Jim Rogers on the Dangers of Price Inflation, the Promise of Commodities and America's Continued Decline
The Daily Bell is pleased to present another exclusive interview with Jim Rogers (left).
Introduction: Jim Rogers was a co-founder of the Quantum Fund, and is creator of the Rogers International Commodities Index (RICI). A native of Demopolis, Alabama, Jim Rogers was entrepreneurial from a young age. His first business venture at age five involved selling peanuts. He attended Yale University where he received a degree in history, and then also Oxford University, where he focused on philosophy, politics and economics. In 1970, Jim Rogers co-founded the Quantum Fund, possibly the most famous and successful fund of its type. Despite his success, he still makes media and television appearances, focused on the free-market principles he believes in and investments in all vehicles, long and short worldwide, that he espouses. He has issued many warnings about the West's debt-making profligacy and has concluded that China will likely constitute tomorrow's most powerful nation-state, in large part because of the energy and discipline of its billion-plus citizens. He is author of many well-received books including the best-selling Investment Biker, a free-market oriented meditation on life and investing.
Daily Bell: We've interviewed you before. Thanks for spending some time with us once again. Let's jump right in. What do you think of the Chinese economy these days?
Jim Rogers: There is some overheating and inflation, which they are wisely trying to cool – especially in urban, coastal real estate. They have huge reserves so will suffer less than others in any coming downturn.
Daily Bell: Is price inflation more or less of a problem?
Jim Rogers: More. At least they acknowledge inflation and are attacking it. Some countries still try denying there is inflation worldwide. The US is even pouring gasoline on these inflationary trends with more money printing instead of trying to extinguish the problem.
Daily Bell: Is China headed for a setback as you suggested last time we spoke?
Jim Rogers: Did I say a setback or a setback in real estate speculation? I think you will find it was the latter. Yes, the setback in urban, coastal real estate is under way.
Daily Bell: They are allowing the yuan to float upward. Good move?
Jim Rogers: Yes, but I would make it freely convertible faster than they are.
Daily Bell: Will that squeeze price inflation?
Jim Rogers: It will help.
Daily Bell: Why so many empty cities and malls in China? Does the government have plans to move rural folk into cities en masse?
Jim Rogers: That is a bit exaggerated. China has been overbuilding ever since I have been visiting. There is at least eventual demand for much of it, but that does not preclude some bankruptcies in the future.
Daily Bell: Is such centralized planning good for the economy?
Jim Rogers: No. Centralized planning is rarely, if ever, good for the economy. But the kind of construction you are describing is at the provincial level – not the national level.
Daily Bell: The Chinese government is worried about unrest given what is occurring in the Middle East. Should they be?
Jim Rogers: We all should be. There is going to be more social unrest worldwide including the US. More governments will fall. More countries will fail.
Daily Bell: Are they still on track to be the world's biggest economy over the next decade?
Jim Rogers: Perhaps not that soon, but eventually.
Daily Bell: Any thoughts on Japan? Why haven't they been able to get the economy moving after 30 years? Will the earthquake finally jump-start the economy or is that an erroneous application of the broken-windows fallacy?
Jim Rogers: It has been 20 years. They refused to let people fail and go bankrupt. They constantly propped up zombie companies. The earthquake will help some sectors for a while, but there are serious demographic and debt problems down the road.
Daily Bell: The Japanese were going to buy PIGS bonds. What will happen now? Does that only leave China?
Jim Rogers: Obviously the Japanese have other things on their mind right now. I think we are getting closer and closer to the point where someone in Europe is going to have to take some losses, whether it's the banks or the countries, but somebody has to acknowledge that they are bankrupt. The thing that the world needs is for somebody to acknowledge reality and start taking haircuts.
Daily Bell: Are you more optimistic or pessimistic about the EU these days? Last time you told us the world needed the euro – a big market with breadth and depth. But you weren't sure it was going to last. Any new insights?
Jim Rogers: I didn't say that the world needed the euro, I said it would be good for the world; we need something to compete with the US dollar. On paper the euro would be a great competitor. However, as I have said before, it is a political currency rather than an economical currency, and I would suspect that this pushes the euro closer to a moment of truth.
The Germans are now in control and they will be able to make everybody toe the line. The Germans expect to hold the euro together during this period of pain, and I hope they can. As I have said before, the world needs something to complete with the US dollar. I would expect the euro will survive this particular round of problems, and this will be good for the world and the euro in the long run.
Daily Bell: Is Germany taking the proper – hardline – stance toward Greece and Ireland? Is austerity the only solution or should bank bondholders finally have to take the haircut you mentioned?
Jim Rogers: Either way, if people start having to acknowledge their losses then that's going to lead to more austerity. And I don't think you are going to see people rushing in to invest or lend to the Greeks if they have just lost lots of money on their bonds or their bank stocks or whatever it happens to be. It will certainly cause problems. I don't think anyone will pull out of the euro this time around, but some might be thrown out. Merkel seems to think she can hold the euro together but that's going to require some stern German discipline and losses. If that is her plan the euro could emerge as a real competitor to the dollar and have a great future. I am a bit skeptical of that last statement, but I do own the euro still.
Daily Bell: Any more thoughts on the American Tea Party, which just scored some political gains? As we recall you were critical. Any further insights for us on the American political situation?
