Posted on 03/15/2008 7:27:49 AM PDT by BGHater
Federal Reserve Chairman Ben Bernanke should resign and the Fed should be abolished as a way to boost the falling dollar and speed up the recovery of the U.S. economy, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe Wednesday.
Asked what he would do if he were in Bernanke's shoes, Rogers, who slammed the Fed for pouring liquidity in the system and accepting mortgage-backed securities as guarantees, said: "I would abolish the Federal Reserve and I would resign."
If this happened, "we don't have anybody printing money, we don't have inflation in the land, we don't have a collapsing U.S. dollar," he told "Squawk Box Europe."
The Federal Reserve announced on Wednesday a rescue package that it would put around $200 billion into banks and investment houses and allow them to put up risky home-loan packages as collateral.
Wall Street responded to the news with the biggest rally of the year, but Rogers reminisced of the 1970s, when the Fed printed money to avert a recession, boosting inflation and then forcing interest rates to more than 20 percent to keep a lid on price rises.
"No country in the world has ever succeeded by debasing its currency," he said. "That's what this man is trying to do. He's trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term."
'Socialism for the Rich'
The Fed's move to accept risky collateral is not part of the central bank's business, he added.
"What is Bernanke going to do? Get in his helicopter and fly around the world and collect rents? That's absurd," Rogers said.
A recession may be a good way to clean up the economy, while trying to prevent one may cost more and actually worsen the recession, Rogers said. Also, investment banks should be allowed to fail.
"Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes -- if you bail out every investment bank that gets in trouble, that's not capitalism, that's socialism for the rich," he said.
The weakest financial institution is Fannie Mae, in Rogers' opinion, "but all of them have problems."
He said he had a short position on all investment banks and is buying agricultural commodities such as cotton, wheat, coffee and sugar and was also buying the Chinese yuan and the Japanese yen.
"Buy agriculture. Agriculture is one of the few places where you're going to make a fortune in the next years," Rogers said.
Isn’t this kind of like a Chrysler rescue redux?
I agree with this, but he's way off base with the ban-the-Fed statement.
Wow, I guess they were right. AGAIN!
If we abolished the Fed, it would take less than 10 years for everyone to realize that abolishing the Fed wasn’t a solution, and made things worse.
Was Jimmy complaining when the Fed was inverting the yield curve?
Tear down the Temple? Sure fire way to get something worse.
You can’t start somewhere in the middle. When this whole civilization crashes to ruins (likely due to Islam), and nobody’s left with the intelligence to notice the Fed is missing, then maybe the Chinese or the Indians will come up with a better way. Though I doubt it.
But even a total economic collapse here in the US wouldn’t change things for the better. Bureaucrats and roaches always survive.
The Federal Reserve should be gotten rid of.
All monetary policy is to be set by the Treasury Department.
The Fed was created by the Wilsonian globalists at the behest of the international banking cartel.
Back to the gold standard.
I agree with Jim Rogers, let's put an end to socialized money/currency. Socialism works as well for money as it does for government schools or the post office.
Agree.
We may yet see a currency linkage to gold before this mess is over..
Jimmy, don't you have a "coming out" party to go to?
I distinctly remember about 20 years ago some economic forecaster predicting future problems with the banking industry
His reason
“The new checks with scenery etc imprinted on them “
His rational
“Bankers are typically very conservative and staid when it comes to financial dealings etc “
The new type checks was an indication that that attitude was changing
Not a good sign in his opinion
Well it took 20 years but he was 100% right
Isn’t this exactly what presidential candidate Ron Paul has been excoriated for saying?
Yes. Right after they prove 9/11 was an inside job.
Style over substance. It will ruin any business. There are a thousand analogies to this. When everyone thinks he deserves a Mercedes Benz, for example. There was a time when society had buit-in incentives for diligence and thrift.
Extend the idea into any realm of life. It comes down to an invisible breakdown in sound social codes. The result is chaos.
And just when you get used to that, people will demand a messiah. And he will come along. And make hitler look like your old auntie.
Yawn.
How do you know?
This and also "casual Friday". What an attitudinal mess that has spawned.
Not meaning to pick holes in your coat, but the Founding Fathers had bigger fish to fry than worrying about a "federal reserve". In their case it was called "The Bank of the United States" but, what the heck, the Fed and BOUS were sisters under the skin.
