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8 Sep, 2013

US investment guru warns of economic slowdown as “printing of artificial money” ends


XIAMEN, Fujian 2013-09-07, (Xinhua) – Another economic slowdown will impact the world including China in the next two years as the United States and other major economies halt the printing of artificial money, according to investment guru Jim Rogers Saturday.

Even though the turmoil will affect China, the long term future of the RMB is still promising, said the 71-year-old co-founder of Quantum Fund, who has long championed the world’s second biggest economy.

Addressing a forum ahead of the 17th China International Fair for Investment and Trade, Rogers said, “Quantitative easing and money printing is going to end in one way or the other. It is going to cause problems in the world economy. Sometime in the next year or two, we are going to have another economic slowdown.”

He said the simultaneous monetary easing and currency debasing in all major western economies “has never happened in the world’s history.”

The “artificial sea of liquidity” has triggered inflation in some countries and caused currency instability, he said, citing examples of the sharply depreciated Japanese yen, and currencies of Indonesia and Turkey.

He hoped that central banks will stop the monetary easing. “Even if they don’t, the market will say we won’t take your garbage paper money anymore.”

But he warned that the withdrawal will cause problems and everybody will be affected, including China.

“America, Europe and Japan, these economies are ten times bigger than China. Even if China is doing everything right, it will still be affected by what’s happening in the rest of the world,” he added.

However, Rogers reiterated his optimism on the RMB, describing it as “the only currency that can compete and replace the U.S. dollar.”

A recent report by the Bank for International Settlement showed that the Chinese yuan has broken into the top 10 of the most traded currencies in the world for the first time.

“I will buy more RMB whenever I can. If anyone wants to sell RMB, come and see me afterwards,” he quipped during his speech.

He praised the government’s endeavors to make the currency more convertible, but hoped that the pace could be faster.

In contrast, Rogers called the U.S. dollar “flawed” and “troubled”. However, he still has to own the dollar because people go to the greenback when there is economic turbulence, he said.

“But I think investors will gradually move away from the dollar,” he added.

Meanwhile, as a renowned commodities expert, Rogers said he would consider investing in sectors of agriculture, raw materials, energy and maybe airlines.

Airlines stocks normally slump if there is war, Rogers said referring to the U.S. President Barack Obama’s recent move to ask congress approval for attacking Syria.

Rogers said if the United States wages a war against Syria, it would not good for anybody. However, for those who believe in an imminent war, they probably should buy the gold now, he said.