Jim Rogers: Well it appears that America does seem to understand, at least on paper, that there are staggering problems. We still haven't seen much action. I haven't seen anybody cut any spending in a serious way. We are still bankrupt and the situation is getting worse, not better. Now, usually when you have this kind of situation it usually leads to social unrest and more political backlash, I suspect it will this time too.
Daily Bell: What about the wars America is prosecuting and its military stance generally? Affordable? Supportable?
Jim Rogers: Well it is certainly not affordable. America has got troops in over 100 countries and it is just making enemies and not helping America's standing in the world. As for supportable of course not! How can anybody justify America now getting involved in Libya? I mean if America is going to support opposition to everybody in the world we don't like, America is soon going to be totally bankrupt, even more bankrupt. Why are we supporting the guy in Yemen and not the guy in Libya? I can see absolutely no intellectual, philosophical, or even political justification for what we are doing.
Daily Bell: Can the US sustain the war in Afghanistan for another three years? Will it have success in Westernizing that country?
Jim Rogers: No, look at the size of Afghanistan; I don't think the guys in Washington have a clue how big it is. Sure, we can stay there for three years and spend huge amounts of money, human lives, and we are making our situation worse not better. So we can stay there, but it is only driving us further and further into problems.
Daily Bell: Is Pakistan being destabilized as a result?
Jim Rogers: It's been destabilized. We are making more and more enemies in Pakistan every day and this is giving more psychological support to the enemies. They have someone else to rail against, more reasons to rail against the US. Pakistan seems to be more and more unstable. They have nuclear weapons; they have a lot of people who don't like the US, and they have a lot of people who don't like India. Pakistan is one of the ten largest countries in the world population wise, and it's in a very strategic area, I hope it's not going to happen; I hope they're not going to destabilize further, but this is how big wars start. People aren't worried, and then all of a sudden, everybody's in over their head.
Daily Bell: Some say the US is trying to surround China. Is there more military tension between the US and China these days? Is that a bad thing?
Jim Rogers: I don't know there's more military tension between China and the US these days. The US is in Pakistan, but the Pakistanis have been allies of the Chinese for a long time. If Pakistan is becoming more destabilized, then they are not going to be an ally of the US against China I assure you. No one in Pakistan is going to say, let's support the US against China.
Everybody knows the US is becoming weaker and weaker geo-politically and militarily. If Venezuela and Colombia went to war tomorrow, there's nothing the US could do. We're over-extended in every way. I think our real position is even weaker than it appears. We may be talking a good game, but China is developing on it's own, and since I don't see that they are doing anything that threatens the US militarily, I am perplexed with this question.
Politicians may be railing more and more about China, but that's a verbal encirclement of China, not a military one. China is the richest country in the world now and we are the largest debtors in the world. That accounts for verbal attacks. Pressuring China militarily won't change the equation.
Daily Bell: Where is gold headed? Silver?
Jim Rogers: Everything I have told the world about gold and silver is going to continue to happen. Eventually gold will be a couple of thousand dollars an ounce, and probably much higher, as currencies become more debased, who knows how high. Silver will definitely reach new highs. As I have said, the US dollar is in serious trouble, and will be debased a great deal in the future, and eventually will be problematical itself. So gold and silver will be measured by the US dollar but I hope there will still be some sound currencies no matter what happens.
Daily Bell: What are some of the best little known investments these days?
Jim Rogers: I am still optimistic about the future of agriculture, but I don't know about how little known that forecast is at this point.
Daily Bell: Do you still believe commodity price inflation generally is a big trend?
Jim Rogers: I don't believe in "belief." I only like to invest in things that I think I know. People who fall in love with their investments or believe in them, usually have problems. I think commodity prices are going to continue to go much, much higher. In several years, we are going to continue to see shortages of things to develop and there continues to be very little investment in productive capacity of anything. Agriculture is continuing to turn into a disaster and I continue to encourage people to understand that those shortages are going to get worse, and that there is going to be more social unrest around the world, and that more governments are going to fall around the world.
People don't go into the streets if the price of copper makes new highs but when the price of rice and wheat and sugar go through the roof, everybody knows it instantly at the same time and everybody is unhappy instantly, and at the same time. So that's where you have serious problems developing and shortages, and that's why agriculture is a great place to invest. There are plenty of ways to invest in agriculture. There are going to be shortages of food and this will continue. As I said before, my portfolio is in commodities and currencies on the long side.
Daily Bell: What about oil? Give us your take on Peak Oil. Is it real? Does it exist?
Jim Rogers: I don't know if there is Peak Oil or not. I do know that known reserves of oil are in decline. That is a very simple statement. Is there a staggering amount of oil out there in the world? We don't seem to know where it is, though we hope we find it soon and that it is accessible. The price of oil and all energy is also going much higher.
Daily Bell: Any comment on water shortages? Is potable water the next big investment?
Jim Rogers: I don't know if we discussed water last time but I have discussed it many times. There are huge shortages of water developing. We have wars developing east of the Red Sea over oil, and we are going to have wars west of the Red Sea over water. Northern India has a staggering water problem and so does northern China. Southwestern part of the US has big water problems. If you can find a way to invest in water, you are going to be extremely successful and rich.
You shouldn't own water, though, because if you own water the politicians are going to snarl and sneer and say you are capitalizing on God's-given-right to water, you filthy capitalist. If you are lucky, they will hang you in the public square. If you are unlucky, it will be worse. But if you can transfer water or clean water or provide water, they will build a monument to you in the public square, and you will be extremely rich.
