The End Game Ep. 11 – Jim Rogers

The End Game Ep. 11 – Jim Rogers

November 14, 2020

After a series of brain-churning conversations, take a breather this week and join us for a fun-filled journey around the investment world with the one and only Jim Rogers.

Hear Jim’s candid views on Japan, China, North Korea, the UK and the opportunities available in Venezuela, as well as cryptocurrencies, the impossibility of being short anything right now and the subject on everybody’s lips post-the U.S. election – Chinese wine stocks…

The Grant Williams Podcast
The End Game Ep. 11 - Jim Rogers
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After a series of brain-churning conversations, take a breather this week and join us for a fun-filled journey around the investment world with the one and only Jim Rogers.

Hear Jim’s candid views on Japan, China, North Korea, the UK and the opportunities available in Venezuela, as well as cryptocurrencies, the impossibility of being short anything right now and the subject on everybody’s lips post-the U.S. election – Chinese wine stocks…

 

Grant Williams:

Before we get going, here’s the bit where I remind you that nothing we discuss during The End Game should be considered as investment advice. This conversation is for informational and hopefully entertainment purposes only. So, while we hope you find it both informative and entertaining, please do your own research or speak to a financial advisor before putting a dime of your money into these crazy markets. And now, on with the show.

Grant Williams:

Welcome, everybody, to another edition of The End Game. Now, it’s just me here at the moment. We’ve had all kinds of technological issues this week. Mercury, I’m sure, is in retrograde somewhere and laughing at the pair of us, so I’m having to record this intro again, after the fact, just before we post this. Fleck is not with me. He’ll be here in a moment for our conversation with our guest this week, the one and only Jim Rogers, someone that Bill has known for a couple of decades, probably. I’ve known Jim for a little less time, but both of us have been fortunate to have a few opportunities to sit and chat with him over the years and we agreed at the end of this that neither of us had ever really heard him quite this relaxed.

Grant Williams:

So, what you’re about to listen to is a very gentle wander around the world with one of the few investment greats of his generation, the great Jim Rogers. So, sit back, relax, pour yourself a cup of your favorite whatever and enjoy this fascinating conversation.

Grant Williams:

So Jim, welcome to The End Game. We’re both delighted to have you here. Bill and I made this short list of people that we wanted to have this conversation with and you were one of the first names down there. We’ve been very lucky to get just about everybody on our list, so we’re thrilled that you can join us for this, so thank you.

Jim Rogers:

Well, I’m delighted Grant. I’ve known Bill for decades, longer than both of us want to admit. When you meet a smart guy in this business, you remember him; and there aren’t many smart guys, so I remember Bill, but it’s been a long time so I’m delighted to see both of you and I sort of knew you were a smart guy. Well, we met what? Three years ago? Two years ago?

Grant Williams:

A bit more than that, I think. We met four or five years ago now. That’s how quickly the time has gone by.

Jim Rogers:

Oh my gosh. Okay, well, let’s start.

Bill Fleckenstein:

Okay, so the one of The End Game questions is, what happens when the ends to the monetization of the central bankers because anyone with any common sense knows this cannot go on forever and so when I try to think about how this might end, I always think about Japan and the fact that the Bank of Japan has bought roughly half the JGBs, now they don’t trade, and it occurs to me that they might just essentially tear them up. And, when I think about that, I always try to think, “If that happened, what would happen to rates in Japan? What would happen to the currency? What message would that send other central bankers?”

Bill Fleckenstein:

So, I was just wondering, if the BOJ decided to essentially expunge the debt by exchanging it for some 100-year piece of paper at one basis point, basically expunging the date, what would happen in the wake of that in Japan, do you think, from an interest rate standpoint and a currency standpoint, if they tried that?

Jim Rogers:

Well, you have to take it another step, too. What about all the people who use those bonds as assets? If you’re an insurance company or a pension plan, or anything…

Bill Fleckenstein:

But, this wouldn’t impact this.

Jim Rogers:

You don’t have any assets.

Bill Fleckenstein:

But this wouldn’t impact theirs. This would just be the ones that the BOJ already owns and they would go to the Ministry of Finance and say, “Hey, you don’t have to actually redeem these. We’ll just exchange them and then they would have essentially wiped out half of their debt and in that world… They’ve effectively done that. I don’t know why they won’t take that next step and I was wondering if they did, what would finance in Japan look like in the wake of that?

