Class News

Jim Rogers '64: Debt will lead to catastrophic recession; Trump will ramp up trade wars

Japan Times

February 21, 2019

Prominent investor Jim Rogers '64 has a new book out that paints a grim future for Japan, and also warns that the worst economic recession of his lifetime is just around the corner. See the video, then read more below.

Rogers, the 76-year-old chairman of Rogers Holdings Co. Inc., recently gave an interview with the Japan Times where he said the United States and China will soon reach a new trade agreement, which should send markets and trade soaring. But the good times will be short-lived, according to Rogers.

The reason, Rogers says, is because U.S. President Donald Trump will ramp up trade wars again in earnest in an attempt to boost his 2020 reelection bid as the U.S. economy slows down to recession levels.

“Later this year or next, when things are getting bad in the world economy — therefore America is going to start suffering — and Mr. Trump has an election in 2020, he is going to say, ‘We got to bash these guys,'” Rogers told the Japan Times. “That’s when Japan, China and other people are going to feel more effects of trade wars because he thinks it will help him win the election.”

Rogers is in Japan this week promoting his book, “The Future of Japan and the World That Will Be Read Through the Flow of Money.”

Per the Japan Times:

In the book, he foresees a catastrophic economic downturn within a year or two due to the “unprecedented” level of debt worldwide. The Institute of International Finance reported that global debt soared to $247 trillion in the first quarter of 2018, and Rogers said debt has increased by $75 trillion, or 43 percent, since 2008.

Rogers also portrays a stark future for Japan in the book, pointing to mounting debt, a rapidly dwindling population and a reluctance to embrace immigration.

Rogers also took a shot at central banks the world over for the practice of excessively printing money — quantitative easing — during an economic downturn, calling the practice “lunacy.”

Jim Rogers is one of the most successful investors of all-time, delivering returns of 4,200 percent to investors via his Quantum Fund during the 1970s before retiring in 1980.

So when he shared his “script” for the end of the “melt up” and the beginning of the “melt down” with Daily Wealth writer Steve Sjuggerud, people take notice.

A little background info on Rogers, who is a libertarian and "equally at home bashing both sides of the aisle," per Daily Wealth:

Jim’s decade-long track record as a fund manager is probably the best of anyone alive – and possibly the best of anyone, ever.

With a 4,200% track record, you know that Jim looks ahead at all of the possible economic and political outcomes – and their investment implications. He tries to determine the most likely outcome… and how to profit from it.

So when Jim shared how he thinks the Melt Up – the final blow-off top of this historic bull market – might play out from here, I was eager to listen.

Rogers says the end of the melt up — the last gasp boom of the bull market — will begin and end with President Donald Trump’s trade war with China.

Sjuggerud says Rogers picks on Trump a bit in his melt-down script, “but please, don’t dismiss him as some nutty socialist. He is for less government intervention, and with that, less protectionism.”

What I expect to happen is, somewhere along the line, Mr. Trump or somebody is going to say, “OK. We solved the [trade war] problem.” Whether they have or not, they’re going to say they’ve solved the problem.

That may lead to your Melt Up. Everybody’s going to say, “OK. We’re safe. We’re safe. That guy Steve was right. We’ll have a gigantic last move in the market.”

Then, when things do start going wrong for real… then we’re going to have the real trade war.

If Trump comes in at that point and says, “We’re going to show them I’m smarter than they are. We can beat them, and we will beat them.” Be worried. Be very worried. Nobody’s ever won a trade war…

That may lead to your Melt Up and then your total collapse. I told you the next bear market’s going to be the worst in my lifetime. That would be what’s going to do it.

Sjuggerud goes on to say he believes “we still have plenty of time — and plenty of upside potential” — before the bear market takes hold. Investors are spooked right now because of the trade war, especially considering Monday’s announcement that more tariffs are likely inbound.

So what does this mean for your money today?

In short, you don’t want to miss out on the Melt Up because you’re worried about the Melt Down.

The biggest gains will happen when everyone finally feels safe… and the euphoria kicks in.

We still haven’t seen this yet. And we need to take advantage while everyone is still afraid of the markets. That means owning the tech and biotech names that have tended to soar in the past during major Melt Up booms.

The Melt Down will get ugly… But we’re not there yet.