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Jim Rogers: "Nobody Gets Out Of This Situation Until There’s A Crisis"

Tyler Durden's picture




 

The following is GoldMoney contributing author Felix Moreno's interview with famed investor Jim Rogers. We hope you enjoy it.

Félix Moreno: Please tell us about your new book, Street Smarts. What was your motivation for writing it?

Jim Rogers: To my surprise people tell me it’s my best book. I never would have expected this reaction. I’ve written a few books about specific things, but my publisher said, “look, you’ve never sort of pulled it together: how did you get from the backwoods of Alabama to Singapore” – among a few things. I had a few setbacks along the way, and a couple of successes. So I sat down to put it all together in the book, how it all worked and everything seemed to be worth it. Some people seem to enjoy it, to my delight.

FM: I enjoyed it – I especially liked the story about your start at the Quantum Fund and your trading days, before retiring at 37. I also enjoyed your book Hot Commodities, in which you talk a lot about the current bull market in commodities. You set up your commodity index fund in 1999?

JR: It started on August 1 1998. The first bull year was 1999.

FM: You always say in your interviews that you are not a very good market timer, but I beg to differ. I’d like to turn to gold: you are one of the few gold bulls who had actually been calling for a correction in the past few months, or at least saying that we were in a correction and that, even though you were very optimistic in the long term, we should expect lower prices now. You must feel vindicated now.

JR: Every once in a while I get it right. Even I get it right sometimes. Vindicated? I don’t take any great pleasure in it. I just talk about the way the world works. It’s reality. Unfortunately some people don’t like to see how the world works, but yes, I did happen to get it right this time.

FM: So what is your opinion on the current state of the gold bull market. You’ve said repeatedly that you expect it to go much higher this decade. How do you see it right now?

JR: Unfortunately from my point of view, and I own gold and haven’t sold any, we are in a long overdue and much needed correction. The anomaly was that gold had been up 12 years in a row. That’s not normal, typical action. It’s abnormal, which worries me and should worry all the gold bulls. It has now corrected for some 18 to 20 months now. I find that encouraging. I mean, I don’t know, because I’m not a very good market timer, but I do know that most corrections go on long enough to scare a lot of people and scare them out of their positions, and that’s what I would expect to happen.

I’ve had people write to me and say: “gold cannot go down 30%”, and I say: “turn on your computer. It’s there.” There are a lot of mystics that are still true believers. Until it scares a lot of people the correction is not over. I would certainly like the correction to be over this afternoon and see gold go to $2,000 or to $3,000, but that’s not reality.

FM: You are one of the few well-known investors who actually says when he is buying or selling something. Most are scared of giving away their secret formula. What percentage of your portfolio is in precious metals?

JR: First of all I won’t say, but second of all I don’t know. I don’t have a committee that I have to answer to, so I don’t have a clue. I do know that I own a fair amount of precious metals, I’ve been buying them for years and I never sold them.

FM: Are you more invested in gold or in silver?

JR: Value wise more in gold, because gold sells for many multiples of the price of silver. But maybe I own more ounces of silver. But so what? Gold is so much more valuable.

FM: You write that you concentrate very much on fundamentals. However you lump gold in with other commodities in several of your books. Do you analyse gold as a commodity or do you look at it as money?

JR: Everybody has their own view. Mine is that gold is not money until you can go into a shop and get someone to accept it as money. Gold, certainly in recent decades, is nothing more than a commodity. Yes at times it has been money in the past, but so has silver, so have seashells, so have cattle. A lot of things have been used as money. Silver has been money more than gold historically, and throughout the world there is a lot more silver around.

FM: But you have to admit that gold isn’t easily valued as other commodities are. After all inventories of gold and the stock-flow ratio are very different from soybeans, rice or oil. The amount of gold that is mined or produced or recycled each year is very small compared to the stock of gold sitting in bank vaults and central bank vaults. So it’s hard to value gold using supply and demand, or at least annual supply and demand like with other commodities.