Jim Rogers:

Well, that’s a… You’re a genius. It’s magic. Free money, free money. My God, we’ve been looking for that for a long time. A free lunch, not just a free lunch, free money. One, you should head over to Tokyo as fast as you can, ask them to pay the fare. Japan, as you well know, I presume you well know, it has some serious, serious problems. The population’s been declining for 10 years, and the debt skyrockets every day. It’s extraordinary. A guy goes to work every morning, runs a printing press as fast as he can and he said I’ll print, his word, unlimited amounts of money and he’s doing it. It’s staggering.

Jim Rogers:

I will tell you, it sounds a little self-serving… It’s actually a bit of a joke, too. I’ve had three number one best sellers in Japan in the last 18 months. Now, that’s a mistake, it’s an accident, I assure. Don’t think I’m some kind of smart guy or something. But basically, the title is something like A Warning to Japan, because Japan is in serious, serious, serious trouble and in the book, I say, “Listen, if you’re 10 years old, you better emigrate or you better learn how to use an AK47 because when you’re 40, when you’re 50, the country, if it’s still here, is going to have serious, serious, serious problems.”

Jim Rogers:

So, what you have just said is a reflection of that, and they may wind up doing… Who knows what they may wind up doing? The Japanese are pretty creative at times, but all politicians, they try to save themselves. In Russia, they still… If you were a pensioner, you still receive your Soviet pension. It’s not worth anything, but you still receive it and that will happen in other countries, too. If that happens to Japan, it’s just part of the same old story, that here we are, population’s going down, debt’s going up, we’re not competitive anymore. We’re less competitive partly because the aging workforce. It’s… Might as well wipe everything out. It’s not the first country that’s wiped out everything in history. In fact, if you go back in history, every country has wiped itself out one time or another. Some have wiped themselves out three or four times, so sure, why not?

Jim Rogers:

The other thing that you didn’t bring up, whenever there’s a problem throughout history, people, if there are any theories around that sound plausible, people try to use them. Mr. Marx had this fabulous theory and he was ignored for a while, but then everybody said, “Oh my God, Marxism sounds great. This is wonderful,” and so many people tried it for a long, long… Now, we know it doesn’t work, but so what. Many people tried it for a long time, but now we have a theory around called MMT, More Money Today, and everybody wants more money today as you just announced, a way to get more money, or another way to get more money today, and we may well try that for a while. It’s obviously going to end badly, when it ends, but Bill, that doesn’t mean people won’t try it. People have tried some absurd things throughout history and we’ll see.

Bill Fleckenstein:

That’s why I always look at Japan because they’re halfway home. They had this egregious amount of debt to GDP and now they’ve got half of it in the hands of the BOJ, who can basically take their portion, say you don’t really have to give it back to us, and I just wonder if they did that, would rates go up or down in Japan? Would the in go up or down? Perhaps, the answer’s not knowable, I don’t know.

Jim Rogers:

I don’t think rates would go up because why? Then, people know. They’d never have to raise rates again. They’d keep doing the same thing.

Bill Fleckenstein:

I was thinking because it would take the debt deflation, implosion card off the table when they had gotten rid of the debt, that implied threat could be they could do it again, so I thought perhaps with the deflation card off the table, maybe rates would rise because there was no reason to them at two basis points or 12 basis points if you didn’t believe in deflation. That was my crazy idea.

Jim Rogers:

No, that is a good point because if people realize, well, we’re not going to get any interest from Japan, why would we invest there?

Bill Fleckenstein:

Exactly.

Jim Rogers:

Why would we buy government bonds because we know they’re just going to disappear. Interest rates might well go up. The risk factor, if you will, and that may well mean interest rates would go higher in Japan because certainly it would send a message to the rest of the world, not that, that many foreigners buy bonds with JGB, but still people say, “Well, wait a minute. I don’t want to invest in Japan because who knows what might happen. If they can wipe out the debt to themselves, they can certainly wipe it out to foreigners. Who cares about foreigners? They’d certainly wipe it out to the foreigners.

Grant Williams:

Well, the Russians have done that. That playbook… There’s an example there recently. The Russians did that in 1998. But, what about the currency because the yen as a safe haven currency has baffled me for quite some time. It just seems as though, to your point, and I think you’re absolutely right, the problems, the bigger problems, the demographic problems, the debt problems facing that country suggest that not only is the population on borrowed time, but the currency should be on borrowed time, too.

Grant Williams:

And yet, it’s still a safe haven currency for many. I’m surprised we haven’t seen a weaker yen. What are your thoughts on that?

