Speaker 1: Jim Rogers, I don’t know how many of you know who he is. He’s a legendary American investor and co-founder of the Quantum Fund and Soros Fund Management.
If any of you have been listening to his views on the market recently, you will know that he’s not exactly the most happy guy when it comes to the American economy and share market. In fact, he said in a recent interview, I expect that we’re going to have a very serious bear market and a very bad economy. For a while, he got asked, will it be the next Great Depression? He said, I’m not sure, but I suspect it’s going to be the worst in my lifetime. So, you know, I’m an American investor and I hear these words come out of his mouth. And that doesn’t make me feel too great, to put it mildly. What I’m going to do in this video as I’m going to go over the reasons why Jim Rogers is predicting such bad economic conditions and then show you his thoughts on how to survive, what might potentially be to come. So one of the biggest reasons why rough economic conditions could be ahead is because of the mounting debt problem that America is facing. As Rogers said, the United States is the largest debtor nation in the world by many factors, and we keep adding staggering amounts of money to our debt. This has always ended badly. 2008, we had problems because of too much debt. Since 2008, that debt has skyrocketed.
OK, let me show you what Rogers is getting at. So in 2008, we had around 10 trillion dollars of debt even for a big country like the United States of America. This is a lot of money owed. But OK, I don’t know how good your history is. We’re not going back too far. But in 2008, we had the Great Recession, 2007 to 2009, to be more precise. What happened then was businesses started, Fairline consumption started declining and banks were in big trouble. And a lot of people needed a lot of money. So the Federal Reserve says, no worries. That’s totally fine. I’ve got this problem sorted, guys. They hate up their figurative money prints and they print money by the bucket load. They give it out to banks, to businesses, to people to try hard up the economy again. And it works. Yay, June 2009, when no longer in the recession. But the thing that people don’t talk about is the debts. Oh, don’t worry about that. We don’t have to pay it back yet. But at some point, debts must be paid. And if we take a look at what happened after 2008, 2009, national debt shot up like a rocket, as you can see, ten trillion, eleven point nine, thirteen point five, 2012, it gets to 16 trillion. And now that debt pile has soared to twenty six point nine trillion. So you go from thinking ten trillion in 2008 was bad. A dozen or so years later, that rises to almost triple the amounts. And this is what Jim Rogers is talking about when he says the USA has a debt problem.
There’s only so much that you can keep accumulating debt before you have to pay it off. And if your answer is, well, we can just pay that off by printing money, then everything will be sorted. If only printing money had no consequences. Jim Rogers, he got asked this question recently. This is what he said. Printing money to pay off debt is probably what will wind up happening as it has often happened in history. Whenever there is a problem in the world, people look around for an easy way to solve the problem. Once upon a time, there was a guy named Mr. Marx. Mr. Marx had a wonderful theory and many people accepted it and tried it for a long time. Nobody believes in Mr. Marx anymore. We found that it didn’t work. But right now there’s another one called More Money Today, MMT, give me some money, more money, free money. Well, everybody loves it. Many people are starting to try it. We’re going to find easy ways. Politicians always find easy ways to work in the long term. As I said, being a young person in America right now is not a good thing to be. And quote, The proper way to pay off debt is by earning more, a.k.a. growing the economy in terms of GDP. So the one question that you should really be asking is, has GDP grown at a similar rate to had debt levels have grown? The answer to that question is no. If we take a look at this graph, GDP has grown well. I mean, we’ve had a 12 year bull market, a strong economy over the past decade. And GDP hasn’t done bad, but nowhere near the same levels as to what debt has grown by, even if we. Draw a line between what GDP has done back in 2008 to what it is in 2020, and we do the same for debt, the debt growth is by a whole lot more. Not even close. And so that’s a look at the picture over the past 12 or so years since the last recession. But Rogers also talks about what’s been happening recently. He said six months ago the United States was the largest debtor nation in the history of the world. Since then, the US has increased their debt by trillions with a T. You know, if you give me a trillion dollars, I will show you a very, very good time. We will all have a wonderful time with a few trillion. But somebody eventually has to pay the price because somebody has to worry about paying it back. And quotes, you know, OK, the USA in 2020 has borrowed record amounts. The deficit surpassed the three trillion dollars to further add to that debt pile. And obviously, we all know the reasons for why America have piled on so much debt recently and they’re genuinely good reasons it had to be done. Doesn’t mean one day the consequences will have to be dealt with as well, especially when you start looking at recent GDP. The other thing that this pandemic caused was obviously the decline in GDP. As you can see, if you look to the end of this graph, it’s even worse than what happened in 2008, a lot worse, just like Rogers said with regards to New York in particular, he said, I hear that there’s a lot of empty space now and it’s not just temporary anymore.
You know, shops in New York are boarded up and many of them are not going to come back, end quote. For those who don’t understand what makes up the economy, its businesses and its business production, and if businesses can no longer produce any more, well, let’s just say it’s not the greatest news when it comes to the economy. As Jim said, I would call it the worst economic times in my lifetime. That’s a big statement. So our economy’s looking terrible, but we’ve had this huge rally when it comes to the market. Why have we had this rally? Well, I’ll let Rogers explain. He said we’ve had a huge rally because governments everywhere have printed and spent staggering amounts of money. But it just means the next time it’s going to be worse still. Debt is going through the roof and we will pay the price. The question now becomes, well, how do we prepare for this? If bad economic times will come, we don’t know when. What do we do about it? One tip that Rogers gave in a recent interview was to research gold and silver. He said learn about gold and silver because gold and silver are probably going to go into maybe even a mania. I hope not, because I don’t want to have to sell it. But you should learn about them. For the most part, people have ignored commodities, but don’t worry, they will be back, especially if we keep printing money the way we’ve been printing money, and especially if economies keep collapsing in quotes. OK, let me try and explain this. What is the main thing that the Federal Reserve has done in twenty twenty one kept interest rates low and to printed bucket loads of money. In just 2020 alone, the Fed has printed more money than it had done in the decade following the 2008 financial crisis. Now, what does this do to the value of the dollar, the dollar that you’ve probably got saved up in your bank? While the printing of money obviously decreases the dollar value? It’s kind of like a cheeky way of slowly or not so slowly eroding your savings. So what do people do when they finally realize this?
They realize they need their assets and something other than cash. So they rush to assets that are known for holding their value assets like gold and silver. And this is why the printing of money is so good for gold owners and so bad for cash holders. And that’s why Rogers says himself, I plan to buy a lot more gold and silver over the next year or two. The other thing that Rogers refers to is the bad potential economic times to come and what are some good assets to hold? He said. People say it can’t get worse, it can get worse. I suggest you read a little bit of history and you’ll find that go back into the 19th century, just America alone. We’ve had some staggering economic difficulties at times. Some of the largest banks in the world went bankrupt. Some companies that people thought would never go bankrupt collapsed.
Don’t think it cannot happen again. It has happened and it will happen again, and when it does, you want assets that are safe. We have already talked about one which is gold and silver, but also the other commodities like corn, cotton, wheat, oil and other types of crops because of bad economic times do come. You’re still going to be in need of most commodities. You’re still going to need eight even in a recession. So commodities are a safer form of assets to own.