JR: If you mean annual supply and demand by the amount mined and the amount consumed, yes. The amount mined and consumed is very low compared to the overall inventory of gold. All the gold ever mined is still somewhere and that is going to continue for the foreseeable future. From that point of view I guess it is harder to value – to figure out the price of gold – rather than wheat for instance.

FM: I have to ask: have you heard of Bitcoin? Do you own any?

JR: I’ve heard of Bitcoin, I’ve never taken the time to figure out how it works and what it is. I know it’s there.

FM: You talk a lot about the future of China. You mention that China is the only one of the BRICs that you see having a very bright future. In fact you say that the acronym is off by only three letters. But why China? What makes it better than, say India?

JR: Have you ever been to India? If you can only visit one country you should go there. It is the most exceptional country in the world from a tourist point of view. But from the point of view of doing business, it’s the worst bureaucracy in the world, and the infrastructure’s a nightmare. It’s a very extraordinary place to visit – the languages; the man-made and natural marvels; the food; the religions; the languages. It’s extraordinary, but not as a place to do business unless you are in with the right people. If you are in with the government – the right part of the government – yeah, you’ll make a lot of money. But otherwise be very careful.

FM: Would you like to comment on property rights in Singapore? As you might know GoldMoney has recently opened a vault there, because it’s one of the countries that respects property rights and gold will be safer from confiscation and high taxes there.

JR: Well, I live in Singapore. Singapore does respect property rights and it’s an efficient and, from my point of view, terrific place to live. Who knows what’s going to happen over the next 50 years, but at the moment it is one of the sounder places to have assets. Whether the new gold vault here will work, I don’t know. But I do know that Singapore is a sound place to have assets.

FM: You don’t expect some populist politician suddenly sticking a huge tax on it?

JR: I would not expect that to happen on Singapore. I would expect it to happen in other places, maybe in the US.

FM: In your book you call the US “The largest debtor in the history of the world”.

JR: That’s not an indictment, that’s a fact. If you consider it a negative fact, it’s an indictment. It happens to be a fact that it is the largest debtor nation in the history of the world. The debt is going through the roof, you know with all the shady rates. I do criticise it. I don’t like it. I’m an American citizen. I’m an American taxpayer, so I hate what’s happening with the debt situation in America. No nation in history has gotten itself into this situation and got out without a crisis. So I guess it is an indictment.

FM: I Do you expect the US politicians to do something about the debt? To balance the budget any time soon?

JR: No, not at all. Not either the present politicians or future politicians. The situation is so dire that it would be almost impossible to balance the budget and pay down the debt without an enormous amount of pain. Now suppose that somebody could win an election on that platform – well within six months or a year or two, he would either be assassinated or give up because the people would say “wait a minute, we didn’t know it was this much pain. This is not what we had in mind” and he would be thrown out and his policies reversed. No it’s not going to happen until there’s a crisis or a semi crisis. That’s the lesson of history. Nobody gets out of this situation until there’s a crisis.

FM: What would you say to those that see the current situation as perfectly sustainable, especially in reference to the money printing, quantitative easing, etc.

JR: I would suggest that they get out a couple of simple history books and see if there has even been a way out. For what it’s worth, there has not been and there won’t be. I suggest that they look it up. They don’t have to listen to people like me, look it up.

FM: Do you think that Bernanke and the Fed have an exit plan from QE and zero-rates?

JR: Mr Bernanke’s exit plan apparently is that he is going to leave his job. He doesn’t want to stick around for the hangover. He doesn’t want to be around for the consequences of what he’s doing. I don’t know if there’s an exit plan. If and when they stop it’s going to cause lots of ramifications in the market and lots of, perhaps even chaos, but certainly turmoil and upset. The only exit plan that he’s talked about is to let it all mature. That sounds wonderful, but it’s not very practical.

FM: It seems that the whole “let’s get out before it crashes” worked well for Alan Greenspan.

JR: Well, Alan Greenspan did get out before it collapsed, more or less, but if nothing else, history has figured out that he is a charlatan who didn’t know what he was doing in the first place.

FM: So you don’t think that they have an exit plan. Does that mean that you are in the inflation camp? Do you think that the crisis is going to come from high inflation like in the ‘70s and ‘80s, or are you in the deflation camp? That it will come through bankruptcies, banking collapses and debt defaults?

