The U.S. economy is doing well right now, but it won't last long. The U.S. will face a recession and a financial crisis within 2 years.
Jim Rogers, chairman of Rogers Holdings, warned in a video interview with ChosunBiz on the 18th that "the U.S. will soon face a recession due to liability and inflation." He added, "The U.S. stock market has enjoyed the longest boom since 2008, and I believe that bubble will burst this year," and stated that he is "not investing in U.S. corporations right now."
Rogers is considered one of the world's three greatest investors, alongside Warren Buffett and George Soros. He is known for achieving a 4,200% return while managing the Quantum Fund in 1973. In his books published at the end of last year, "Super Prediction: Trump 2.0 in a New Era" and "A World Map of Money by 2030," he also forecast a dark economic outlook for the U.S.
Rogers viewed the U.S. liability as a threat to the country's economy. He said, "U.S. liability has increased more than fourfold compared to 20 years ago and is still rising, and the U.S. will sink because of this liability." He further predicted that if the U.S. liability continues to increase, it will follow in the footsteps of the U.K. Just as the U.K.'s current account deficit after World War II led to a decline in the value of the pound and economic collapse, the U.S. could also lose its status as a global leader and the power of the dollar as a reserve currency.
He also predicted that President Donald Trump's protectionist policies would lead to tragedy for the global economy. On the first day of his inauguration on the 20th, Trump declared, "I will impose a 25% tariff on Mexico and Canada starting February 1." On the second day, he mentioned that conversations were ongoing about imposing a 10% tariff on China starting February 1, and indicated that the European Union (EU), which runs a trade surplus with the U.S., would also have to face tariffs.
Jim Rogers commented on Trump's policies, saying, "Historically, protectionism has been bad for both sides. While it may have yielded some short-term benefits, the ultimate outcome has been negative." He emphasized that "the more open the economy and trade are, the better it is."
Jim Rogers stated, "Rather than emphasizing decoupling the U.S. and China economically, it is right to reduce risks from China." Risk reduction refers to the strategy of effectively managing risks arising from a close economic relationship with China while maintaining the economic relationship. He expressed that "the U.S. should avoid excessive dependence on China, prevent the outflow of advanced technology to China, and maintain the economic relationship itself."
Jim Rogers also expressed a negative outlook on the future of Korea. In his book published at the end of last year, "A World Map of Money by 2030," he cited Korea as one of the "countries that will fade away in the next 10 years" alongside the U.S., European Union (EU), and Japan, citing reasons such as insufficient population to become a great power, stagnant population growth, and closed borders.
Jim Rogers argued that "for Korea to become a great power, it needs to open the demilitarized zone and engage with North Korea." He suggested that "the North and South should open their borders for trade and develop the tourism industry," and believes that they can become a great power if the strong manufacturing and finance of South Korea meet the high education level and affordable labor of North Korea.
Jim Rogers identified China, Uzbekistan, and Russia as countries that will grow over the next 10 years. He said, "While there are current issues causing undervaluation, I prefer to invest in places with future growth potential," and mentioned that he is "investing in China and Uzbekistan." He added, "While the Chinese economy is currently struggling, I believe it will recover. China has innovative technologies like electric vehicles and artificial intelligence, as well as numerous talents and natural resources," but also noted that "there are many barriers for China to become a hegemonic power and it may experience larger bankruptcies and panics in the future," while stating, "It is possible to replace the U.S. if they continue to open their currency."
Regarding investment in Uzbekistan, he mentioned that "President Mirziyoyev, who took office in 2016, has achieved various results in revitalizing the tourism industry and modernizing agriculture," adding, "Though it was a former socialist state, it is well transitioning to a capitalist economy." He also noted, "The number of foreign corporations in Uzbekistan increased from 5,000 in 2017 to 10,000 by the end of 2020, and its business environment ranking rose to 69th in 2020." Jim Rogers highly values Uzbekistan's high education level and its abundant natural resources such as natural gas, uranium, and gold.
Meanwhile, he pointed to bonds as assets not to invest in this year. Jim Rogers remarked, "A bond bubble continues globally," emphasizing that "now is not the time to invest in bonds." He explained, "I foresee inflation coming, which will lead to interest rate hikes," indicating that if high-yield bonds come out, there is a risk that the prices of bonds issued at lower interest rates could plummet. He noted, "Currently, inflation is trending down, but unexpected events like China invading Taiwan or major droughts could ignite inflation at any time, especially if central banks implement quantitative easing policies."
He also expressed concerns about investing in Bitcoin. He stated, "Bitcoin is a bubble," predicting that "it will someday disappear and become 'zero.'" However, he added, "Bitcoin is a good transaction medium, so if you want to trade virtual currency, you should take the risk and trade it."
He recommended commodity investments as a diversification strategy to avoid risk, such as in energy resources like crude oil and natural gas, precious metals like gold and silver, and grains like corn and soybeans.
When asked for advice for investors, Jim Rogers said, "Don't listen to anyone's advice, not even my own." He stressed, "If you do not know enough about the investment target accurately, you should not invest and instead put your money in the bank and wait," advising against trusting investment hot tips from the media and emphasizing the need to study first.