Jim Rogers: Major Crash Ahead For U.S. Investors

MoneyMorning ^ | 25 February 2013 | Terry Weiss

[Lorianne]

Despite the current stock market rally, legendary investor Jim Rogers say the U.S economy is poised for a major crash and is warning investors to protect themselves immediately.

In a riveting interview on Fox Business, Rogers warned Americans not to trust any of the positive economic news coming from world governments.

"I don't trust the data from any government, including the U.S., Rogers said. "We know that governments lie to us. Everybody's printing money, but it cannot go on. This is all artificial."

Rogers, who for years has been an outspoken critic of the Feds policies of "Quantitative Easing" says all the money printing is creating false hope that we are in the middle of some kind of super bull market.

But in reality, he says, "we're living in a fool's paradise."

"The Bank of Japan says it's going to print unlimited amounts of money... Then Mr. Bernanke said I'll match that... I'll print that money too. The Europeans are catching on. You've got money printing going on everywhere and that has never been good for anybody," Rogers said.

Currently, Bernanke and company at the U.S. Fed is buying $1 trillion of Treasury and housing agency bonds each year. That's about $85 billion per month against a budget deficit that is about the same level.

The real risk right now is an all-out 1930s-style currency war that could devastate an entire class of investors who have put their faith in the current economic dogma of endless bailouts and money printing

"It cannot go on," Rogers warns.

[1010RD]

Japan and the US are both serving the best interests of moneymen. They're using public funds and debt which means future taxes to prop up a system that benefits the few at the expense of the many.

If instead they allowed the market to work an equilibrium would have be found naturally. It would have caused short term pain and we'd see several banks, shareholders and bondholders get wiped out, but that's the free market. Instead they're stealing from the future so that we get out of deflation.

The history of pre-Fed deflations is that prices and wages both drop. Eventually a bottom occurs and the economy grows again. Deflation isn't ever a permanent spiral and there's no historical precedent of perpetual deflation. Nothing ever would be valued at zero. It's absurd and you've been taught this by egghead economists who use a thought experiment to simulate reality.

What would really happen in the face of deflation? If someone told you your house was worth zero dollars what would you do? If the deflation we see in electronics occurred across the entire economy why would that be a bad thing for Americans? Productivity driven deflation is a good thing. Government stands in the way. Doing nothing would have been better.

Take a look at clearing houses and the history behind them. Also, we need to break the monopoly of the US Treasury on money printing. Deflation can be good, very good.