JR: Throughout history when you print staggering amounts of money, it has always led to inflation. Now, you can have an inflationary boom, an inflationary feel-good period, but usually the politicians just keep printing. No politician is going to run on a platform, or could get elected on a platform of “we are going to have pain”, so they are going to continue to print money. You know as Mr Bernanke is doing, the BoJ, the Bank of England, the ECB. They all say the same thing. They are all doing the same thing. So they are going to continue to print money. Eventually of course what always happens is that inflation gets higher and higher and then the bubble pops and you have deflation and harder times. But between here and there is a long way, because they are not going to stop printing money. That’s all they know how to do. It’s the wrong thing, but it’s all they know to do.

FM: Capitalism without bankruptcy is like Christianity without hell and you give examples of banking crises where there were no bailouts. What is your opinion on the bailouts?

JR: It’s not supposed to work that way. You are not supposed to take money away from the competent people and give it to the incompetent so that the incompetent can compete with the competent people with their own money. That’s not the way capitalism is supposed to work. That’s not the way morality is supposed to work. I know politicians don’t care about morality. It’s not going to work. You see what happened in Japan. Japan has had two lost decades. Their stock market is down by 70-75% from where it was 23 years ago. This system has never worked.

In the 1920s America had this problem and America balanced the budget and raised interest rates. I repeat: balanced the budget and raised interest rates. They had a terrible 18 months, but then they had the most exciting economic decade in American history. Scandinavia did the same thing in the early ‘90s. When the Japanese were refusing to let people fail, the Scandinavians let people fail. They had a terrible two or three years, but since then Scandinavia has been an extremely strong and exciting part of the world.

This way (the bailout way) doesn’t work, and there are no examples of something like this having ever worked. It’s not going to work this time either.

FM: Some argue that a current example are the eastern European countries: Estonia, Lithuania, etc, who made big cuts within one year of the crisis and are now growing faster than the rest of Europe.

JR: There’s no question. You can look at other places: Iceland, Ireland – you know, the places that did take some pain have certainly done better than the places that denied reality.

FM: From the Spanish perspective, it’s certainly not better to have a lost decade or two by trying to postpone all the big budget-balancing hard work.

JR: You can postpone it all you want, but the problems just mount. There is no country in Europe that’s going to have lower debt this year than last year, or lower debt the next year than this year. Every one of them will run up the debt, instead of decreasing the debt.

FM: Do you expect the Euro to lose the currency wars? Which will fall down the cliff first? The yen, the euro or the dollar?

JR: It depends on what standard of measure you are talking about. The Japanese claim that they are going to print “unlimited” amounts of money. That’s their word, not mine. Unlimited amounts of money. I would expect the yen to go the furthest the fastest. But America has also said “wait guys, we’ll print a lot of money too” – though they didn’t say “unlimited”. And the British said “we should do it”.

So I don’t really know. It’s a very good question, which one to own. I don’t own the yen, because “unlimited” is a pretty hefty amount of money. I grapple with this every day, which currencies to own. Believe it or not I was even contemplating putting money into the ruble – only because it seemed less flawed at the moment than these others.

FM: You seem to have had a change of heart recently regarding Russia.

JR: In recent months I have seen that Mr Putin and people in the Kremlin have changed their attitude. It will take a while for all this to sink in. They said for many years that they welcomed foreigners and capital, but they were lying. They shot you, they put you in jail, and they confiscated your wealth. But now Mr Putin seems to understand that he has to play by international rules, he cannot go on putting people in jail and taking their money. If he wants to play on the world stage he has to treat international capital, and domestic capital, in a proper way. You can ask me in 10 years if I got it right or not.

FM: The Russians are more friendly to depositors than the Cypriots – and perhaps many other jurisdictions as well.

JR: Well, what happened in Cyprus as you know is that most of the big depositors were foreigners. It’s always easy to take advantage of the foreigners. 125 years ago America threw the foreigners right, left and centre. Nearly all developing countries find a way to take advantage of foreigners. It’s not a particularly good comment on world society. Cyprus voters did lose money, but nothing like to the extent of the foreign folk.