Daily Bell: Will the IMF have success in replacing the dollar with the SDR, as it wishes to? How long will it take?
Jim Rogers: I can see if something dramatic happened tomorrow or if people are desperate, but I don't see SDRs working at all. It's an unofficial creation of bureaucrats and those types of things rarely work. Currency unions have never worked in history, and this could be the potential problem with the euro, it's a currency union, so I don't see something as artificial as SDRs working on a temporary basis or in the short term.
Daily Bell: What trends are you emphasizing in your public speaking these days?
Jim Rogers: I'm speaking but I am not sure people are listening. They haven't been listening to the rise of China or the problems with the US dollar and more and more currency turmoil. People don't listen about how inflation and commodity prices are going to continue to skyrocket. The things I have been talking about for several years are right and they continue to be right. I talk about more and more social unrest and there is going to be more social unrest. Look what is happening in Libya, Tunisia and Egypt. I talk about these things, and they turn out to be right, but people do not want to accept them, so unfortunately you have opportunities from this but once everybody thinks the same way, there's no opportunities left. I still see what has been happening, will continue to happen. Eventually everybody will know how to spell commodities. Eventually everybody will know how to find China on a map or even the Pacific Ocean on a map, but in the meantime, that is still years away.
Daily Bell: What do you think of these color revolutions taking place? We think that there is considerable interference by the West and especially America. Comments?
Jim Rogers: Well, as I have said, there is going to be more social unrest and I have been saying this for several years now. You can call it a "color revolution" or whatever you want, but basically when the price of rice and sugar and wheat goes up, people get unhappy. People will put up with a lot of things but eventually they go into the streets and especially when they have had their expectations aroused. The people that revolt are the people that have been led to think that things are going to get better and then their expectations are not met, and that's when they go to the streets. So you are going to see more governments fall, more countries fall.
Daily Bell: You told us last time that the West was not handling the economic crisis (which began in 2008) very well. Are you more or less optimistic now?
Jim Rogers: The situation continues to be bleak, in the US especially. The politicians continue to dole out staggering amounts of money and the people who receive that money think they're better off. But the overall situation is worse. America's debt continues to skyrocket; the money train continues at a high rate, leading to more inflation and higher prices, and to eventually to more currency turmoil and eventually higher interest rates.
Somebody is going to have to take some losses, just as in Europe. The idea that the solution for too much debt and consumption is more debt and more consumption is ludicrous. It's embarrassing. Maybe the Europeans are starting to understand it and maybe they are going to do something about it, or be forced to do something about it, which is more likely.
In Portugal they are saying, they are not going to cut spending, well eventually somebody is going to have to face reality. In China, they realize they have an inflation problem and they are trying to do something about it; let's hope they do. They still have a blocked currency, which in my view, is part of the problem. But to their credit, they do continue to open the currency more and more, every month, every quarter, and they know they have to.
There are serious problems developing in India with their central bank and numerous other countries. Thailand, Australia, Korea, South Korea are all victims of the US central bank and the UK central bank easy-money policies. Staggering amounts of money are flooding into these countries, and there is no way in their power that they can stop this inflation or the subsequent price inflation. The situation continues to get worse for them.
Daily Bell: Bernanke and the Fed – and other central banks – have apparently issued into the world's economy something like US$20 to US$50 TRILLION in loans, pump-priming etc. What happens when the velocity of money increases and all that money starts to circulate?
Jim Rogers: It's already happening; prices are going higher. Now the blame game starts and the government will blame it on draught or crop failure or whatever. Politicians will do and say anything to avoid explaining that inflation is a monetary problem. Their reactions are always the same and it's always astonishing to me. As President Ford said, "there is no problem" – and even if there is, it's not his problem. Well there are always people who are in denial; then the problem gets worse not better.
Daily Bell: Bernanke recently went on the record as saying he was 100 percent certain that he would know when and how to withdraw excess dollars from the world's economy – so that it didn't cause price inflation. Do you believe him?
Jim Rogers: Again, I don't believe in belief, and you can never be 100% sure of anything, but I will go on record as saying, I'm a 100% sure in saying Mr. Bernanke is wrong again.
Daily Bell: Is the stress getting to Bernanke? Is he becoming unbalanced?
Jim Rogers: I don't know that he was ever balanced in the first place. He's never been right about anything. If you go back to the people who have been doing research on Mr. Bernanke's projections and statements, they'll tell you he has never been right about anything. He's always been unbalanced, if you ask me. You might find a time or two when he was right about something, but generally he doesn't have a clue.
Daily Bell: Is Bernanke actually trying to ruin the dollar so that the IMF can usher in a world currency?
Jim Rogers: No, he's not that smart. The IMF is not that smart. They are not smart enough. That's a conspiracy theory that assumes these people could work together. No, he actually believes in what he is doing and he believes he's going to save us all.
Daily Bell: We asked you this before. What will the world look like in 10 years?
Jim Rogers: There will be many different governments and many different political parties and unfortunately more destruction from civil wars and outright wars. The world will still be in a state of turmoil and perhaps it will be much worse. I could be wrong but you should at least examine the possibility that I might be right. What I would encourage everybody to do is to figure out ways to protect themselves. Most people have insurance policies, like fire insurance, car insurance, health insurance and you hope you never have to use them. But I would hope that everybody takes out some kind of insurance policy for their money, in case I might be right and hope that I am dead wrong and then it's unused money. But if I am right, at least it's some protection.
