Financial Times Interview with Jim Rogers – 2007 Predictions

The Financial Times interviewed Jim Rogers in late 2007. They were trying to get an idea of where he thought the US economy was headed in 2008 and beyond. He makes some very insightful comments about Ben Bernanke, the FED, and the recession on the horizon.

We have a complete transcription of the interview after the jump, enjoy:

FT: You said you’re selling US assets. So what makes you so bearish on the dollar?

Jim Rogers: Well the US dollar is a terribly flawed currency. As recently as 1987 the United States was a creditor nation. We’re now the largest debtor nation the world has ever seen in only twenty years. We owe the rest of the world over thirteen trillion with a “T” US dollars. That’s a bad number, but what’s worse is our foreign debts are increasing at a rate of one trillion dollars every 15 months. It’s simple arithmetic at how fast it’s going to go up, but its pretty terrifying arithmetic. I don’t want to own a currency which is being debased that way. The central bank in America has said that they’re going to print as many dollars has they have to drive down the value of the currency. The secretary of the treasury is trying to drive down the value of the currency. I mean it doesn’t take a genius to figure out that it’s a currency that’s going to be going down for some time to come. They want to debase the currency. The head of the central bank has been printing money since he got there for two years. He’s printing money very rapidly now, especially since this summer. This is a man who his whole intellectual career has been spent studying the printing of money. Now America is giving the printing presses. I don’t want to be in a currency like that.

FT: So what’s your assessment of Bernanke’s performance so far?

Jim Rogers: Well it’s been a disaster.

Did I make myself clear? He’s been a disaster. I mean he’s been printing much too much money, since the beginning. Last summer he bailed out his friends on Wall Street, said there was some kind of problem. I mean the stock market was down 6%. If a 6% decline in the stock market causes the man to go and cut interest rates by a half a percent, when inflation is running rampant, when the dollar is under pressure anyway, what’s he going to do when the market is down 36%? What’s he going to do when they have a real crisis? I mean he’s going to print money until we run out of trees! I don’t want to own US dollars in an environment like that. I don’t know why you would. I don’t know why anybody would.

FT: So is the US already in a recession?

Jim Rogers: In my view yes. We know that housing is in worse than recession. We know that automobiles are in worse than recession. We know that many parts of the financial community are in worse than recession. We know that machinery — Caterpillar Tractor, one of the largest machinery companies in the world, has said it’s the worse they’ve seen in 50 years. There are a lot of sectors of the American economy that are in serious trouble, shall we say. The government says it’s not a recession. I’d like to know from them, what’s keeping it up, that if all these other sectors — and you know housing and automobiles are two of the very largest sectors — what is not in recession? Retail sales are down; I could go on and on.

FT: So what’s next? What do you think is coming?

Jim Rogers: Well for the dollar? Well probably the dollar is going to have a big rally about now, because everybody in the world is short the dollar. In my experience in the investment markets, when everyone is on one side of the boat, you’d better think about going to the other side of the boat for a while. I suspect there’ll be a rally; I have no idea what will cause it. And if there’s a rally, for a few weeks, a few months, I would urge you to sell that rally — that’s my plan — to get the rest of my money out of US dollars.

FT: You’ve actually been bearish on the dollar for more than a decade. So why are getting headlines now? Is it to do with promoting your new book?

Jim Rogers: I didn’t know I wasn’t getting headlines, you called me, I didn’t call you. The dollar has been steadily going down, as you know, for several years. It’s not been a wonderful place to be. I have no idea. Maybe it’s because now the dollar’s starting to crescendo a little bit more. And actually now that I think about — I don’t think it has anything to do with me — as you probably know, the dollar has never gone below 80 as an index, which is a federal government report; it’s never gone below 80 in the history of the world. Until the last two or three months, when Bernanke started printing all this money and cutting interest rates; in a terribly inflationary environment he was cutting interest rates. It’s broken below that level, so it’s now going to the lowest level in history. So maybe that’s why more and more people are starting to pay attention to the dollar.

FT: You’re known for being apolitical. Are you backing anyone in the next year’s US presidential election?

Jim Rogers: Well, yes. A pox on both of their houses, as far as I’m concerned; the Democrats and the Republicans. I rarely if ever pay much attention — I always vote – but I don’t pay too much attention to them, because I know they’re pretty hopeless. However in this election, if Ron Paul gets anywhere near the nomination, I will certainly support him. I mean he’s the only one I’ve seen in American politics that seems to have a clue about what’s going on in the world.

FT: Will he win?

Jim Rogers: If I’m backing him, there’s no way, no way I assure you. Poor Ron.