FM: On the other hand there are a few countries that do welcome foreign money like Singapore or Hong Kong.

JR: It might just be an anomaly of history. We can look back in eight years and see if Singapore and Hong Kong are still welcoming. I suspect they might do, but unfortunately throughout history there have been countries that welcome money, but then they get fat and lazy and they become anti-foreigner and confiscate their money. I don’t think you can find any country in history that has consistently welcomed foreigner’s money for centuries. Yes, for a century or two or even three maybe. But nobody has a history of always welcoming foreign money.

FM: But it gives hope to see that Hong Kong and Singapore changed China. Perhaps another “lighthouse city”, another good example could change Europe, Latin America…

JR: As long as my lifetime and my kid’s lifetime – I guess that would be more than most people can expect.

FM: You have become very favourable towards competing currencies as a solution to the crisis of fiat money.

JR: That’s the only solution that has ever worked long term. Nothing has worked a long time – including gold, silver, seashells, cattle. Nothing has worked long term except that you choose your money.

FM: You write about how you opened a Swiss bank account in the ‘70s. Could you do so today?

JR: It’s getting more and more difficult for foreigners – for Americans I should say – to open bank accounts anywhere in the world, because of the problems with the US government. I’ve had places where I’ve had accounts for years who have called me to say “look we love you, but we have to get rid of all American accounts”. It probably is possible to open a Swiss bank account, but I don’t know, I haven’t had to do it in a long time. I still have my Swiss bank accounts, which are all reported by the way, but it is becoming a problem for Americans.

FM: FATCA and the growing amount of regulation is one reason why so many are looking to Bitcoin and cryptocurrencies in general.

JR: Yes, it’s becoming a huge problem for Americans, honest Americans at least.

FM: What would you tell American leaders and politicians?

JR: Resign.

FM: The same thing to Ben Bernanke?

JR: No, Bernanke I would tell him to close the Federal Reserve and then resign.

FM: So you wouldn’t want, for example, Jim Grant as Fed chairman?

JR: I know Jim and I like him, but he has some ideas I don’t think would work. He’s a wonderful goldbug and has been for many years and is convinced that the gold standard would solve America’s problems. You know, the gold standard didn’t work either in the long term. They found ways to get around it. Or they just abolished it. The gold standard has its own problems too. The only way to survive is to let people decide for themselves what they want to use as money. Someone can use gold, or we find enough people who want to use seashells, or whatever.

FM: So competing currencies and may the best money win?

JR: It’s the only solution that has worked throughout history. Every government imposed, every dictated from of money has always failed. Including the gold standard.

FM: Yes, although the gold standard does have a record of lasting hundreds of years on several occasions. But I agree, nothing lasts forever and it’s better to have something that can evolve, not imposed from the top down.

JR: I’m not sure I know a case where the gold standard has lasted hundreds of years, but if you say so, yes. Gold has certainly had recurring uses. Not necessarily the gold standard, but gold itself has had recurring uses many times in history. But as I said before, silver has been used more historically than gold around the world, and so have other things.

FM: In fact China has used silver for a very long time. A lot of Spanish silver dollars ended up in China when they were kicked out of the US.

JR: Yes the Chinese have a longer history of silver than they do of gold, but again, many places do. Jesus was sold for 30 pieces of silver, not 30 pieces of gold. Silver was the predominant currency back in those days, in that part of the world.

FM: China has also had a long history with paper money. If there’s one constant in the history of money it’s that paper money never seems to last more than 40 or 50 years before blowing up.

JR: Paper money doesn’t have a very glorious history, but again, nothing imposed by the government has a very long and glorious history.

FM: On that positive note, and hoping for many good things to come in this new century, I’d like to thank you for talking to GoldMoney, and hope that you will be back soon.

JR: I’m delighted. Thank you very much. Let’s do it again.

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Fri, 05/31/2013 - 00:27 | 3612730 newengland
newengland's picture

Fair point, sort of.

Rogers has the humility to admit he doesn't know timing, but knows themes.

However, that is somewhat disingenous given his links to Soros, the Rothschild agent.

