Jim Rogers is not convinced the $700 billion rescue plan will solve the financial crisis. In fact, it will do just the opposite, he says.
Speaking on CNBC, Rogers warned that the current rescue plan, which will force government to issue more debt, print money, and flood the markets with liquidity, will wind up feeding inflation after the crisis is over and consequently create worse problems.
"We're setting the stage for when we come out of this massive inflation holocaust," he said.
A better way to solve the financial crisis is to let people go bankrupt, Rogers said.
"Then you will hit bottom, and then you start over. The people who are sound will take over the assets from the people who aren't sound, and we will start over. This is the way the world has worked for a few thousand years."
Why haven't the markets responded to the various efforts the government has taken to remedy the situation? It comes down to lack of confidence.
"Markets do not trust the government's plans to keep struggling banks alive, and investors will only calm down when the companies with bad assets are allowed to go bankrupt," Rogers explained.
Rogers also doesn't think the G7 leaders meeting in Washington, D.C. will find a solution to quell the crisis.
Alistair Darling, Britain's Chancellor of the Exchequer, said, the G7 need to demonstrate that governments of the largest economies in particular are prepared to act.
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