Tags: Rogers | US | Japan | markets

Jim Rogers: ‘Race To Insanity’ Producing ‘Artificial’ Market Gains

By Michelle Smith   |   Wednesday, 24 Apr 2013 01:32 PM

With central banks printing like never before, legendary investor Jim Rogers warns that markets and economies are likely to get hurt in the aftermath.

“This is the first time in recorded history where nearly all the central banks in all countries are pumping out lots of money, debasing their currencies, printing money. I've never seen this in history, and now we've got everybody — or nearly everybody — doing it,” he told Money Morning.

Japan's central bank dominated headlines when it announced an unprecedented stimulus program that devalues the yen. This action was said to be an effort to battle deflation.

Editor's Note:
Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

Central bank policies that weaken national currencies are seen as competitive. When other nations do not follow suit, they essentially become less competitive because a weaker currency results in cheaper exports.

Countries’ efforts to competitively weaken their currencies is commonly called the race to the bottom.

Rogers told Money Morning that instead it is a “race to insanity.”

While the gains in the U.S. and Japanese stock markets may be euphoric now, Rogers warns that they are “artificial” and likely to lead to pain.

“The central banks are determined to keep printing money. But, underneath that, eventually there are going to be more and more skeptics. I'm not going to be the only one. And more and more people will start heading for the door. And by the time they stop, printing the damage may already have been done to the markets,” Rogers noted.

But similar statements have often raised the comeback question — when will the stimulus stop? Many argue that there is little reason for investors to be concerned about that now if it will happen much later.

Even Rogers admits that though the market gains are artificial, the bubble may not burst anytime soon. Investors could continue to see soaring markets for some time.

Central banks’ policies could cushion any sell off, he explained to Money Morning. But ultimately, the ending is still a bad one — the results of that type of distortion could be a “slow-speed crash,” not only for the markets, but also for the broader economies.

Editor's Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

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