World needs new currency, not dollar: Jim Rogers
Published on Friday, March 19th, 2010 at 6:04 PMAuthor: onlinecommoditycalls (1958 Articles)
LONDON : Illustrious commodities investor Jim Rogers says the US dollar is a much flawed currency and therefore the world needs the emergence of some alternative currency something like the Euro.
In an interview to the King World News, Rogers who shifted from the US two years back to settle down in Singapore, said that Euro despite all its present ongoing troubles may survive for longtime. But he said America continues to the world’s biggest debtor nation and the dollar is a much maligned currencies these days.
“America is not the country it was in the 1930s. The safety valves that have existed in the past are no longer there. America has gone from the world’s largest creditor nation to the largest debtor nation in history. Today we have much more of an entitlement, “you owe it to me,” mentality, and people’s work ethic has greatly deteriorated. People like this are much more likely to be unhappy and try to do something about it,” Rogers said.
Jim Rogers had not much good to say on the future of pound. “The pound sterling’s outlook is not good. The UK has huge, huge debt. The City of London financial center is badly damaged and politicians are trying to kill the goose that laid the golden egg by increasing taxes so much that it will drive out the remaining banks. In a few years we will look back and be shocked at how far the pound has come down,” he said.
He said the euro, although in trouble, will most likely survive its current stresses. They will either paper over the problem, which will cause a sigh of relief, or they will let Greece default, which will show investors that Europe wants a sound currency.
”Longer term, however, the euro, in its current form, will not survive. The eurozone has expanded too much too fast. Most of the countries do not bring much to the party. As things get tougher, the odds are that some countries will leave the eurozone,” Rogers pointed out.
”The EU, however, is a fabulous concept. The world desperately needs the euro, or something like it, because the dollar is such a flawed currency,” he said.
Rogers said with the United States and the European Union in economic trouble and showing few signs of recovery, the whole world can’t help but be affected. China’s economy is a bit of a dichotomy. Some aspects of the economy are in a major bubble that is still inflating, especially coastal real estate. However, some sectors, like those dependent on exports to America, are struggling.
U.S. investment bank Goldman Sachs is getting bad press for its role in helping Greece hide its bad debt. Along with Greece, many other countries, such as Italy and France, are also keeping two sets of accounting books. The official set is doctored so that the countries can comply with the rules of eurozone membership.Although Greece is in the spotlight right now, America keeps two sets of accounting books too. You can look back at any period of American history and find many, many cases of phony bookkeeping, both at the government level and corporate level. “This is just the way the world has always worked.”
However, you can’t keep hiding financial problems forever. When these countries start to collapse, voters will be furious—and justifiably so. People are already very unhappy in California, Virginia, New Jersey and elsewhere. If things keep getting worse, social unrest will escalate. History shows that when standards of living dramatically fall, social unrest results.
Rogers said two bubbles that could eventually pop are Chinese coastal real estate and long-term U.S. treasuries.
”Another potential crisis brewing is a food shortage. There is a shortage of farmers around the world, not to mention fertilizer, seeds and farm equipment, especially tractor tires. Food prices are unbelievably depressed,” Rogers added.
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