Saturday, June 2, 2018

Jim Rogers Worries About Exploding Debt With Rising Interest Rates

Exploding debt around the world

Kim: You’ve often talked about the explosion of debt in markets. Can you tell me some more of your thoughts on that?

Jim: Well, Kim, as you know, debt worldwide has boomed in the past 30 years, but especially in the past 10 years. In 2008, the world had a big problem because of too much debt. Since 2008, the debt has skyrocketed everywhere. And so the next time we have a problem, it’s going to be a doozy. I mean, the Federal Reserve alone in Washington, its balance sheet is up by 500 percent in 10 years. It’s staggering what’s been going on in the world. No matter where you look.

In 2008, China had a lot of money stored for a rainy day. It started raining, China started spending the money and helped rescue the world. But even China has a lot of debt now. You’re going to see bankruptcies in China the next time the world comes to an end. And that’s going to surprise a lot of people… it’s going to surprise me, and I know it’s coming. I’m telling you, it’s coming. But it’s going to surprise a lot of us, and that’s just going to make the bear market even worse.

The looming trade war

Kim: What are your thoughts about the U.S.-China trade war?

Jim: Mr. Trump for many years has been keen on trade wars, so it seems to be in his soul, in his psyche. He said that trade wars are easy and are good. That’s totally inaccurate. But it doesn’t matter, he’s the president and even if he has wrong information, which most politicians do, he will do what he can get away with. And so he wants trade wars, the people around him that he keeps bringing in, they’re all keen on trade wars. Nobody has ever won a trade war, but they don’t know that. And if they know that, Mr. Trump thinks he’s smarter than history, he can control history. I don’t think he is, but we’ll find out.

If it happens, then when the problems start coming, it’s going to be worse than any of us can imagine. It’s not going to be good.

You’ve seen previous trade wars, nobody has ever won. They’ve never helped anybody. Maybe some in the short term. But even when trade wars help some people, they hurt other people even in the same country. So they may happen. If they happen, you’re going to have a lot of readers because everybody’s got to know what to do. You have job security because somebody has to report it and somebody has to tell us what to do.

- Source, Value Walk