Investment guru Jim Rogers believes the stock market’s recent gains won’t last because the U.S. economy remains mired in crisis. But he says the massive fiscal and monetary stimulus campaigns engineered by the government and Federal Reserve could cause a huge run-up for the stock market first. "It’s a bear market rally.
I was going to say I don’t think the S&P 500 will see new highs," Rogers tells The Economic Times of India. "But I have to quickly temper that by saying against the dollar because the S&P 500 could triple from here if they print enough money and the value of U.S. dollar collapses. Then the S&P could go to 50,000, Dow Jones can go to 1 million." ~ NewsMax
Dominant Social Theme: Hope springs anew.
Free-Market Analysis: Jim Rogers is trying to make a point. If you pump hard enough, you may be able to blow anything back up, at least a little and maybe a lot. Certainly, we can see the monetary elite doing their best to puff up the world’s economy once again. And once upon a time, we might have been a bit relieved to see it. But like you we have learned our lesson during this last debacle. The monetary elite isn’t trying to save OUR system. It is trying to save THEIR system.
How exactly is it our system? We don’t get to print any money. And we don’t get any bailouts either. When central bankers and governmental leaders want to stimulate the economy, no matter how bad things are (and they couldn’t have gotten much worse) they nonetheless run away from significant tax cuts as fast as they can. Instead, the printers go to work. The paper is ladled out to commercial banks that are supposed to lend it to mostly small businesses that are in turn to provide it to their employees via raises or bonuses … at which point the individual consumer is advised to go out and spend, spend, spend.
This is a fairly complex process, is it not? Additionally, when central banks try to blow up a collapsed system this way, by printing money instead of cutting taxes, they are depriving the economy of the ability to purge mal-investments. By using central banking disbursements, governments prop up all sorts of resource-wasting businesses. At best, then, the collapse is shoved forward to another day-of-reckoning. And that day will be worse than this one. Like any other force of nature, the business cycle cannot be stopped, only delayed. Here’s some more from the above-excerpted article.
Jim Rogers has taught finance at Columbia University’s business school and is a media commentator worldwide. He is the author of Adventure Capitalist and Investment Biker. See his website.
