Jim Rogers, co-founder of the Quantum Fund along with billionaire investor George Soros, expressed his unequivocal view on the Fed’s $200 Billion bailout plan – abolish the Federal Reserve.
More than headline grabbing, Rogers’ view is based on very sound logic. Though we all know the Fed is not going to be abolished anytime soon, he will probably use today’s interview on CNBC Europe to tell the world “I told you so” if the US economy goes as he expects. So far, he’s been dead on nails by calling for climbing oil, a falling US dollar and climbing agricultural prices. Read this post from November 14th in which I reported his calls on these very items.
HIGHLIGHTS
I strongly recommend you watch the video above but for those of you that are short on time, here are the noteworthy points:
- In the 1970s, the Fed printed money to avert a recession, boosting inflation and then forcing interest rates to more than 20 percent to keep a lid on price rises.
- “No country in the world has ever succeeded by debasing its currency,” he said. “That’s what this man is trying to do. He’s trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term.”
- Investment Banks should be allowed to fail.
- “If you bail out every investment bank that gets in trouble, that’s not capitalism, that’s socialism for the rich”
- He has a short position on all investment banks. Fannie Mae is the weakest. (Eric Sprott said the same thing a couple of days ago…this is the second time Jim Rogers has echoed someone at Sprott within 2 business days. Here is the first time.)
- A recession may be a good way to clean up the economy, while trying to prevent one may cost more and actually worsen the recession.
I can’t poke a hole in any of these points. The Fed is making a valiant effort to save the US economy for – most likely – political reasons, but you can’t fight this credit crisis, which is essentially a string of colossal errors made by individuals, banks and funds. This is too big of a mess to clean up … but it isn’t big enough to get even worse. By printing more money, the Fed is doing just that.
Gold $2,000 is starting to look a little more plausible.
Regards,
George
[…] Jim Rogers short on all investment banks was bang […]
While interest rates were pushed up sharply by the US Fed in the very late 1970’s and very early 1980’s, if not an intended consequence, then most definitely a notable consequence all the same, Major Large Cap Blue Chip Corporations also benefited disproportionately. What ever the outcome of current events, I do hope the least affected Major Large Cap Blue Chip Corporations benefit, but not at the expense of the Small aspiring Resource Sector Explorers, the likes of Noront Resources, among a few very good other Junior Minerals Explorers.
Old Joe
[…] George Soros, echoed Sprotts’ short call on US financial institutions. He made the call this morning, less than 48 hours after the Sprott call. I point this out because this is the second time in 4 […]