Rogers appearing on ZH is interesting, but no free pass.

Fri, 05/31/2013 - 03:31 | 3612824 Bring the Gold
Bring the Gold's picture

Some folks REALLY like Rogers or you pissed them off above. 

Fri, 05/31/2013 - 02:04 | 3612792 Ropingdown
Ropingdown's picture

Financial knowledge (not financial propaganda) is understanding life, together with studying the actual behavior of people and the true values of good family and loyal friends.  Why do things cost what they do, and why are they changing the way they are?  Why does the US owe so much money, and what does it mean?  What is the result of the tremendous extent of consolidation in so many industries, and now in tech?  What happened to anti-trust laws and enforcement, and why?  There is money behind each of these stories, and certainly behind the careers of every politician.  It isn't the story you get to read.  You have to go looking for it.  Just my opinion.

Fri, 05/31/2013 - 00:47 | 3612747 newengland
newengland's picture

'Never let a crisis go to waste,' says this Administration.

Operation Gladio in Europe showed how globalists use a crisis to kill women and children, and get more power for the State, for the corporatists, the big banks.

Operation Northwood in the USA shows what this could have meant for mainland USA if it wasn't stopped.

Operation Paperclip shows that Nazis were deliberately brought to the USA by international financiers at home and abroad in order to pursue their freak idea of a new world order, ruled by banks, assisted by pet politicians and chosen academics.

Rogers is interesting when he criticises failed policies, but always remember that he is a nomad, a globalist who has no allegiance to any land; a typical robber baron.

Only this time, he and his sort are afraid that their unregulated otc derivatives which blew up the world financial system in 2008 might land on them, and they do so desperately want someone to bail them out, again.

Cheap labor in his Far East bails them out, just as Britain's 'Labour Party' under Bliar allowed uncontrolled immigration to drive down British wages and smite their political rivals, according to well publicised remarks by Labour apparatchiks.

Fri, 05/31/2013 - 01:03 | 3612764 newengland
newengland's picture

Rogers has no allegiance to any land. He is self-serving, and will make more money by herding others than the cute kittens and puppies in his thrall will ever do.

If he was genuinely interested in the profit and welfare  of the USA, then he would live in the USA, not Singapore.

Fri, 05/31/2013 - 01:49 | 3612786 Monedas
Monedas's picture

You are a pretty sick puppy .... in the clinical sense .... you live in your alternative world of fantasy .... that's a pretty scary existence .... find a healthy personna like Rush, Beck or even me .... and start absorbing .... I recommend Rush .... he is the most intelligent, complete, well grounded personna out there .... just shut up .... forget yourself for a moment .... and absorb the life wisdom of a truly great human being !

Fri, 05/31/2013 - 01:57 | 3612789 Ropingdown
Ropingdown's picture

I think Rogers was interested in the welfare of the US until he realized that the wealth of the nation's producers was being wasted at such a high level on weapons and on welfare, giveaways to cronies, and so forth, that he couldn't take it anymore.  The military is a business.  Politics is a business.  But when they need people to die overseas, suddenly everything is about patriotism.  I've never known a smart person to believe that or act on it....past the age of 19.  Through every war businesses (both the vital ones and the politically connected ones) made large profits.  (WWI in the US is a scandalous example.)  But soldiers? They came home with lost years and no profession, no business, no stock in trade.  Other than WWII it is difficult to think of a war that received actual broad support for reasons other than stunt publicity.  Walmart used to scream how devoted it was to "buying American."  Sure.  Just until the Chinese factories were up and running. "What" ask the WM buyers "is the China price?  Can you beat it?"  Don't fault Rogers for noticing what was really happening while America was watch Dallas, Knot's Landing, or American Idol.  Admire him.

Fri, 05/31/2013 - 05:23 | 3612864 currencywar
currencywar's picture

Exactly. You can scream to the rooftop what you see around you, it is easier to move to safer climes.

Rogers saw long ago how this movie was going to end--massive civil unrest and worse.  I saw him speak and one of his investment recommendations was to buy farmland.  It is chilling, but believable.  All you have to do is look around you, the "bull" market in the face of massive debt, unprecedented dependency on the government, you can almost imagine a colapse of such epic proportions that food supplies become disrupted. 

