Federal Reserve has already started QE3, says investor Jim Rogers

Veteran US investor Jim Rogers believes the Federal Reserve has already launched a third round of quantitative easing, despite chairman Ben Bernanke failing to mention stimulus measures in his Jackson Hole speech last week.

By Andrew Trotman

Mr Rogers, who co-founded the Quantum Fund with George Soros, believes that America's central bank is secretly printing money to avoid "getting egg on their face again" after previous attempts to kickstart the faltering economy with $2 trillion of QE failed.

"I do not know if they [the Fed] will announce it," he told India's Economic Times. "I know they are going to print more money. They already are. If you look at their balance sheets, you will see that something is happening, assets are building on their balance sheets and they are not coming from the tooth fairy.

"They are a little bit embarrassed because they announced QE1 and QE2, and it did not work. So they may try to discuss it. They may just continue to do it without getting egg on their face again, but they are going to print money, they are all going to print money. It is the wrong thing to do, but that is all they know how to do."

He told the Daily Telegraph: "They probably have learned how to do things off balance sheet. I have nothing to confirm this but everyone else has learned how, so they probably have too. This is just a comment on human nature."

Mr Bernanke said in his annual speech at Jackson Hole on Friday that the country's high level of unemployment - it climbed to 8.3pc in July - is a "grave concern" and that the "economic situation remains far from satisfactory".

The US's plight is echoed across the Western world as the eurozone grapples with its own debt crisis that threatens to see Greece leave the single currency. Spain and Italy are also struggling with recession as austerity measures championed by Germany eat away at growth.

And Mr Rogers believes there is no end in sight to the eurozone's problems.

"There are going to be more problems coming out of Europe," he said. "You have got countries that are essentially bankrupt. Nobody is dealing with the problems in Europe. You look at everyone out there. They all have higher debts and all of their projections, maybe Bulgaria and one or two more countries do not have higher debts in their projections, but everybody has got increasing debt. The solution to too much debt is not more debt."

As turbulence rocks Western stock markets - the Euro Stoxx 50 index is down 3.1pc from its year-high in March after falling 18.8pc - investors have turned to emerging markets such as Asia for returns. However, Mr Rogers - whose Quantum portfolio gained 4,200pc in the 10 years to 1983 as the S&P advanced about 47pc - says the East has major problems of its own.

"I doubt [India can overcome its sluggish growth]. The debt to GDP in India is now more than 90pc. Study shows that when you get that high debt ratio, it is very difficult to grow in a dynamic way... India has inflation for its own reasons... I am not a fan of India. In fact, I am short on India."

Even China, which has enjoyed double-digit growth in recent years, is at risk from a financial crisis as the government seeks to cool the economy. Chinese manufacturing fell to a three-year low on Monday in a further sign China is headed for a "hard landing".

"China tried tightening for three years," Mr Rogers added. "It started back in 2009 or so to try to kill the inflation bubble and the property bubble. Rightly so in my view. Now they are starting to loosen up. I would not loosen up yet if I were China because they need to kill inflation totally and they need to totally pop the property bubble. But I am not China. They are going to do what they want to do."

With the eurozone crisis spreading to all corners of the globe, traditional safe havens have come to the fore. The gold price, for instance, traded above $1,900 an ounce last year but is now around $1,689. However, Mr Rogers believe this will start to rise again once governments are forced into restarting stimulus measures.

"Unfortunately, all central banks know to do is to print money. You are going to see more money printing, more debasement of currency and, therefore, the price of gold will go much higher over the course of the decade... The situation with gold is that it has been up 11 years in a row without a down year, which is extremely unusual."

Another commodity that is predicted to rise is oil, as supply issues and potential wars push the price ever higher.

"The surprise with oil is going to be how high it stays and how high it goes," Mr Rogers said. "We are running out of known reserves of oil. There may be a lot of oil in the world. If there is, we just don't know where it is. So prices are going to stay high and go much higher. If America goes to war with Iran, they are going to skyrocket."

Mr Rogers recommends buying oil if the price crashes on a country such as Spain leaving the eurozone.

