
  • Given a future of higher rates, as well as massive debt issuance, Jim took a short position in U.S. Treasuries* 
  • The world economy is more interconnected than ever. All the players need each other, raising the systemic risk posed if countries start defaulting (which Jim notes is a more common occurance than most people realize).

As with our recent interviews with Marc Faber and Bill Fleckenstein, Jim ends the interview with his specific outlook for 2011.

[*note: Jim has informed us he closed out this short position a week after recording this interview, given the increases in international social unrest.] 

Click the play button below to listen to Chris' interview with Jim Rogers:

About the guest

Jim Rogers

Jim Rogers, a native of Demopolis, Alabama, is an author, financial commentator and successful international investor. He has been frequently featured in Time, The Washington Post, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times, and most publications dealing with the economy or finance. He has also appeared as a regular commentator and columnist in various media and has been a visiting professor at Columbia University.

After attending Yale and Oxford University, Jim Rogers co-founded the Quantum Fund, a global-investment partnership. During the next 10 years, the portfolio gained 4200%, while the S&P rose less than 50%. Rogers then decided to retire – at age 37. Continuing to manage his own portfolio, Jim Rogers kept busy serving as a professor of finance at the Columbia University Graduate School of Business, and, in 1989 and 1990, as the moderator of WCBS's 'The Dreyfus Roundtable' and FNN's 'The Profit Motive with Jim Rogers'.

In 1990-1992, Jim Rogers fulfilled his lifelong dream: motorcycling 100,000 miles across six continents, a feat that landed him in the Guinness Book of World Records. As a private investor, he constantly analyzed the countries through which he traveled for investment ideas. He chronicled his one-of-a-kind journey in Investment Biker: On the Road with Jim Rogers. Jim also embarked on a Millennium Adventure. He traveled for 1101 days on his round-the-world, Guinness World Record journey. Passing through 116 countries, he covered more than 245,000 kilometers, which he recounted in his book Adventure Capitalist: The Ultimate Road Trip. His latest book "Street Smarts: Adventures on the Road and in the Markets" was published in 2013.

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11 Comments

mkrismer's picture
mkrismer
Status: Member (Offline)
Joined: Jul 8 2010
Posts: 7
Re: Interview with Jim Rogers: Why Inflation is Raging ...

Good Job! I love your podcasts.

Marteen's picture
Marteen
Status: Bronze Member (Offline)
Joined: Sep 29 2010
Posts: 40
Re: Interview with Jim Rogers: Why Inflation is Raging ...

Many thanks for this interview. Unfortunately Jim Rogers is always telling the same riddle. whether this is CNBC and or many others. I also noticed his avoidance on the peak oil questions. He is still a baby-boomer and has difficulties with the idea that the quality/luxuary of live will change.

At the end he is still an investor.

The guests are always focussed on 1 subject and has dedicated their live to it to proof that they are right.

It is very difficult to find blogs like CM where the whole spectrum is discussed in a decent and progressive manner. Though very concerned.

I have the feeling i know enough and have to prepare myself in a different way. I have now passed the 3 emotional faces of the near and long future. I am more and more interested in what the common people are doing. I have asked Adam already for a section on your website where you can meet other common concerned members.

In Italy there is a massive movement growing against all the noncence of berlusconi. This internet movement lead by Mr Beppe Grillo has a meet-up section and new political parties are emerging in local communities. I strongly believe that we have to start something like this as well otherwise nothing will happen.

Marteen

guardia's picture
guardia
Status: Platinum Member (Offline)
Joined: Jul 26 2009
Posts: 592
Re: Interview with Jim Rogers: Why Inflation is Raging ...

Marteen wrote:

Many thanks for this interview. Unfortunately Jim Rogers is always telling the same riddle. whether this is CNBC and or many others. I also noticed his avoidance on the peak oil questions. He is still a baby-boomer and has difficulties with the idea that the quality/luxuary of live will change.

I think him and others like Marc Faber are simply avoiding the term "peak oil". They know about the limits to the resources, they just don't want to brag around the boogieman term... I'm guessing it's been overused in the 70's and they just don't want to be associated with the hippies or something Laughing

Samuel

kekalev's picture
kekalev
Status: Member (Offline)
Joined: Jul 15 2010
Posts: 1
Re: Interview with Jim Rogers: Why Inflation is Raging ...

have'nt listened to the podcast, yet. but, rogers has spoken in his own terms about peak oil for over a decade now. 

JAudette's picture
JAudette
Status: Martenson Brigade Member (Offline)
Joined: Feb 15 2009
Posts: 5
Re: Interview with Jim Rogers: Why Inflation is Raging ...