The charter for the BOUS was something like 12 years, renewable. Both POTUS Madison and Jackson fought like h--- to see that the bank's charter was not renewed, believing a central bank violated state's rights as well as the US Constitution. The result? Like a poop-fight at a monkey house. Why do you think we're back to using a central bank?
Wake up !
The Fed just gave money to a bunch of STOCK BROKERS in the form of Bear Stearns. They are not even a commercial bank.
Whats next!
I'm not aware of that, but the idea is certainly not new.
Taxpayers bailed out Chrysler in the 80s, the Savings & Loans Banking in the 90s, and now we’ll bail out the mortgage industries. Hey, just print more of those worthless denominations to cover the cost.
***Back to the gold standard.***
The problem with that is they are not mining enough gold, or silver,to use as currency for everyone.
Otherwide I would agree.
What if some industrialist tries to “corner” all the gold?
bttt
I’ve been lurking at Free Republic for years and decided to “jump in”.
I would like to add my 2cents (worth .005 now thanks to the fed) that Jim Rogers is right again. The Fed is absolutely worthless.
don’t worry, once McCain gets in he’ll fix it...because - what did he say? - he doesn’t understand the economy?
stonefree, welcome to Free Republic!!
arbooz, yes, this is exactly what RP has been talking about. People have major problems with his foreign policy. I don’t fault them for that. He has a very sound fiscal responsibility stance, I believe.
Scissors cuts CreditCard.
Fortunately, Congressman Ron Paul has introduced legislation to restore financial stability to America's economy by abolishing the Federal Reserve.
Click here to contact your congressional representative and ask him/her to co-sponsor H.R. 2755.
Commodities market? (Serious question. I was thinking about stocks...)
Commodities? You mean going up against the big boys like General Mills, Armour, Hershey??
Pffft! Take your money and go to Vegas. You'll have a lot more fun, and, who knows, even walking walking away with a few bucks. Heaven knows, the odds are better.
We would be lucky if it were only worthless. Unfortunately it's destructive.
The big boys no longer much have control. If things continue, they will have absolutely no control. The money sloshing around the system is looking for a home and it dwarfs their purchasing power.
No, not quite. It's because of what happened/will happen if you bust up the central bank and divvy out its function(s) to state banks. And the central bank is private -- with a whole lot of string attached -- b/c,well,
1) A private bank is PDQ responsible to its shareholders. The government...well...been to the DMV or SS office lately?
2) See how Congress ran social security...right into the ground with its constant "borrowing". How its run the city of Washington, DC? So whence the notion that Congress would administer a central banks -- with its oceans of money -- any differently?
The wildest goldbugs say that if it were priced as it was when it was actually linked to the Treasury, it would be in the neighborhood of $35,000 per ounce. Now just cut those Eagles into small enough pieces and there's the solution. :-)
Yes, futures.
I'll be sitting on my hands as "buy agriculture" is a bubble that is about to burst, as oil is also a bubble ready to burst like the housing bubble has...
I don’t remember exactly offhand but there are now some agriculture “ETF”s you can buy. I think DBA is one for wheat, google around and you’ll find them.
Obviously there’s not enough gold and silver to meet everyone’s currency needs. But by making paper money redeemable in them, you ensure that no more paper is issued than is needed. Consult Adam Smith’s “The Wealth of Nations” for details.
And as for industrialists cornering the market, the last ones to try it were the Hunt brothers, and you’ll recall what happened to them.
There are several things you could look at, but dont take my advice.
John Deere
Bunge
Monsanto
Cresud
ADM
or ETF’s like DBA,MOO
Now what?
I don't mean "There'd be dancing in the streets" kind of reply. I mean, well, now what? The needs that the Fed Res serves served doesn't go away. They still have to be met. Who steps in? State banks? A specially established Congressional bank? Who? What? and, for Pete sakes, when? Life --esp. financial life-- isn't going to wait.
In a more serious vein, I am daily reminded of the special relationship the Federal Reserve has had over the decades with decision makers from the British government....The tie between the Bank of England and the Federal Reserve was cemented during the 1920s in that extraordinary relationship between Benjamin Strong, the President of the New York Federal Reserve Bank, and Montague Norman, the Governor of the Bank of England. Their correspondence yields quite fascinating insight into the way they interpreted events that are now important history. The ties developed then between the Federal Reserve and British monetary authorities endure to this day.