Singapore doesn't sound so bad.

Fri, 05/31/2013 - 14:46 | 3614541 MeelionDollerBogus
MeelionDollerBogus's picture

He's still an American tax-payer. If he didn't care about America he'd ditch that and pay no taxes there.

Fri, 05/31/2013 - 01:27 | 3612776 ebworthen
ebworthen's picture

Regarding Gold:

"FM: You don’t expect some populist politician suddenly sticking a huge tax on it?

JR: I would not expect that to happen on Singapore. I would expect it to happen in other places, maybe in the US."

Yeah, exactly, that is why it is my escape plan, 'mfuckers.

Fri, 05/31/2013 - 14:46 | 3614536 MeelionDollerBogus
MeelionDollerBogus's picture

Indeed. Looks stable economically & politically, friendly to investors & not friendly to free-loaders, relatively safe from the wind-flow and water-flow patterns carrying Fukushima radiation, near the rest of Asia's hot centers, not near any major war zone.

Good call indeed

Fri, 05/31/2013 - 01:43 | 3612782 Monedas
Monedas's picture

War is an artifact that moves evolution .... without wars .... we'd be monkeys .... and killing each other .... greed is good .... if you earn your stuff .... war is just what we do .... it's what all living things do .... the thing is to WIN WARS !

Fri, 05/31/2013 - 03:29 | 3612822 FunkyOldGeezer
FunkyOldGeezer's picture

Maybe, just maybe, Capitalism is a barbaric relic? Maybe what we're currently going through is a revolution of the total human psyche?

To deny the pain and suffering of fellow human beings brought about by Capitalism, is to deny one's humanity?

Who knows?

Nice book plug, BTW. /sarc off

Fri, 05/31/2013 - 06:19 | 3612882 Lebensphilosoph
Lebensphilosoph's picture

Maybe what we're currently going through is a revolution of the total human psyche?

What is that supposed to be and how does it work?

Fri, 05/31/2013 - 07:39 | 3612946 MyBrothersKeeper
MyBrothersKeeper's picture

Capitalism is its truest form is nothing more than people maximizing their God given talent. It doesn't lend itself to greed or power anymore than anything else if you are morally grounded and realize that all good comes from God.  If you choose to not share your gifts to better those around you and society as a whole than that is a moral failing.  I submit that capitalism has created the greatest standard of living in the world, created more cures for disease and medical advancement, resolved more human suffering etc etc.  That tells me that many have shared their wealth and gain with the rest of the world.  The poorest in America (crime non-withstanding) have a higher standard of living than most of the middle class around the world enjoyed throughout history. It is in the moral failing where the negative consequences have manifested.....and that is not unique to capitalism or any other economic system...as history has proven time and again as millions have been killed by the hands of their own leadership throughout history.

If you take Rogers comment on crony capitalism (Socialism etc) beyond money, a good example might be this:  You have a kid in school that excels in math and another kid that excels in music.  What Socialism wants to do is even it out by taking some of the math skill and giving it to the musically incline and vice versa.  The result is, instead of an A math and an A music student with talent that can be maximized, you have two C students with no remarkable qualities.  The problem is that doesn't help anyone in the long run......there is no incentive to cultivate your talent.  Another big problem with Socialism etc is it assumes the so called marginalized have no talent/gifts.  That is not true as all people have gifts and talents.  They are either undiscovered or unutilzed but there nonetheless. Some talents may make you more wealthy than others but maybe that is more of a curse than an advantage.....as we have seen time and again. We mistakedly heep praise on the successful vs encouraging them tyo stay grounded.  That is a moral failing. I submit we are all by nature capitalists and anyone who says they are not, I bet I can prove that they are with a few simple questions. As the quote goes:  "Capitalism is the worst form of economic system ever undertaken....except for all the others"

