Jim Rogers: beware the central banks

Jim Rogers, who co-founded the Quantum Fund with George Soros, is bearish about the outlook for most assets. He thinks aggressive central bank money printing, which he expects to increase as a result of Brexit, means asset prices are at artificially high levels. Thanks to these efforts, and the "PR campaign by the central banks", the US stockmarket is going up even though earnings have been falling for nearly a year. Even so, gains seem to be confined to larger firms, with smaller companies doing much worse.

Meanwhile, global instability and negative interest rates in many countries have persuaded many people to pile into US Treasuries, since these still offer a small positive yield. This has perpetuated the idea that the US is still a safe haven and immune from the world's problems. However, Rogers thinks that those moving their money into dollars out of a sense of security are only fooling themselves.

This is because American society is "falling apart" and at risk of following the chaotic path of Venezuela. To back up this extreme pessimism, Rogers cites the recent surge in shootings and protests about police brutality. While some have drawn parallels with the riots at the end of the 1960s, Rogers argues that today's discontent is far more widespread, and isn't confined to a single issue, such as Vietnam. Consequently, the situation is ripe for exploitation by "crazy politicians", like Europe in the 1920s and 1930s.

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Overall, Rogers urges investors to be "prepared" for extreme volatility, citing an observation from author Aldous Huxley: "That men do not learn very much from the lessons of history is the most important of all the lessons that history has to teach."