Top U.S. Money expert: "It's going to be much worse"

Top U.S. Money expert: "It's going to be much worse"

money.cnn.com

NEW YORK (Fortune) -- You might expect Jim Rogers to be gloating a little bit. After all, the famed investor has been predicting a recession in the U.S. economy for months and shorting the shares of now-tanking Wall Street investment banks for even longer. And with fears of a recession sparking both a worldwide market sell-off and emergency action from Federal Reserve chairman Ben Bernanke, Rogers again looks prescient - just as he has over the past few years as the China-driven commodities boom he predicted almost a decade ago began kicked into high gear. But when I reached him by phone in Singapore the other day there was little hint of celebration in his voice. Instead, he took a serious tone.

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Finally, people are starting to call the Fed on their disastrous policies. We are in for a long haul of financial instability here folks....

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"I'm extremely worried," he says. "I have been for a while, but I just see things getting much worse this time around than I expected." To Rogers, a longtime Fed critic, Bernanke's decision to ride to the market's rescue with a 75-basis-point cut in the Fed's benchmark rate only a week before its scheduled meeting (at which time they cut it another 50 basis points) is the latest sign that the central bank isn't willing to provide the fiscal discipline that he thinks the economy desperately needs.

"Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I'm afraid it's going to be much worse," he says. "Bernanke is printing huge amounts of money. He's out of control and the Fed is out of control. We are probably going to have one of the worst recessions we've had since the Second World War. It's not a good scene."

Rogers looks at the Fed's willingness to add liquidity to an already inflationary environment and sees the history of the 1970s repeating itself. Does that mean stagflation? "It is a real danger and, in fact, a probability."



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Well, it's made it from the blogosphere/altnews web, to the bear side of the financial media, and now it's hit mainstream. I had to be picked up by a rental car company today while my car is in the shop, and they picked up a couple of other people there too. The conversation we had in the car was all about the economy. There was myself and another (early 30's), the driver (a much older gentleman probably 70's at least), and a gentleman who just retired. All of us were talking about how bad things were financially. A negative view of the economy is pervasive all the way down to the common man. People didn't wake up overnight and decide this. THe mainstream media has only been talking about how bad economic conditions are since primary season hit full swing.