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Jim Rogers: Abolish the Fed, Buy Commodities, Short Stocks

Rogers: QE3 is already here, Alix. Get out the numbers for non-seasonally adjusted M2 and you will see that Mr. Bernanke said that in the summer we are going to keep rates artificially low. Now you can't just say the words. You've got to do something. And so they went into the market. The money supply numbers skyrocketed. They are in there. They are in there buying already. You can't just say the words. You've got to do something and they are in there buying. And that's why M2 has exploded. They are already easing and they may ease some more. Again, I told you, the worst risk facing us is the United States central bank which doesn't have a clue what they are doing.

And to your point the M2 supply is over $9.5 trillion, up 20% since November 2008. However, then why are you long the dollar?

Rogers: I am long the dollar because of all of the chaos going on around the world and because people dumped the dollar. There was lots of selling. Everybody is bearish on the dollar including me. I am the biggest bear in the world on the dollar but when I saw everybody too bearish, I bought dollars. There is this chaos and I am afraid there is going to be more flight capital. People see the dollar as a safe haven. It's not a safe haven. But since it's still in people's mind that's why I still own the dollar. But when people start getting exuberant about the dollar, if they do, I'll sell my dollars and I may never own the dollar again.

So what should the U.S. government do right now, with the Fed on the wrong policy, with jobs still really bad in the U.S. and with growth moderating, what should the U.S. government do?

Rogers: They should abolish the Federal Reserve. That would be the first thing they should do. They are not going to do that but what they should do is let interest rates find their normal rate, their realistic level. Right now masses of people in America, the people who save and invest, the people who we would say have done the right thing, are being destroyed because [of low] interest rates.

I mean think of all of the retirees. Not even the retirees, the people who have been saving and investing. They are being destroyed by the people who have done everything the wrong way in the past 10 or 20 years. When you destroy your class which saves and invests, you are really undermining the system very very badly. And I find that not a good thing.

So, if I were the Federal Reserve, now they would scream and say you can't do it, we'd have problems , we'd have unemployment etc. I beg to differ with them but even if we did, we've got to correct them. We've made a lot of mistakes in the past 50 years. We are the largest debtor nation in the history of the world. I mean it's staggering what we are doing. The debts are going higher and higher and someday, you've got to pay the piper. This has been going on for a long long time. You can't just wake up one day and say well you know we've made a mistake, let's change that. You've still got to pay for the mistakes.

What should the U.S.'s credit rating be?

Rogers: We are the largest debtor nation in the history of the world and the debts are going higher and higher by trillions, every two or three years. I don't know. I don't quite know how the ratings agencies work because I don't pay any attention to them. You shouldn't pay attention to them either. Nobody should pay any attention to them.

They have proven many, many times in the last few years, they don't know what they are doing. They have made huge mistakes, but I don't know, BB or something like that. You know you've got a huge, huge debtor, the largest in the history of the world, getting deeper and deeper into debt. That's not something that's worth AAA. That's not something that's worth A in my view.

-- Written by Alix Steel in New York.

>To contact the writer of this article, click here: Alix Steel.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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