Thread: Jim Rogers: US Stagflation Will Be Worse Than '70s

Jim Rogers: US Must Brace for Nasty Stagflation

Friday, 14 Oct 2011 08:09 AM
By Forrest Jones

Stagflation is getting ready to strike the U.S. economy, and it will be worse than it was in the 1970s, says international investor and commodities champion Jim Rogers.

Rogers' call for stagflation, a period in which consumer prices rise while the economy contracts, differs from others who see the U.S headed for what's known as a balance sheet recession, where the economy tanks but prices don't soar and is largely a time when businesses and individuals pay off debts.

Loose monetary policies designed to kick-start growth and hiring are having more inflationary impacts that governments will admit, which will hurt bond prices, Rogers says.

"As the inflation numbers get worse and as governments print more money and as governments have to issue many, many more bonds — somewhere along the line we get to the point when (bond prices) go down," Rogers tells CNBC.

"I wouldn't advise anybody to buy bonds, I would advise you to sell bonds," Rogers says.

"If I were a bond portfolio manager, I would get another job."

"In the 70s you didn't make much money in stocks, you made fortunes owning commodities," Rogers adds.

The Federal Reserve, meanwhile, says it may roll out more accommodative monetary policies if it feels inflation rates will fall, normally a sign that growth is ebbing and the opposite of what Rogers predicts.

"It is something that we're going to be watching very carefully," Fed Chairman Ben Bernanke said recently, according to Reuters.

"If inflation falls too low or inflation expectations fall too low, that would be something we have to respond to because we do not want deflation."

http://www.moneynews.com/StreetTalk/Rog ... /id/414442

Jim Rogers Sees Devastating Stagflation, Would Quit If He Was A Bond Portfolio Manager

Submitted by Tyler Durden
10/14/2011 19:04 -0400
Comments: 129 / Reads: 7,935
several links on this post

Now that we already had one notorious bond bear in the house with a late afternoon appearance by Bill Gross, who in a very polite way, apologized and said that while he may have been wrong in the short-term, he will be proven correct eventually, it is now time for the second uber-bond bear to make himself heard. In a CNBC interview with Jim Rogers, the former Quantum Fund co-founder, who back in July said he was had shorted US Treasurys, exhibited absolutely no remorse, instead reiterated a 100% conviction in his "bond short" call: "Rogers said when there is a bubble, such as the one being experienced in U.S. Treasurys, prices could go up for long periods of time. Bill Gross of Pimco, who also had a bearish view on Treasurys, threw in the towel earlier this year. But Rogers is sticking to his opinion that Treasurys will eventually fall. "Bernanke is obviously backing the market again and the Federal Reserve has more money than most of us - so they can drive interest rates down again. As I say they are making the bubble worse." The reality is that while Bill Gross has to satisfy LPs with monthly and quarterly performance statements (preferably showing a + sign instead of a -), the retired and independently wealthy Rogers has the luxury of time. And hence the core paradox at the heart of modern capital market trading: most traders who trade with other people's money end up following the crowd no matter how wrong the crowd is, as any substantial deviation from the benchmark will lead to a loss of capital (see Michael Burry) even if in the longer-term the thesis is proven not only right, but massively right. Alas, this means most have ultra-short term horizons, which works perfectly to Bernanke's advantage as he keeps on making event horizons shorter and shorter, in the process killing off any bond bears which unlike Rogers can afford to wait, and wait, and wait.

On whether the US is becoming a deflationary Japanese-style basket case:

"A difference is when Japan did that they were the largest creditor nation in the world, America is the largest debtor nation - not just in the world - but in the history of the world and the U.S. dollar has been - and is the world's reserve currency. So there are some factors that might not keep the interest rate down in the U.S.

Ok, so no deflation. What then?

The U.S. economy is likely to experience a period of stagflation worse than the 1970s, which would cause bond yields to spike, commodity bull Jim Rogers told CNBC on Friday in Singapore. Rogers said governments were lying about the inflation problem and the recent rally in Treasurys was a bubble.

"As the inflation numbers get worse and as governments print more money and as governments have to issue many, many more bonds - somewhere along the line we get to the point when (bond prices) go down."

Between 1974 and 1978 average inflation in the U.S. was at 8 percent, while unemployment hit a peak of 9 percent in May 1975. Currently, unemployment is at 9.1 percent while CPI is at 3.8 percent.

"This time is never different" and why the mother of all stagflations is coming soon:

Rogers believes inflation will get much worse this time because, he
said, in the 1970s only the Fed was printing money, whereas now many
global central banks have been easing monetary policy.

So yes: he will be right eventually... But what about in the interim?

"Bernanke is obviously backing the market again and the Federal Reserve has more money than most of us - so they can drive interest rates down again. As I say they are making the bubble worse."

For now though Rogers is playing it safe and avoiding bonds. Instead, he's betting on stagflation by being long commodities and currencies (such as the Chinese yuan) and shorting stocks.

Rogers even has some career advice for up and coming bond mavens:

"I wouldn't advise anybody to buy bonds, I would advise you to sell bonds," he said. "If I were a bond portfolio manager, I would get another job."

Ok, well, make that anti advice.

As to where the money will be made...

"In the 70s you didn't make much money in stocks, you made fortunes owning commodities," Rogers added.

http://www.zerohedge.com/news/jim-roger ... io-manager

I never take advice from an enemy,like these rich NWO jerks.
What I'm hearing is 'share the wealth'.
These people who turned capitalism into a democratic ponzi scheme are liars and against our right to prosparity.
Many are stocking up gold,well they took it before and they will take it again.
Agenda 21 proves this.Anyway if theres nobody selling anything what good will old do .