Jim Rogers: It's Going To Get Really "Bad After The Next Election"

By Terry Weiss, Money Morning

In a riveting interview on CNBC, legendary investor Jim Rogers warned Americans to prepare for "Financial Armageddon," saying he fully expects the economy to implode after the U.S. election.
 Rogers, who for years has been an outspoken critic of the Feds policies of "Quantitative Easing," says the world is "drowning in too much debt." He put the blame squarely on U.S. and European governments for abusing their "license to print money." In the U.S. alone, the national debt has surged to nearly $16 trillion, that's more than $50,000 for every American man, woman and child.
 "[They] need to stop spending money they don't have," Rogers said. "The solution to too much debt is not more debt... What would make me very excited is if a few people [in the government] went bankrupt..." Rogers added.

 Rogers also charged Obama and German Chancellor Angela Merkel with promoting dangerous policies that create the illusion the economy is stable... but are really only intended to buy time before their upcoming elections.

And according to these experts - who have presented their findings to the United Nations, the UK Parliament and a long list of world governments - the catastrophe may happen well before Americans hit the polls in November.

 "What this pattern represents is a dangerous countdown clock that's quickly approaching zero," said Keith Fitz-Gerald, the Chief Investment Strategist for the Money Map Press, who predicted the 2008 oil shock, the credit default swap crisis that helped bring about the recession, and the Greek and European fiscal catastrophe that is still wreaking havoc until this day.

 "The resulting chaos is going to crush Americans."

Another member of this team, Chris Martenson, a global economic trend forecaster, former VP of a Fortune 300, and an internationally recognized expert on the dangers of exponential growth in the economy, explained their findings further:

 "We found an identical pattern in our debt, total credit market, and money supply that guarantees they're going to fail," Martenson said. "This pattern is nearly the same as in any pyramid scheme, one that escalates exponentially fast before it collapses. Governments around the globe are chiefly responsible."

 "And what's really disturbing about these findings is that the pattern isn't limited to our economy. We found the same catastrophic pattern in our energy, food, and water systems as well."
 According to Martenson, these systems could all implode at the same time.
"Food, water, energy, money. Everything."

Dr. Kent Moors, one of the world's leading energy analysts, who advices 16 world governments on energy matters and who currently serves on two State Department task forces on energy, also voiced concerns over what he and his colleagues uncovered.

 "Most frightening of all is how this exact same pattern keeps appearing in virtually every system critical to our society and way of life," Dr. Moors stated.

"It's a pattern that's hard to see unless you understand the way a catastrophe like this gains traction," Dr. Moors says. "At first, it's almost impossible to perceive. Everything looks fine, just like in every pyramid scheme. Yet the insidious growth of the virus keeps doubling in size, over and over again - in shorter and shorter periods of time - until it hits unsustainable levels. And it collapses the system."
 Martenson points to the U.S. total credit market debt as an example of this unnerving pattern.

"For 30 years - from the 1940s through the 1970s - our total credit market debt was moderate and entirely reasonable," he says. "But then in seven years, from 1970 to 1977, it quickly doubled. And then it doubled again in seven more years. Then five years to double a third time. And then it doubled two more times after that.

"Where we were sitting at a total credit market debt that was 158% larger than our GDP in the early 1940s... By 2011 that figure was 357%."

Dr. Moors warns this type of unsustainable road to collapse can be seen today in our energy, food and water production. All are tightly connected and contributing to the economic disaster that lies directly ahead.

According to polls, the average American is sensing danger. A recent survey found that 61% of Americans believe a catastrophe is looming - yet only 15% feel prepared for such a deeply troubling event.

Fitz-Gerald says people should take immediate steps to protect themselves from what is happening.
"If our research is right," says Fitz-Gerald, "Americans will have to make some tough choices on how they'll go about surviving when basic necessities become nearly unaffordable and the economy becomes dangerously unstable."

"People need to begin to make preparations with their investments, retirement savings, and personal finances before it's too late," says Fitz-Gerald.