Tags: Jim Rogers | Alan Greenspan | Federal Reserve | Lehman Brothers

Jim Rogers: Fed Has No Clue, Will 'Ruin Us All'

By    |   Thursday, 30 March 2017 11:59 AM

Jim Rogers, the chairman of Rogers Holdings who once criticized former Federal Reserve Chair Alan Greenspan’s loose credit policies for creating serial asset bubbles, says the central bank will “ruin us all” trying to solve economic problems by encouraging more debt.

“The central bank of America has no clue as to what it is doing,” he told newswire Bloomberg News. ”Interest rates are at levels we have never seen in history.”

The Fed this month raised interest rates for the third time in the past 10 years on signs that the jobs market was improving and inflation was near its 2 percent target. The central bank had cut its target rate to nearly zero percent as the 2008 financial crisis erupted with the bursting of a massive real estate bubble in the U.S.

Rogers said the U.S. should have allowed poorly run companies to go bankrupt as a way of building a stronger foundation for economic growth. Investment bank Lehman Brothers Holdings Inc. in 2008 filed the biggest bankruptcy in history, while other banks like Merrill Lynch were saved through government-supported acquisitions by even bigger banks.

“Propping up zombie banks is not the way the world is supposed to work,” Rogers said. “Had we taken the pain in 2009 or 2010, by now things would be great. If you take the pain, you clean out the mistakes and you start over and then things boom.”

He acknowledged that U.S. economy would have suffered several years of major distress as weaker companies disappeared, but the experience of regions like Scandinavia in the 1990s showed that markets do recover from crisis.

The Fed’s easy-money policies haven’t restored strong economic growth, Rogers said, but they have encouraged governments and corporations to take on record levels of debt. The U.S. federal debt almost doubled to about $20 trillion during President Barack Obama’s eight years in the White House.

“We do not have much to show for it except staggering amounts of debt worldwide,” Rogers said. “And many pension plans are going broke.

Janet Yellen has overseen the Fed since 2014, and her term ends on Feb. 1, giving President Donald Trump an opportunity to appoint a new chairman.

Weak economic growth is also leading to a rise in populist movements like last year's U.K. exit from the European Union and Trump's presidential victory on campaign promises to promote jobs growth with tax cuts and spending on roads, bridges and airports.

“What do we have now, strange elections because no one is happy? Everyone in the world, whether it is Europe or Asia, we know something is wrong and we are trying to figure out what to do,” Rogers said “Maybe the solution is Donald Trump. Some people think that is not a solution, but a problem. Many people in the world know something is wrong but they do not know what to do so they take it out on politicians.”

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Jim Rogers, the chairman of Rogers Holdings who once criticized former Federal Reserve Chair Alan Greenspan's loose credit policies for creating asset bubbles, says the central bank will "ruin us all" trying to solve economic problems by encouraging more debt."The central...
Jim Rogers, Alan Greenspan, Federal Reserve, Lehman Brothers
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2017-59-30
Thursday, 30 March 2017 11:59 AM
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