Jim Rogers on The Collapse of a once-proud Financial Superpower

Undeniable Pro of That Absolute Power Corrupts , Jim Rogers weighs in on the collapse of a once-proud financial superpower, and why it's dangerous to the global economy.



Interview Transcript:

Robert Williams: Welcome to Part Three of my interview with celebrated hedge fund manager and bestselling author Jim Rogers. Jim, chapter 13 of your book Street Smarts is my personal favorite because it speaks of a once-powerful currency that’s secretly in trouble. In fact, you say, “Any monopoly eventually destroys itself, and this currency in predictable fashion is corroding from within.” Some of our readers might be shocked to know that we’re referring to the Swiss franc. Is this scenario beginning to play out as you predicted?

Jim Rogers: Yes. I mean, it’s astonishing to me who’s been around Switzerland for over 40 years you know that you see the Swiss franc and the Swiss National Bank doing things that were inconceivable a few decades, even a few years ago – that they would debase the currency, that Swiss politicians would buy votes. But they are doing it. It is just making Switzerland less attractive as an investment destination and as a place for people to put their money. I mean Switzerland, more or less, had a monopoly on managing money, international money anyway, for decades, many decades. And now, of course, in Asia… new competition is rising – Singapore, Hong Kong, other places. But the Swiss are just destroying themselves.

Now politicians and bureaucrats have destroyed themselves many times throughout history in many countries of the world but it’s always a little astonishing just to sit back and watch it happen before your very eyes. You can say to them, “Guy, you’re making a terrible mistake,” and they do it anyway. It’s amazing to me. I am not bullish, I am not bullish on the Swiss franc, which is guess is the ultimate answer to your question.

Robert Williams: Jim, I know you occasionally go short when the situation calls for it. In fact, at the peak of the housing boom, you had most of your money out of equities with the following exceptions… You were short Citibank, the investment banks, the homebuilders, and Fannie Mae. So I’m wondering, is there a short play here with the Swiss franc?

Jim Rogers: Well, I’m sure there is. I haven’t bothered to – I’m not sure what the Swiss franc should’ve been, we all should have been short the euro and the Swiss franc. I have been long in the dollar, U.S. dollar… which is the other side of that trade, but at the same time, I guess I should’ve shorted the euro. I just went along with the dollar… not because I have a lot of confidence in the dollar. I’m going to give you more answer than you asked for. I don’t have any confidence in the U.S. dollar, it’s just that I see more turmoil coming – and in times of turmoil, rightly or wrongly, many people race to seek the safe haven of the U.S. dollar. It’s not a safe haven, but it’s perceived that way.

So as this turmoil develops, and you see it happening now, the dollar will go higher. At some point, I’m going to have to sell my dollars and turn around and buy something else. What? I don’t know – maybe then it’ll be the Swiss franc, although that’s very unlikely… or maybe gold or maybe silver at that point. I am not short anything in Switzerland. There must be many ways to do it. Somebody, whenever you have a huge currency move, somebody is on the wrong side of the trade. So somebody is on the wrong side of this major change in Switzerland. I don’t know who, though, and if you can figure it out, let me know.

Robert Williams: We’re trying to figure it out, and so far, we haven’t. Now, this would evolve over several years, right? Or is Switzerland’s collapse imminent?

Jim Rogers: Yeah, yeah the Swiss National – I’m probably going to collapse before the Swiss National Bank. I even know they’re making a lot, lot more mistakes than I am.

Robert Williams: You mentioned the dollar strength, and I’d like to do a deeper dive because I think it’s important. A lot of folks have accepted this newfound belief that the world is embroiled in a currency war. In other words, it doesn’t behoove a country to have a strong currency, so there’s a race toward devaluation. Do you agree that this is happening?

Jim Rogers: Well whether it’s an intentional war or an accidental war or side effect, I don’t know, but it’s certainly happening. You just look around, look out the window, and you see that nearly every currency in the world is down a lot against the U.S. dollar except the Chinese renminbi, and the Hong Kong dollar, of course, which is tied to the U.S. dollar. You know everybody, I don’t know if it’s somebody sat around, and plotted, and said, “Let’s have a currency war.” They just said, “What we need to do is print a lot of money,” without realizing it’s going to cause currency fluctuations. That’s what the Japanese are doing and other people, as well.

The consequences, central banks around the world printing a lot of money for better or for worse is that more people are going into the U.S. dollar, which I own too… although, I have no confidence in the U.S. dollar long term.

Robert Williams: Do you have confidence in the U.S. stock market?

Jim Rogers: Well Bob, the U.S. stock market is making an all-time high. As you know, it’s up more highs this year than any year since 1929. That’s not a bottom. I’d rather buy – I’m buying shares in other markets around the world. I mentioned Russia… China, I bought more Chinese shares yesterday… Japan, I want to buy some more if I get time off the phone to buy more Japanese shares. You know the Chinese and Japanese markets are down 60% from their all-time highs. America’s making all-time highs as it did in 1929. I don’t know if these other markets are better, but I know buying low and selling high often turns out to be right.

Robert Williams: Thanks again, Jim. For Wall Street Daily, I’m Robert Williams.



Jim Rogers started trading the stock market with $600 in 1968.In 1973 he formed the Quantum Fund with the legendary investor George Soros before retiring, a multi millionaire at the age of 37. Rogers and Soros helped steer the fund to a miraculous 4,200% return over the 10 year span of the fund while the S&P 500 returned just 47%.