Daily Bell: Any new books or articles in the works?
Jim Rogers: No, I have been interviewed periodically, probably too much. My agent would like me to do an autobiography, but I cannot imagine that the world wants an autobiography of Jim Rogers. I am resisting if nothing else. I am not that interested in doing this, so if I'm not interested I doubt anybody else would be either.
Daily Bell: We'd be interested in such a biography! Any final thoughts?
Jim Rogers: I have a new index, with CITIC, a huge Chinese company, in partnership with BBVA, a huge European bank. The three of us are in it together. It's called, RGREI, Rogers Global Resources Equity Index. It offers diversity of choice for the people wanting to invest in natural resources.
Daily Bell: We'll be sure to check into it. On behalf of all of our readers we thank you for sharing your views with us – and for your important work and great books.
Jim Rogers: Thank you
Jim Rogers is in fine form in this interview. We believe it is easily the best interview we've done with him in the sense that he was unusually frank and forthcoming and made some points that we have never read anywhere else, especially about water and how to invest in it. One can gain a good sense of where he stands on numerous issues and why.
There are several places where he corrects us regarding the phraseology of a question: Once regarding the euro, anyway, and several times regarding questions that he "believed" something. He points out quite rightly that he doesn't "believe" when it comes to investments. He approaches them analytically and "belief" implies emotion, and emotion has no place in his business.
The remonstrations show something specific about the man and his character. Jim Rogers is someone who will patiently sit through interview after interview (he says he's been giving too many of them) and express informed opinions on any one of a number of topics. This generosity can fool you into thinking you are speaking to an amiable, even low-key gent, and not one of the sharpest most successful investors alive today.
We could, perhaps, have removed or softened these interactions somewhat, but we like to carry interviews in an unvarnished form whenever possible. In this case, we think such "pushback" reveals his character and the rigorousness of his thought process. He may appear to be sharing off-the-cuff opinions, but what he is providing is the result of careful consideration and rigorous analysis – and his language is notably precise.
We pointed out last week in an interview with Hans-Hermann Hoppe that what came across strongly to us was the discipline-of-thought that we could sense behind the great libertarian philosopher's answers. We think that same sort of discipline comes across in this interview with Jim Rogers, and more strongly in this interview than before. Notice how he remembers the details of conversations he had with us months ago. The Jim Rogers of this interview is the real Jim Rogers; he doesn't necessarily suffer fools gladly and his comments, visionary as they may be, are the product of diligent analysis and precise language.
There are very few investors of Jim's level of accomplishment who would bother to answer questions regularly from the media, let alone the alternative media. Yet Rogers tirelessly shares his viewpoints, puts up with dumb questions and even when he expresses some reservations about phraseology, continues to make his points, informing us all. He is as kind as he is precise.
We enjoyed not only the results of the interview but the interaction as well. Rogers has a first-rate investment mind; more than that, he is one of a handful of great investors of the late 20th century and in this interview, more even than some others, we think we can see why. We may disagree with some of his analysis and perspectives but it is impossible not to notice the insights and hard thinking that went into them. You can't ask any more from someone in an interview format like this. Thanks, Mr. Rogers!
Posted by Bionic Mosquito on 04/03/11 04:34 PM
I often wonder what "independence" was won in 1783. Of course, none to speak of for any of the non-white populations of America....
What of the white males? Was there a difference significant enough to justify the cost in blood and treasure? To the extent that there was a significant difference, for how many years did this last? And might the difference been achieved, as it was elsewhere in the empire, in a less violent manner?
What of the last 100 years. Is the life of the average middle-class American significantly different than the life of the average Brit? The poor Americans even got dragged into the Brit's wars when there was no reason for this. What of independence?
The independence seems to be no more than the independence of a new class of rulers to kick out the old class. And of course, this is only at the visible level. The money power, above the political class, is very likely the same.
I am not making any definitive statements here. Just food for thought.
Posted by Memewatcher.com on 04/03/11 04:26 PM
From reading the interview I understand that Jim supports the rule of Central Banks but doesn't agree with the management due to their unwise economic analysis. Or at least thinks they are necessary to create currencies. He speaks about the USD needing an international competitor but only in the terms of another Central Bank currency. I would be interested to get his opinion on an open competition of currencies, ideologically vs. personal investments.
I can imagine that a truly open competition of currencies would greatly dampen his or any investors ability to predict the wise investments that have made them so much money over the years. Which is why the PE will never give up their monopoly of the creation of money and the people that understand and benefit from this control will not support a free market alternative. I tend to agree with the Hegalian dialect analysis suggested by Mark.
Some of Jim's investment advice is sound for the common man and I have come to the same conclusion he has but I am enacting them on a much smaller scale; owning my land for water wood and food, and owning my gold and silver as an insurance for my wealth. Of course I will not make billions and probably wont ever be interviewed by the news outlets or even the Daily Bell. The other advice of trying to ride the wave from the PE's next currency bubble (the Chinese Central banks Renimbi) I will have to pass on due to principle but I am certain there is money to be made if you are so inclined. Just know when to pull out cause like all monopoly currency bubbles they can not last.
