Investor extraordinaire Jim Rogers has harsh words for the government’s interventionist economic policy.
That policy, which he dates back to the Bush administration, verges on communism, he told Moneynews's Dan Mangru in an interview.
“America now owns the car industry. America owns the mortgage industry. America owns a lot of the insurance industry,” Rogers said.
“Karl Marx must be somewhere standing up in his grave cheering.” And why is that? “America has become a socialist and maybe even communist nation in many ways,” Rogers said.
In Asia, by contrast, “they’re not doing that. In Asia, they’re getting rid of state and government ownership,” he said.
As for stimulus, Rogers said that President Bush approved two packages, President Obama one, and now there’s talk of a fourth.
“The first stimulus didn’t work. The second stimulus didn’t work. The third stimulus hasn’t worked,” he said.
“They’ve been doing the wrong thing for over two years. Nothing has worked. I don’t know why they think this is going to work. This is going to make things worse, too.”
Rogers said that Japan implemented a huge stimulus in the 1990s. “It didn’t work in Japan, and Japan was a creditor nation… It’s not going to work for us, either.”
Treasury Secretary Tim Geithner, former Federal Reserve Chairman Alan Greenspan and White House economic adviser Larry Summers “used to say to the Japanese: ‘You’re doing it wrong. This approach isn’t going to work,’” Rogers said. “We’re doing exactly the same thing.”
Rogers isn’t too happy with the massive monetary easing the Fed has engineered under Chairman Ben Bernanke, either.
“Printing money has been tried many times throughout history in many countries,” he said. “It has never worked in the long term; it has never worked in the medium-term. Occasionally, it has worked in the short term.”
Still, he says, “Printing money is going to lead to serious problems down the road.”
The amounts involved are staggering, Rogers said. “They’ve already injected huge amounts of money into the system. The Fed has more than tripled its balance sheet in the past year or so.”
The federal government “has increased its own debt by four, five, six times,” he said.
“We don’t know much, because they took over Fannie Mae, AIG and the rest of them who had huge debts, which we are now responsible for,” he said.
Rogers scoffs at the conventional wisdom of diversification. “If you are a successful investor, and if you’ve made a lot of money, then maybe you’ll think about diversification,” he said. “But if you want to make money, if you want to build a fortune, you don’t diversify. You find the right horses, you back those horses, and you watch those horses very carefully.”
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