Fri, 05/31/2013 - 07:53 | 3612964 Ghordius
Ghordius's picture

I thought the quote was "It has been said that democracy is the worst form of government except all the others that have been tried", generally attributed to Churchill

though your adaptation has merits

re your example of the bright students: what Socialism generally does is to expect that both get the same salary, even if demand for the math genius is greater than demand for the music genius

one very interesting example was that the salary for medical doctors was the same as the one for factory workers, in the Soviet Union, even though the med had to study for many years to achieve his skill level

Fri, 05/31/2013 - 08:15 | 3613019 MyBrothersKeeper
MyBrothersKeeper's picture

The capitalism adaptation was from someone else other than me.....  I knew of Churchills comment.  That's very interesting about Soviet doctors and I guess reinforces the notion of eliminating incentive.

I don't think God cares about money and believe we all have enough talent to live a prosperous life.....some more than others perhaps but as the good book says....in the end...."those are first will be last and those who are last will be first"....so struggling more can have long term benefits.  It kills me to think so many believe that governments role is to control the economy and make everything "fair".  It never works...never has and never will.

thanks for the feedback

Fri, 05/31/2013 - 10:58 | 3613448 shovelhead
shovelhead's picture

Good comment about capitalism maximizing talents. The subsequent rewards for those talents are (and should be) also determined by a market.

I will have a minor quibble about capitalism is inherently natural though. A great many of our problems stem from the fact that many people will not endure the sacrifice of consumerism to amass any capital and are at the mercy of those that would exploit this weakness by catering to those who will consume much more than they produce. They become the slaves to debt whose chains grow heavier over time.

Capitalism is learned and not natural. I learned these lessons early behind a lawn mower in hot summers while the ballgame down the road was in progress and in in the rain and snow delivering newspapers. The reward may had been the consumerists dream of that new Schwinn in the Western Auto window but it would also cut my delivery time by more than half and allow me to buy another route to service. Now I had enough profits to pay runners to take the papers from the road to put the papers on the porch and cut my time further to add another route.

I became a (minor) newspaper baron by buying routes and leasing them for a percentage of the profits to those who couldn't amass (or risk) capital to buy a route outright. A win/win proposition for both that only worked when an equitable arrangement was reached. I would then sell the route at a profit as my lessee accrued the capital to buy. I also understood that exploitative terms would cause failure and resentment so every deal had to be made fairly.

My big coup was renegotiating a 1 cent drop per paper in my cost from the vendor. Folding money for being a power to contend with rather than a single distributor. Still, a win/win deal because by that time I was moving enough papers to warrant my own stop from the vendor (but Mom wouldn't let a bunch of kids hang around raising hell while waiting for papers to come in and be counted out.)

Early lessons in credit were learned because my vendor was a variety store and 'newsies' had a line of credit backed by their weekly collections. Having a 'tab' was a huge status symbol to the busload of older kids who haunted the store when jr. high let out. Many kids abused this credit with wild spending sprees and turned over their entire earnings for the week to the store. They were a good source to buy a route for cheap because "delivering newspapers didn't pay shit".

Capitalism, in it's true form creates opportunity where there was none and raises living standards for all those who engage in it. Without Govt. labor laws or interference.

No school can teach these lessons, and kids today seem to have lost these venues for learning by not exploiting them to their advantage.

When was the last time you saw an eager 10 year old knocking on you door asking to mow your lawn or shovel your snow?

Fri, 05/31/2013 - 04:10 | 3612844 jack stephan
jack stephan's picture

Did someone step on a duck?!?!!

Sorry I had to, this situation is so damn depressing, real joykill.

Fri, 05/31/2013 - 04:15 | 3612849 jack stephan
jack stephan's picture

And tell the chef this is some low grade dog food alright.?

Fri, 05/31/2013 - 04:37 | 3612853 Peter Pan
Peter Pan's picture

Jim is so quotable but he needs to read a bit of history and become acquainted with how ancient societies and the Byzantium used gold and silver coins for centuries before destroying themselves in the process of watering down the content of their coinage.

While nothing is perfect he indirectly concedes the value of precious metals by admitting to their constant accumulation and admitting that he never sells any.

