Jim Rogers’ Warning: Riots Coming To America
Dominique de Kevelioc de Bailleul: Speaking with the Wall Street Journal on Friday, commodities trader Jim Rogers of Rogers Holdings said riots such as the ones witnessed in Greece and reported as widespread in China will hit the United States and again in Europe as the next leg down in the financial crisis takes shape (after the election, he speculates in previous interviews).
“I’m more worried about those kind of problems [rioting] in the U.S. and Europe; this is where social unrest is going to be worse,” Rogers told the Journal. “I would suspect that, when economic conditions get worse here and get worse in Europe, we’re going to see . . . you’ve seen governments fail in Europe; you’ve seen countries fail in Europe. I suspect you’re going to see more of it [rioting], yes.
When asked about Bernanke’s credibility regarding his latest FOMC public statement, in which he said the Fed will be able to contain inflation, Rogers became noticeably irritated.
“Mr. Bernanke has zero credibility as far as I’m concerned. The Federal Reserve has zero credibility,” Rogers said forcefully. “Simon, go back at everything Mr. Bernanke has said in the last seven or eight years he’s been in Washington. He’s never been right about anything. The man has zero credibility for anyone who would take the time to look at his history.”
As far as further inflation down the road, Rogers stated inflation is already in the pipeline, and will manifest in higher commodities and consumer prices—of which, historically, have lagged money supply expansion by six months to one year.
As of the week ending Apr. 25, 2012, the Fed reported its balance sheet reached a total of $2.92 trillion, up from $2.71 trillion a year ago, and up from $920 billion in March 2008—well before the brunt of the financial crisis took its toll on markets later in 2008 and early 2009.
A tripling of the Fed’s balance sheet within fours years won’t be the extent of the damage to the Fed’s debt monetizing scheme and the value of the U.S. dollar, according to Rogers, who sees much more Fed money printing to come as well as consumer price inflation as a result.
Rogers said investors have it easier today than prior to the crisis. It’s a heads-you-win, tails-you-win scenario. The emergence of Asia as a source of consumption of raw materials and finished goods will exact pressure on harder-to-find natural resources. If demand is crippled by the financial crisis, however, central banks will respond by debasing their respective currencies, forcing smart money into ‘things’ as a means of protecting wealth.