Click to view link
Reply from The Daily Bell
"Of course I will not make billions and probably wont ever be interviewed by the news outlets or even the Daily Bell."
This is such a big deal?
Posted by Wayne on 04/03/11 04:22 PM
"Hamilton is one of the best examples, but any review of the actions of the first several Presidents, founding father's all, show examples of either a) going beyond what seems to be the clear intent of the Constitution, and/or b) not taking steps that would have limited the encroachments."
It would seem that this has been a big insider joke!
Let the renegade colonists think they have won, and control them through the money. You must admit that this is very funny, and a brilliant strategic move. Or we are just plain stupid, which is not as funny!
Was the US the first test of this principle?
""Give me control of a nation's money
and I care not who makes the laws." Mayer Amschel Rothschild
What if that was the whole point? We were just lab rats all along?
Something to think about!
Reply from The Daily Bell
We believe Hamilton was possibly a Rothschild agent. We had an argument with Ingo Bischoff over this. He doesn't.
Posted by Bill Ross on 04/03/11 04:12 PM
DB: "immediately violated every law that was to constrain it."
The whole point of "checks and balances" by the legal / political classes is that they know damn well their intent is to be predators (how can it be otherwise, they produce nothing and refuse to be "public servants", our employees). Fools believe that just because check and balance "laws" are on the books, that THEY are "constrained".
Just try to hold them to account in THEIR courts. THEY, as sure as the sun will rise tomorrow will have their "alternate interpretations" and rationalizations of "neccessity" (Machiavailli) (rule of biased man on the bench). Which is why, we once had the "rule of law", because absolute power corrupts, absolutely and, no person is competent to judge the fate of another, unless that other has aggressed, in which case the aggressor has invited a proportional (defensive) response and reparations can be justly extracted for their victims:
Click to view link
Fact is, "we, the people" are the only and final "check and balance" against tyranny. Increasing social disorder, planetwide IS the "proportional (defensive) response of we, the people seeking reparations for THEIR victims and ourselves".
Posted by Sharky on 04/03/11 04:05 PM
JR: "I would hope that everybody takes out some kind of insurance policy for their money"
What does he mean by this? Hedging?
Reply from The Daily Bell
Gold and silver, probably.
Posted by Bionic Mosquito on 04/03/11 04:01 PM
Hamilton is one of the best examples, but any review of the actions of the first several Presidents, founding father's all, show examples of either a) going beyond what seems to be the clear intent of the Constitution, and/or b) not taking steps that would have limited the encroachments.
Posted by Bionic Mosquito on 04/03/11 03:59 PM
"This corruption was brought on by an 1866 law passed by the Republican Congress under Section 4 of Article I of the U.S. Constitution. It required open voice votes for the selection of U.S. Senators and was designed to gain insight to the selection process of U.S. Senators from the Southern States."
The 1866 law you cite was passed by senators appointed by the states. As I said, the states were neutered by Lincoln's war, and well before the 17th amendment. The neutering was sealed only one year before, in 1865. It didn't take long for the federal government to take advantage of the lesson taught by Lincoln and Grant. They did not have to wait until 1913. Six hundred thousand dead was lesson enough; no need to wait for an amendment to take effect, only papering what was already known to all in practice.
Reply from The Daily Bell
It was the Civil War that was the problem, not an amendment ...
Posted by GMartine on 04/03/11 03:48 PM
I am a big fan of Jim Rogers but his view on conspiracy theories is questionable. People conspire all the time. All actions are results of people working together towards a common goal. Jim's partner was George Soros. Basically the first rule of the club is there is no club. But Jim is the good side of the club and is honest about everything else.
Reply from The Daily Bell
Yes, something seems to be going on there, but we appreciate his time and the courteous interviews he has given us ... This was certainly the best in our view.
Posted by Wayne on 04/03/11 03:45 PM
"However 1913 gave us the best culprit for the final nail in the coffin, being the Fed of course.
Some might say the turning point came in 1865, or 1861. The states were certainly disabused of any notion of checks and balance by Lincoln.
Others might say 1787. The camel got his nose under the tent.
"They wrote the U.S. Constitution to prevent [central government].""
Yep, this was engineered right in the beginning, by a man who was not a "natural"born" US citizen.
"Ever since 1791, when Alexander Hamilton got the Federal government to take over state debts, which his cronies had bought for pennies, and then when he got the Federal government to authorize a monopoly for a privately owned central bank, the Bank of the United States, the real Mob has been plucking the feathers of the public.
The goons are Congress and the enforcers in the executive branch. The victims are taxpayers and investors who think the goons represent them. The Mob is the corporate system that consents to a law against insider trading in order to gain protection from investors: new investors who are ready to buy shares at a good price from existing investors, so they can replace existing senior management." Dr. Gary North
"America may have won the Revolutionary War, but it has since lost one of the main things it fought for: the freedom to create its own credit instead of having to beg for credit from private banks at a usurious cost."
Put simply, we never got free of the City of London. Talk about winning the battle and losing the war!
Posted by Ingo Bischoff on 04/03/11 03:27 PM
"If state appointment of senators was an effective tool for controlling the central state, how was it possible that the states gave up this tool? Either they were forced to do so, unable to prevent it, or too stupid to see the consequences."
Ah...thank you for another great opportunity to answer some historical questions.