If I may say...  Good responses.  There are probably many good reasons why Jim did not talk about peak oil.  Not least among them is his inability to deal with the pain of knowing that (we) caused this for all the future generations.  This site has always focused on the financial end of the problem anyways, so he's  just sticking to the subject matter.  After all, he's not a peak oil expert, so  what additional information can he give us that is helpful?  I myself have been in the opposite situation, where someone is once again  spouting the same rhetroric about peak oil, climate change, and the 3 E's.  (I've been there, done that - give me something I can USE! - will ya).

If you've been there, you know what I mean.

I've been at this problem for a while (we all know it's a big one), and I've been searching all that time.

As far as getting more rounded information:  I've found that nobody really has a complete solution to our dilemma, but many people have PARTS of the solution.  Each one of these (organizations), of course, touts their solution as THE solution, but I just walk away with what I need.  So I myself have been piecing together my own solution.   Like so many of the really important things in life, this is MY personal solution - this will not work for everybody.  Everybody has there own personal background and situation.  They have to figure out what will work for them. 

What I have seen is that because the solution is so personal, as soon as a mixed group of people get together and start to form an organization, infighting starts because of people's different situations, and the group falls apart.

So far, one of the groups that I have seen that is closest to making this work is Transition Network (www.TransitionNetwork.org).  This a group that started in the UK, and has spread to the united states.    The only reason that they have been partiall sucessful is that they preach tolerance right from the start, and they seem to understand the individuality of the solutions.   I give this information to you because you asked about the common man, and this is exactly what this organization is about.

Depending on where you are in your journey, you will find this helpful, insluting, or pollyanna, but wherever you are I hope I have not offended, and please except my aplogies if I have.

Good Luck

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 2586
Re: Interview with Jim Rogers: Why Inflation is Raging ...

I am trying to get my thoughts in order.

Mish Shedlock is a deflationist. He says that the price we pay for something is a symptom of deflation/inflation. 
He says that deflation is real because it's definition is a shrinking of the money supply, regardless of the cost of commodities.

Further he says that the money the FED (and others) are printing is not getting through to Main St. but is being diverted to purchasing commodities by the recipient organizations. Also it is not in the interest of the lending institutes to allow this funny money onto Main St. as we will pay down our debts with it.

Thus we have a shrinking of the money supply on Main St. (Deflation), and a  simultaneous rise in commodity prices seen by consumers.

So. The supply of money to Main St. where I live shrinks, and the price of my basket of goodies rises even faster.
What to do?
Do I compete with my real dollars with the funny money of Wall St for commodities, or do I keep my money and wait for funny money to soak through and destroy the value of my dollar?

I think that Wall St will not allow the funny money to soak through, because of the problem of people paying off their debts with it.
In which case the value of my dollar will increase. But will it rise faster than the price of my basket of goodies?
If I get some funny money of my own they will expect me to pay it back with real dollars, so that wont work.

In conclusion there are two types of dollar. Real dollars and funny money. The funny money is removing commdities from the real economy.

Maslow advises to invest in food, because it's value is rising faster than my pay packet.(inflation)

However, everytime I pay for something I am using real dollars  to purchase something payed for in funny money, ( stolen goods).

guardia's picture
guardia
Status: Platinum Member (Offline)
Joined: Jul 26 2009
Posts: 592
Re: Interview with Jim Rogers: Why Inflation is Raging ...

Arthur, I think you're trying to explain something really simple in a really complicated way. Basically, the banks, Wall St. whatever want to keep their toys and take yours away from you too. That's it, pure and simple. They get the wheat, they buy the oil, we get nothing, die off because everything is too expensive to buy, and they win. See? Inflation. Deflation is not guaranteed to happen even when people start massively dying on the street, but it may happen, but in that case nobody will have dollars to trade with anyway.

So, the answer is to not use the dollars, and build your own community, finding people with whom you can trade stuff without dollars

Samuel

pismo10's picture
pismo10
Status: Member (Offline)
Joined: Feb 11 2011
Posts: 3
Re: Interview with Jim Rogers: Why Inflation is Raging ...

The US will never default. Do you think they really are not going to cash their own checks? They will print the money to pay off debt, fund the $75 trillion in welfare and kill the dollar. The soft default. Hard is not going to happen.

christo930's picture
christo930
Status: Member (Offline)
Joined: Nov 22 2009
Posts: 1
I can't believe he said that!

China's raising interest rates and allowing the renminbi to rise will keep the higher prices out of China. China is deliberately importing US inflation to supress the renminbi and keep the Chinese people from enjoying lower prices as the result of their economic growth.

joeysan's picture
joeysan
Status: Member (Offline)
Joined: Apr 21 2011
Posts: 11
good interview!

Rogers is always on point.

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