...The Federal Reserve's close relationship with the Bank of England and other major central banks has been enhanced through periodic meetings at the Bank for International Settlements in Basel since 1963. But it has been over only the past quarter century, with the emergence of regular meetings of the finance ministers and central bankers of the Group of Five, and later the Group of Seven, that interactions between the Federal Reserve and the British Treasury and other major finance ministries have taken on special importance.
Now what?]
We're Americans. We'll deal with it.
Why is this the case, you ask? Consider General Mills. They use huge quantities of various grains, and lock in their costs using the futures markets, specifically by buying grain contracts for future delivery. This is exactly the function of futures mkts; to provide a means for users and producers of goods to insure against an adverse price movement.
General Mills will only rarely, very rarely, be selling futures -- they're buyers, enormous buyers, 98-99% of the time because they need the grains to process for their products. So, if you enter the futures mkt, and you buy (say) corn futures, you're trading with General Mills (ticker symbol GIS), not against them.
No offense, but the reasons that people like you view futures as riskier than stocks are 1) you don't (evidently) understand the mechanism of the mkts, and 2) you don't (very likely) understand leverage in finance.
The futures mkts offer simply enormous leverage to people, and most people -- far and away a huge majority -- if left to their own devices will abuse this leverage terribly.For instance, if you trade 1 contract of May '08 corn, that's worth about $27,962 at tonight's close. Yet the exchange (CBT division of CMEGroup, Inc.) will allow you to put up just $2200, no typo, to hold your position.
The leverage involved here is approximately 1272%, and that, m'friend, is one heck of a lot of leverage. Contrast this figure with the leverage that the Fed allow in stock transactions, which is a maximum of just 100% if one trades 'on margin'.
Yet some people, those who don't understand leverage, will do exactly that, put up $2200 and cross their fingers. And these people almost always get their butts smoked because any adverse price movement is magnified almost 13-fold.
Trading futures, if one does so using proper caution and avoiding too much leverage, is considerably less dangerous than dealing in most stock shares, because the futures mkts are far more transparent than are share mkts. You don't believe it, right? Read on.
Consider, again, General Mills. What did the CEO say to the CFO in the boardroom last Monday? Or, what did the CEO say to GIS's investment bankers on Wednesday? You and I will never know, correct? However, there's not a doubt in the world that these conversations might very well have a material and possibly even immediate effect on GIS's share price. In short -- and this is but one simple example, there are thousands of others -- you and I cannot get timely, accurate and anything close to complete information about GIS.
Now consider, contrarily, hogs. It is absolutely child's play, if somewhat tedious, to acquire as much timely and accurate information about this mkt as one wants. Even 'complete' information about supply and pending supply, and demand and pending demand, with a couple of minor exceptions.
For instance, we can't learn exactly on what day Farmer Brown will take his hogs to market, and we don't know until after the fact whether Farmer Jones will be expanding or contracting his crop of pigs.
However, what Jones and Brown do are not particularly material to the market price; we're only interested in what the sum of all the Joneses and Browns are doing, and this can be derived with really quite excellent accuracy (think Law of Large Numbers and poll sampling).
In which market, then, GIS shares or hogs, is our information very apt to be more timely and more complete?
Right you are. Trading anything is always about information. Nothing ever happens in a market until/unless someone (or a lot of 'someones') changes his mind. And, of course, the major reason why someone changes his mind is the acquisition of new information about the market in question.
Have fun in Vegas. Speaking as a trader, I never willfully take the short end of a bet.
As a sidebar, you might enjoy chapters one and two in Trading Options to Win (John Wiley & Sons, 2003), in which gambling, banking, bookmaking and trading are compared as activities involving 'making money with money'.
Good luck. 'Baby needs a new pair of shoes', and all that.
The only honest sentence he spoke! Rogers is absurd most of the time he speaks! a little George Soros, short America, bashing America! He stands to gain if he bashes successfully! Amazing he still gets camera time! Proves the media is Anti-America as well!
Not an investment bank or a couple investment banks, ALL INVESTMENT BANKS! Ya gotta wonder how many phantom shares that generated! The lawyers at the SEC are yukking this up, I'm certain! Nope, the problem ain't the Fed folks!
Exactly, He was also calld a kook for suggesting that gold be introduced as a competing currency with the dollar.
People are going to hear old campaign speeches from Ron Paul in five or ten years, and wonder why they didn’t listen to him in 07-08.
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