The general corruption which plays out in the symbiotic relationship between U.S. Senators and the big FED banks, was mirrored by the corruption which existed in most state legislatures when selecting the two U.S. Senators for their state. This corruption was brought on by an 1866 law passed by the Republican Congress under Section 4 of Article I of the U.S. Constitution. It required open voice votes for the selection of U.S. Senators and was designed to gain insight to the selection process of U.S. Senators from the Southern States.
While secret ballot voting for U.S. Senators prevented, or at least reduced corruption, open voice vote selection actively encouraged it. Toward the end of the 19th Century, corruption in the selection of U.S. Senators was rampant in every other state. Some state didn't even send U.S. Senators for several years.
Enter the "Progressive Movement" made up of many of the later immigrants from the Scandinavian countries and from Germany which wanted to remove the corruption in state legislatures by calling for amendments to require the popular election of U.S. Senators and to more equally distributing wealth through a national "income tax". Both of these measures appeared to present benefits to central bank thinking. Consequently, the "Progressive Movement" clandestinely was heavily supported by the big money center banks.
The big money center banks were losing out with the Aldridge Bill in the U.S. Senate, as well as a subsequent Bill which favored their interests. The 1913 FRA instead enshrined "commercial" banking and the gold standard, not "central" banking.
However, Benjamin Strong in the 1920s used the 16th Amendment to justify his Federal Open Market Operations, and the 17th Amendment enabled the FED to buy the votes of the majority of U.S. Senators which by 1934 were all popularly elected and could not be recalled by their state legislature. This popularly elected U.S. Senate established FED central banking.
Now, do you see how the state legislatures were stupid enough to be pressured to ratify the 16th and the 17th Amendment. We're dealing with typical politicians which were pressured by the "Progressive Movement" financed by "big bank money". Don't think the separate states haven't regretted these ratifications made in 1913, especially with the decline of the USD/FRN and with Obama Care. They are in the courts now to gain what they could easily have accomplished had they not thrown away their voice in the U.S. Government.
BTW, I am happy to let you have a copy of the proposed amendment to repeal the 17th Amendment.
Posted by Ingo Bischoff on 04/03/11 02:45 PM
"As far the 1970's rupture with the gold standard goes, for this analysis of yours to work you'd have to explain how the US and the West hit the wall in 1929 with a gold standard in place ...."
You have given me no greater pleasure, than the opportunity to answer this question for you.
Under the Federal Reserve Act of 1913, the commercial banking system organized under the Federal Reserve System was authorized to create the "redeemable" Federal Reserve Note currency only against gold and "Bills of Exchange" (See Paragraph (a) and Paragraph (c) of Section 14 of the original FRA). The monetization of "Anticipation Bills" (U.S. Treasuries or other debt) was specifically prohibited. When in the early 1920s the U.S. economy entered a recession period (to explain the recession would distract from my answer here), the NY FED under the presidency of Benjamin Strong violated the 1913 FRA by conducting "Federal Open Market Operations" (creating a bond market) and thereby monetizing U.S. sovereign debt. This was strictly prohibited under the 1913 FRA and the NY FED was breaking the law. However, Benjamin Strong had completely neutralized the Federal Reserve Board as the oversight body of the U.S. Congress, and Congress never objected. Furthermore, the power exercised by the big money center banks kept the other eleven Federal Reserve Regional Banks from objecting to the rogue acts of the NY FED.
Soon, the extra currency created by the NY FED in monetizing sovereign debt, created a huge real estate bubble in Florida real estate. This bubble was quickly followed by a bubble in the equity markets. All the while, one USD/Federal Reserve Note was still redeemable into 1/20.65 of an ounce of gold. When the population started to have doubt value of the accounting standard of the Federal Reserve Note, the result was the 1925 Florida real estate bust, followed by the 1929 stock market crash.
All the while, the Federal Reserve Note was still legally required to be exchanged for 1/20.65 ounces of gold by the Federal Reserve System. When banks no longer could or were willing to exchange FRNs for gold in the early 1930s, FDR helped them out by first declaring a bank holiday and then prohibiting people from holding gold.
When the U.S. Congress ex-post-facto authorized the rogue acts of the NY FED in conducting FOMOs started in the 1920s by adding in 1934 Paragraph (b) to Section 14 of the original FRA, it created today's FED central banking system and killed "commercial banking".
Now, do you see how the US and the West hit the wall in 1929 with a gold standard in place ....???
Reply from The Daily Bell
"violated the 1913 FRA"
Ha, this is exactly our point, Ingo! You yourself have just explained how this institution, once empowered, immediately violated every law that was to constrain it.
What on earth gives you the idea that government, large or small, (and US states are NOT that small) provides a solution to any money problem?
If you would advocate for stateless (private) money without a state-fixed standard, and a private accounting standard, as well, your intellectual stance would be admirably defensible. If, on taking that stance, a reality-based movement began that vitiated your preferred private-market approach with state involvement, well that might be preferable to no implementation at all ...
But your intellectual stance, as you have argued it here over and over, gives up the high ground right from the start, arguing for state involvement immediately on numerous levels.
It is a theoretical and intellectual non-starter. It may be the way real-life operates, but theoretically the state always cheats and damages even good concepts. (As you have just shown again above.)
The best government governs least. It only took a ten or 15 years before the Fed, a private monopoly operating under the color of federal law, began to break its constraints and eventually caused the crash of 1929 and helped cause the subsequent Great Depression.