Jim Rogers:

I’m surprised, too. I don’t own… I don’t think I own any, and maybe a few by accident. I think the main problem is… Grant, look around the world. What else? Are you going to buy the ruble? You going to buy the euro? But sterling? I own a lot of U.S. dollars partly for that reason. The alternatives are few and far between now; even the Swiss franc.

Jim Rogers:

When I was a kid, the Swiss franc was the paragon of… There was nothing more virtuous than the Swiss franc. Now, the Swiss franc, as you probably know is, is backed by Amazon and Google and TenCent. Swiss National Bank has gone and bought huge amounts of FANGs and the world wakes up and says, “What?” When did we have a bear market in stocks again? And people realized, “Oh my God. The Swiss franc is not backed by gold. It’s not backed by integrity. It’s backed by Google.” I’m afraid the Swiss franc will be a disaster, too.

Jim Rogers:

So, back to your question, Grant. What’s the alternative? And the yen, I don’t own the yen because I just got to tell you, the Bank of Japan cranks it up, prints as much as it can every day. But, many people don’t know that, don’t think about that and for historic reasons, they buy the yen just like they buy the dollar. The U.S. is the largest debtor nation in the history of the world, but a lot of people think the U.S. dollar is the place to be when things go wrong. That’s why I own it. I know it’s a disaster, but at the moment, I own a lot of it.

Bill Fleckenstein:

It’s the proverbial one-eyed man in the land of the blind. Jim, you’ve invested in currencies your whole life and you’ve studied history. Has there been a period comparable to this in the last couple of hundred years, when all the currencies were this bad. There’s really no good, solid choices. Maybe you could make an argument for Norwegian krone or something like that, but by and large, all the currencies are untethered. They’re all playing the same game. Have we ever seen anything quite like this before, other than during a war?

Jim Rogers:

No. You look back in history, the world’s had many reserve currencies or medium of exchanges in history, but none of them have lasted 100, 200 years. I can’t imagine it had been 200 years for any of them. But, the gilder, the Spanish peseta, the British pound. All these had their day in the sun, but they all eventually disappeared because they got… Same thing we’re doing, we the U.S.; got over-extended, ran up debt. U.S. over-extended militarily, politically, financially. It’s happened many, many times in history and Bill, if you know one that survived, let me know…

Bill Fleckenstein:

I was asking you the question for that reason.

Jim Rogers:

Yeah, sure, we’ve had many periods of bad currencies, always; there’s always some politician somewhere ruining this currency, but I don’t… In the 19th century, the pound was there, gold was accepted by many countries, gold and silver. Even in the 20th century, the U.S., for a long time, was accepted. We more or less didn’t have huge debts, etc. We had a balance of payment surplus, etc. That was before 2026, when everything goes down.

Grant Williams:

Let me ask you a question…

Jim Rogers:

Wait, let me just finish that…

Grant Williams:

Go ahead.

Jim Rogers:

The other thing too, Bill, frequently in history, people could use anything they wanted as money. At one time, you could use seashells or gold. Banks could print their own money; legally, you could print your own money and it was accepted in the marketplace. So, people could use whatever they wanted and if they saw currencies deteriorating, or falling apart, then they would just switch, legally, and there was no problem with that. And so that meant there was always something people could find to use that was a sound currency. Now, in these days of Monopoly money, where the governments control, you and I cannot make a contract in gold now. It’s illegal. We’re Americans, but that’s true in many countries.

Jim Rogers:

In the 1930s, the Bank of England said, “Okay, guys, I know you’ve been using seashells and sugar cubes and cattle and everything else for money, but from now on, it’s an act of treason to use anything for money except our money. Well, an act of treason, Bill, means they execute you. So, most people stopped using seashells and printing their own money and everything else and that’s when that central bank reverted back and said, “Okay, it’s our money. If you don’t like it, treason.”

Jim Rogers:

So, that’s partly a brief history of money and how has always been something, which people would use. But now, what are we going to do next time? The U.S. dollar, like I say I own a lot of U.S. dollars, and I’m not sure this is where you guys wanted to go, but where do we go when the U.S. dollar, when people give up. My plan is that the U.S. dollar is going to get overpriced in the next turmoil because people don’t know what else to do, and it might even turn into a bubble depending on how bad the turmoil is. But then, what do I do? I have a couple of thoughts. I have to sell, especially if the dollar turns into a bubble. Then what?

Grant Williams:

Well, Jim, I have to ask you this question at this point in time because I know there are people listening who are daring me not to ask you and that

Bill Fleckenstein:

Go ahead.

Grant Williams:

Yeah, so everything you’ve just said there, to me, points towards something like Bitcoin. So, I’d love to get your thoughts on Bitcoin. And I don’t want to go too far down the crypto road, we’ve got plenty to discuss, but I’m interested.

