The U.S. dollar is a terribly flawed currency. I’m trying to get all of my money out of U.S. dollars. I don’t know why anybody would put money into the U.S. dollar, and by extension into the U.S., as we stand here today. The U.S. is probably the largest debtor nation the world has ever seen!
The United States’ foreign debts are increasing at the rate of $1 trillion U.S. dollars every 15 months. U.S. foreign debt is over $13 trillion, and rising rapidly. It’s the official policy of the central bank to debase the currency. They’re trying to drive down the value of the dollar.
Q: The government has succeeded wildly, so far.
Rogers: You haven’t seen anything yet!
They’re trying to drive down the dollar. I’m trying to be patriotic. I’m trying to sell dollars. That’s what they want. I’m trying to help them drive down the value of the currency.
All Americans should. There are certainly probably good reasons to put some money in dollars. For instance, if you have to buy cotton, you have to have dollars.
But for the most part - I, anyway - am joining other people who’re trying to avoid the U.S. dollar, because Washington has sent a very clear signal: “We want the dollar to decline. We’re gonna do our best to make it decline.”
Well, everybody has to make their own decision. I’m trying to do what the Federal Reserve wants me to do, and I’m selling dollars.
Q: My take is that former Fed Chair Alan Greenspan and current Fed Chairman Ben S. Bernanke may go down as the worst central bank chairmen in history. Do you see it differently?
Rogers: [Bernanke] and Greenspan together will probably bring [about] the end of the Federal Reserve. We’ve had two central banks in America that failed. This third central bank will probably fail, too, because of Bernanke and Greenspan.
The Federal Reserve last week put $200 billion more onto its balance sheet of mortgages. Now I don’t know how big they can expand their balance sheet, but if they keep doing it, there’s only so much - [and] they just bought Bear Stearns.
There’s just so much they can do. Maybe that balance sheet is infinite. I doubt it. And it can be said to be infinite; they just print money like Zimbabwe or someplace. But that has to come to an end, eventually.
Maybe Bernanke is going to get into his helicopter and fly around collecting rents now. Maybe when they repossess all the property, he’s going to be the rent collector. But then when they eventually take on all the car loans, I guess he’s going to be collecting car payments, too. And credit card debt, when they take over all the credit card payments, I guess he’ll be hauling us all out saying: “Your credit card’s overdue.”
This is insanity.
Q: Is there a circumstance under which you could see the U.S. recovering, or do you think this country is doomed to be an economic also-ran?
Rogers: Historically, nations that have gotten themselves into this kind of situation have only gotten out following a crisis or a semi-crisis, or some gigantic stroke of luck.
The U.K. got out because they discovered the North Sea. Now you give me the largest oil field in the world, or one of the largest oil fields in the world, I’ll show you a good time, too.
So if you have a stroke of luck [you can escape these kinds of problems], but otherwise, nobody’s ever sorted out these problems without some kind of gigantic crisis or semi-crisis first.
In America, most people do not understand there is a problem! The few who know there’s something going on don’t understand what it is. Most of them who understand it actually think it’s good that the currency’s declining. America’s not going to do anything until things get very, very bad.
Others that offer the rejoinder to this - that the declining dollar makes America competitive - [that] has worked in the short term. But no country has ever restored itself by debasing its currency, not in the long term, not even the medium term.
Many places have tried to debase their currency as a solution. It’s never worked, other than maybe in the short-term, for a while.
Q: Are we looking at a Japanese-style lost economic decade?
Rogers: The Federal Reserve is making the same mistakes that the Japanese made. They’re trying to say: “We won’t let anybody fail. We’ll print a lot of money. We’ll drive interest rates to zero. And we don’t want anybody to fail. We’ll put on as many Band-Aids as we have to.”
Well, putting Band-Aids on a cancer patient is not a good solution.
So whether it’s like the ’90s in Japan, or the ’70s in America, remains to be seen.
[One-time U.S. Federal Reserve Chairman] Arthur Burns, who headed the central bank in the ’70s, did exactly what Bernanke’s doing. He raced in and printed money and said: “Oh, everything’s gonna be OK.”
But the economy never recovered, inflation went through the roof, and the dollar was under duress. Eventually they had to bring in Paul Volcker and interest rates went over 20%. And eventually they killed inflation and they solved the problem.
They’re making exactly the same mistakes that Burns made. For whatever reason, though, this problem is going to last longer than previous difficulties in America. And it’s probably going to be worse.
Because, now, America is a debtor nation. Now we’re the largest debtor nation in the world. At least in the ’70s, we were still a creditor nation. Japan could survive because they were the largest creditor in the world at the time. So they didn’t fall off the face of the earth.
America’s now the largest debtor the world has ever seen. What’s happening in the U.S. is not going to be fun.