State solutions are solutions of force. You simply shouldn't argue for them theoretically. You shouldn't. It doesn't "hold water."
Posted by Bill Ross on 04/03/11 01:27 PM
DB: "...and nothing is ever as it seems."
Meanwhile, back at the ranch, unbenown to most, the grim reaper of "Mathematics of Rule" is doing the heavy lifting of reality accounting, insuring that consequence is and always will be the sum of actions:
Click to view link
Opinions are irrelevant when dealing with reality. It just is, independent of how one may think or feel about it.
So, rather than listening to and "considering" what "the man behind the curtain" is saying, consider what he does. Then, you will know him.
Posted by Victor Barney on 04/03/11 01:20 PM
Ingo Bischoff on 4/3/2011, I'm listening and your spot on, but it's not going to matter! Watch! p.s. We're in the minority and this, although just about over, will be our doom! Watch!
Posted by Kunsthausmann@yahoo.com on 04/03/11 12:56 PM
Jim Rogers: "I am still optimistic about the future of agriculture, but I don't know about how little known that forecast is at this point."
--Hmmm. So what do we know about the tendency of governments to meddle in agriculture as through subsidization? And can this meddling be predicted? For the well-connected, the answer is yes.
JR: "There are plenty of ways to invest in agriculture..."
--Indeed. One way is by investing in subsidized agribusiness. Another was demonstrated a few centuries ago by a political phenomenon called enclosure. Perhaps there are others. For instance, one might speculate in land and lease it to farmers, esp. subsidized ones. Still another way is to know in advnce when the tax burden on real estate will be shifted away from real estate and on to other wealth and to time one's speculations accordingly. Or one might takke advantage of political means to cartelize the distribution of water, of which farmers use plenty.
JR: "There are going to be shortages of food and this will continue. As I said before, my portfolio is in commodities and currencies on the long side."
Let's hope that the shortages are short-lived and not too acute. Now, he's long on currencies, of which the price he expects to fall sharply, not to rise sharply, esp. in terms of commodities. That's an interesting hedge for someone who's long on commodities, too, as his other remarks suggest.
JR: "...you can never be 100% sure of anything."
--Not about anything? Is Jim certain that he exists? Maybe there's a small chance that he merely imagines that he does, but I doubt that he'd believe that for even a minute.
JR: "It's called, RGREI, Rogers Global Resources Equity Index. It offers diversity of choice for the people wanting to invest in natural resources."
--What are the prospects for coal and oil in the universe of "Atlas Shrugged"? John Galt's plan to put oil and coal producers out of business is moving along nicely, and once he's put the power companies out of business with his strike, he'll be well-positioned to scoop up their distribution networks dirt cheap. It's difficult to see how demand for coal and oil could return to prestrike levels, for Galt's generators don't need them.
DB: "...and nothing is ever as it seems."
‒ No argument there.
Posted by Bionic Mosquito on 04/03/11 12:38 PM
"Central government is an antithesis to Natural Law. It does not work. The founding fathers knew it. They wrote the U.S. Constitution to prevent it. In 1913, their good work was negated with the ratification of the 16th and 17th Amendments. Why does no one point out this fact?"
But Ingo, you point this out regularly! You are certainly someone.
That central government does not work is clear; you will, of course, get no disagreement from me.
That will be the extent of our giddy feelings towards each other today, I am afraid.
The 16th and 17th amendments were not the turning point. I will remind you again the 17th amendment was ratified before the 17th amendment took effect. Yes, a silly statement on my part. But consider it: the states were unable to prevent this 9in your view) great usurpation of power at a time when they held this power of appointing the senate, a power you hold in high esteem for preservation of the Republic. If state appointment of senators was an effective tool for controlling the central state, how was it possible that the states gave up this tool? Either they were forced to do so, unable to prevent it, or too stupid to see the consequences. In any case, it demonstrates the states were effectively neutered already by 1913.
However 1913 gave us the best culprit for the final nail in the coffin, being the Fed of course.
Some might say the turning point came in 1865, or 1861. The states were certainly disabused of any notion of checks and balance by Lincoln.
Others might say 1787. The camel got his nose under the tent.
"They wrote the U.S. Constitution to prevent [central government]."
A few of them might have, I doubt they all felt this way. Many of those same founders, when in later years were in position to check central government, acted in ways only to strengthen it. The Constitution, perhaps, was only a foot in the door to centralized government in the eyes of many who supported its acceptance.
"But whether the Constitution really be one thing, or another, this much is certain " that it has either authorized such a government as we have had, or has been powerless to prevent it. In either case, it is unfit to exist."
Written by Lysander Spooner well before 1913 and quite accurate at the time he wrote it.
Yes, one can say it is up to the people to prevent the government from abuse. This is quite so. The best way to keep a government in check is to not centralize it in the first place; not even for a few so-called limited functions as outlined in the Constitution. The belief that, once given life, it will somehow be kept in check was the most fundamental fallacy of the founders, at least of those few that truly desired a limited government.
Once given birth, central government of even the most limited type will find every avenue available to grow. To believe and expect otherwise is quite naive.
