The U.S. economy is in such terrible shape that the Federal Reserve will have to implement another round of quantitative easing (QE3), says legendary investor Jim Rogers.
But that’s not what they’ll call it, he tells RT (Russia Today) Television.
The Fed’s QE2 program will end as scheduled June 30, because the central bank has committed itself so strongly to that date, Rogers says.
(Getty Images photo)
“But when thing start to get worse again, you’re going to see them come back with QE3,” he argues. “They may not call it that. They may call it ‘cupcakes.’ Who knows what they’ll call it, but it’s coming back.”
As for the government’s debt burden, Rogers says Treasurys will pay the price for Washington’s failure to deal with it.
“Sooner or later – probably within the next couple years – you’re going to see people stop buying U.S. government bonds. They will stop lending money to us,” he maintains.
“You’ll see interest rates go a lot higher. You’ll see turmoil in currency markets, in all financial markets and therefore all real markets – shops, companies, factories. Everything will be affected.”
Many experts agree with Rogers about QE3.
“The bond market is going in one direction, which is up, telling you quite clearly the direction of economic travel is downward,” Simon Maughan, co-head of European equities at MF Global, tells CNBC.
“QE3 is coming. The bond markets are all smarter than us, and that’s exactly what the bond markets are telling me.”
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