Wednesday, September 12, 2012

Jim Rogers Doubtful of QE3

Billionaire investor and commodity expert Jim Rogers says he's not convinced the Federal Reserve and Chairman Ben Bernanke will implement another round of quantitative easing, saying they would "look like fools again."

"QE1 failed, QE2 failed, so I'm not so sure they would announce QE3, because they'll look like fools again," said Rogers.

He already thinks that's the case with the introduction of the Draghi plan for Europe, which was ruled as being in line with the constitution of Germany Wednesday by its Federal Constitutional Court.

Rogers concluded:

"We're all going to pay a horrible price for this in a year or two or three," adding that it's only a tool that is "unanimity towards mutual destruction" by the West.

Although it's almost a surety that the Federal Reserve will implement QE3, the ruling that the European Stability Mechanism can be implemented in the euro zone does make it possible that Bernanke will wait until later in 2012, or maybe early 2013 before launching QE3.

If Europe hadn't acted, Bernanke would have been under even more pressure than he is to stimulate the economy, even though it has proven to be a waste of money.

Rogers is correct concerning the consequences of the actions of central banks around the world, which continue to go deeper into debt as countries raise their debt ceilings and spending to unsustainable levels.

Over time commodities will thrive in this atmosphere, as prices will rise if stimulus continues, and they'll also rise because little in the way of new production is being entered into by commodity-producing companies because of the slow economic growth.

It's a win/win for commodity investors either way. Rogers recommends looking for commodities that are trading lower for best results, as commodity prices in many segments have been soaring lately.

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