Reply from The Daily Bell
You have put your antenna on the crux of the problem we are having with Mr. Bischoff. We simply do not agree, hypothetically, that one should grant the state a theoretical "pass." Ingo Bischoff is emphatic in his anti-Leviathan rhetoric but then when it comes down to how he would structure society, he is tolerant of endless state intrusions. It leads to faulty historical analysis as well, which is a great shame as he is truly a wonderful economic historian when it comes to Real Bills.
Posted by Bud Wood on 04/03/11 12:20 PM
In answer to your question, "What will the world look like in 10years?": Rogers predicts, "There will be many different governments and many different political parties and unfortunately more destruction from civil wars and outright wars".
In looking back 10 years, there may be a clue as to the progression over the next 10. However, changes will probably be much greater. There seems to be less acceptance of central planning (and central mandates). It follows that the super sized political entities will break. In this regard, note that this astute guy, Rogers, is living in a small city state. One might surmise that he is following his thought toward what may be the trend of the future. Sooner or later, we all may be.
Posted by Ingo Bischoff on 04/03/11 11:52 AM
Jim Rogers provided an interesting interview dealing with the effects of central banking seen throughout the world. He described the economic fallout of central banking practices rather than explain why it occurs.
We are where we are today, because after replacing the USD's fixed gold standard of value in the 1970s with the standard of value of the fluctuating Saudi (OPEC) price of crude oil, which is quoted exclusively in USD/FRN, the quantity of USD/FRN needed to finance the world's energy requirements was decided by the FED central banking system operated by the U.S. Congress and the big money center banks.
After it became impossible to create the sovereign debt obligations (congressional budget deficits) to print and supply the necessary amount of USD/FRNs supported by U.S. taxpayers, California's Prop 13 made it possible to use GSEs like "Freddie" and "Fannie" to circulate "deposit" currency in the form of GSE Bonds worldwide. This worked, because the U.S. made possible the circulation of this type currency in providing an "island" for everybody's exports.
First Japan, then Europe, then China built their currency systems on the same FED central bank model for creating their domestic currency system, having to resort to monetizing real estate values from the outset. Be it the BoJ, the ECB, the BoC or the FED, central government control depends on central banking.
Japan's real estate values collapsed in the 1990s, the collapse of real estate values in the PIGS and the Baltic States is monumental. China has empty high rise building and empty shopping malls galore, and the U.S. is just in the first half of a near total collapse of highly inflated real estate values. Witness the death of central banking. What will take its place? If we cannot agree on this soon, there will be hardship visited upon us which is yet unimaginable.
...and yet, the only talk is about checking inflation.
Central government is an antithesis to Natural Law. It does not work. The founding fathers knew it. They wrote the U.S. Constitution to prevent it. In 1913, their good work was negated with the ratification of the 16th and 17th Amendments. Why does no one point out this fact?
Reply from The Daily Bell
...and yet, the only talk is about checking inflation.
Yes Ingo, because at one point the Japanese palace grounds were worth more than the entire state of California. It was the bursting of the inflationary asset bubble that did Japan in. As far the 1970's rupture with the gold standard goes, for this analysis of yours to work you'd have to explain how the US and the West hit the wall in 1929 with a gold standard in place ....
Posted by Patrick McDonald on 04/03/11 11:42 AM
Always listened to Sir John Templeton and Jim Rogers for over a decade. JIm and George Soros used to run The Quantum Fund. Nothing new to you all. Dealing in facts are more scientific than dealing in myths. JIms ear on the wire is spot on and accurate. Dealing in fact is more accurate math than dealing in fantasies. JIm lives in Singapore and his daughters are learning Manderin. Water is often refered to as The Blue Gold.
Posted by Victor Barney on 04/03/11 11:30 AM
Jim Rogers, I don't doubt that you are a brilliant bussiness man, but China, Russia, India, or any other country that is not from the tribe of "Israel"(including Judah, whose name actually is NOT Israel: Gen. 48:16-will never surpass Israel in civil power and wealth!
It is written that way in the Bible and it is what it is! In fact, man's 6,000 year reign is about over, even though "Eve" is playing the same hand she played 6,000 years earlier called "intellectualizing!"
Did I explain that women naturally are better in verbal skills than men and men are naturally better in physical skills? Well, anyhow, next comes the Islamic caliphate being helped along by the terrorist group called the Chicago weatherman with Bill Ayers and company, who also did do what they promised in the 60's and that is to have put a black Marxist in as President over America, but it will not produce what they expected! That is the Two-Witnesses to punish Israel for 3 1/2 years! Watch! It's called Jacob's trouble! Yes, Obama is the "Anti-Christ"(Head Marxist) of Revelation! Watch!
Posted by Geoff Masen on 04/03/11 11:19 AM
"No, he's not that smart. The IMF is not that smart. They are not smart enough. That's a conspiracy theory that assumes these people could work together. No, he actually believes in what he is doing and he believes he's going to save us all."
Fantastic interview DB. I think this answer is notable and reasonable considering that each players' place in history is yet to be determined. We are witnessing a very serious intellectual failure whether or not Bernanke, Obama, Geithner, and the rest of the team aspire to middle management of the NWO. I think it's important to remember that everyone involved is human.
"Jim may have been reading the Book of Revelations on his water prediction. If I'm not mistaken, Chernobyl is the Russian word for wormwood, meaning bitter water."
Let's hope he wasn't. Let's hope that he and the rest of humanity will work to shape theories around established patterns and facts and not metaphor.