Fri, 05/31/2013 - 06:23 | 3612884 Lebensphilosoph
Lebensphilosoph's picture

There's a lot more to the fall of Rome than a 'devaluation' of its coins.

Fri, 05/31/2013 - 07:05 | 3612904 Peter Pan
Peter Pan's picture

That is true, particularly because the acquisition of an empire brought spoils, but the administration of an empire costs money and this is where the emperors started to "print" money by lessening the silver content of coins to the point where it was nothing more than a coating as opposed to an almost pure silver coin. But once again, I stress, that watering down coinage is to hide the fact that you are overspending on the wrong things.

Fri, 05/31/2013 - 07:54 | 3612970 Ghordius
Ghordius's picture

+1 for "overspending on the wrong things" - the opposite of economizing

Fri, 05/31/2013 - 11:20 | 3613674 shovelhead
shovelhead's picture

Hell,

Even overspending on the right things is a recipe for disaster. It's just slower.

Fri, 05/31/2013 - 06:05 | 3612873 Moe Howard
Moe Howard's picture

Hey, he does PMs just like me! Buy and never sell.

BTFD, bitchez!

Fri, 05/31/2013 - 06:45 | 3612894 They trynna cat...
They trynna catch me ridin dirty's picture

He's right about the future of the US: with the coming dollar crisis, Obamacare, change in demographics from Anglo to third world, there are going to be neckbreaking tax hikes (fed, state, property, estate) and massive reduction in living standards for middle class and non-politically connected. In other words, it is not a place that anyone civilized will want to stick around.

The question is, where to go?

Fri, 05/31/2013 - 06:49 | 3612897 Debugas
Debugas's picture

Rogers forgets to mention that this crisis is WITHOUT AN END

Fri, 05/31/2013 - 07:15 | 3612912 Racer
Racer's picture

The ChairSatan is like the Uk's Bliar and sold UK's gold at the lows Brown, who take credit for something they didn't do and now their party are blaming another for the things they caused

Fri, 05/31/2013 - 07:35 | 3612925 criticalreason
criticalreason's picture

laws of capitalism have been trumped by more fundamental laws of the jungle. the strong take from the weak. btw thats the way it always was capitalism or no.

supp. Q.1

is goldmoney sell physical gold? do u pay the gold price or the price of gold?

supp. Q.2

whats to stop bitcoin going the same way as liberty reserve?

Fri, 05/31/2013 - 07:51 | 3612960 proLiberty
proLiberty's picture

AFAIK, Swissquote Bank still accepts accounts of US Persons. http://www.swissquote.ch/sqweb/index.jsp?l=e (If you read the "Disclaimer" really carefully you will see it for what it really is.)

Fri, 05/31/2013 - 08:07 | 3612992 cabtrom
cabtrom's picture

The Bernagger Beast eats every thing in its path. This 8 legged human centipede then shits out green pieces of paper that it distributes to the masses as a means of trade. Fearful that this beast will soon consume humans after its eaten everything of value the people begin to forge weapons of gold and silver to slay the beast. I have no idea how this story ends. Make that movie you treasonous Hollywood Fucktards!

Fri, 05/31/2013 - 08:32 | 3613065 Hail Spode
Hail Spode's picture

Agree with Rogers on the GOVERNMENT "Gold Standard" not working, because history shows that governments bound by such a standard always try to find ways to wiggle out of it....

"The issuer of money holds the money up as being a secure store of value.  But what happens when the government, as an issuer of money, violates this implied contract?  Government cannot be an impartial enforcer of a contract to which it is a party."- from "Localism, A Philosophy of Government."

 

The conclusion is that in America 2.0 the government should not have any power to issue money or make any thing a legal tender, whether by themselves or in conjunction with a " special " central bank.  Competition in money, without the guys holding the guns an entrant in said competition, is the only way to keep money honest.  Money is too powerful to be left in any one set of hands, in particular the government's.  

Fri, 05/31/2013 - 09:36 | 3613271 Common_Cents22
Common_Cents22's picture

Any idea on Rogers' net worth?

Fri, 05/31/2013 - 10:24 | 3613465 Aegelis
Aegelis's picture

I like this article, a nice dose of common sense and humility.

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