Jim Rogers:

I’m happy to go down that road. Money is going to be on the computer. Nearly every country in the world right now is working on crypto money. The Federal Reserve is working on crypto money. Chinese are way ahead. If you go to China, you can’t take a taxi using money. You can’t buy ice cream using money. You got to have your computer money. It’s absurd. They’re way, way ahead of everybody else but other countries are doing that, too, but it’s going to be computer money, internet money, crypto money. Call it what you will, but Grant, I just told you the story of what the Bank of England did in the 30s, act of treason. Now, if the central banks say, “Mr. Williams, from now on, it’s an act of treason if you use Bitcoin,” maybe you will, but I won’t and a lot of people are not… Governments don’t want to give up their monopoly money. Are you kidding? Governments love the power and the control and that’s one of the things that gives them the most control.

Jim Rogers:

By the way, they love computer money because they know every… They will call you up one day and say, “Mr. Williams, you’ve been drinking too much coffee this month. Cut back on your coffee. Cut back on your anything; baseball, whatever you’ve been doing too much of.” They’ll know. They’ll know everything you do and they love that. I hate it, but it doesn’t matter what I hate. They’ve got the guns. To that point, the crypto guys say, “Well, we’re smarter than the government.” Well, Grant, of course they are. All the Bitcoin guys are smarter, but the government’s got the guns. I don’t particularly like that, but the Crypto guys don’t… How many tanks do they have? None. How many tanks does the Pentagon have? More than the crypto guys.

Bill Fleckenstein:

That is a serious achilles heel. I know the proponents to the cryptocurrencies always hate it when you bring up anything that’s slightly negative, but the anonymity that is perceived to exist doesn’t because everything is trackable. It’s a rub that you bring up that, at the end of the day, they’re going to know everything you’ve done if the currencies are electronic like that, all electronic like that.

Jim Rogers:

Well, the Bitcoin guys say, “No, no. It’s anonymous and they’ll never know. It’s all secret, et cetera.” Well, hallelujah. I hope they’re right for their sakes, but then if the government shuts down electricity or the internet goes down, then what do you do?

Jim Rogers:

So far, nobody’s given me an answer to that. The only answer I’ve heard is, “They can’t shut down the internet.” Your governments can do all kinds of absurd things.

Bill Fleckenstein:

Yeah, well they have little workarounds with the cold storage wallets and all these kinds of things, but at the end of the day, it’s still pretty trackable and so if the governments decide they don’t want you using it, as you say Jim, they can make your life pretty difficult, I would say.

Jim Rogers:

Even with the workarounds, Bill, if I want to go to the grocery store, how do I buy bread? I say to the guy, “This is all secret and here, and now you can’t tell anybody and I’m not going to tell anybody and this is a big, big secret. Don’t let them know that I’m buying bread from you and here’s the money.” The guy’s going to look at me and say, “What? What did you say?”

Bill Fleckenstein:

People say the same thing about gold and silver; that there not really fungible, but I suspect if you needed to do some bartering at the store, not in today’s environment, but in a different environment, you could probably find a way to turn your gold or silver into some sort of coin of the realm that you could use at the store. So, I think there’s potentially a little more functionality, but it’s one of the arguments against the precious metals as well, from a transactional standpoint.

Jim Rogers:

But if I do to the store and I show the guy a silver coin, a Chinese panda or a U.S. dollar coin, many people will recognize and know what it is and will accept it.

Bill Fleckenstein:

Right.

Jim Rogers:

Many, many, many people in the world. Now, maybe someday the Bitcoin guys are right; when I go to the store and the guy, and I say to him, “This is a big, big secret. You can’t tell anybody and you can’t spend it.” Maybe he’ll say, “Okay. I accept it. You’re right. I understand. We’re all in this big secret together, all eight billion of us.” I think it’s more likely he’s going to say, “Well, I’ve seen U.S. dollar, I’ve seen silver dollars before. I’ve seen silver pandas before. Okay, here’s your bread.”

Grant Williams:

Yeah, that’s the big flaw to me and it’s the question I haven’t had anyone give me an answer to is, if they make it illegal… And, I think the point you made there, Jim, is exactly the way I think of it, is that 96, 97, 98% of the people, as soon as you said, “This is illegal,” they just won’t do it because they don’t want to break the law. That’s the one part I haven’t had an answer to.

Jim Rogers:

Well, especially Grant, if they make it something strict like an act of treason.

Grant Williams:

Yeah.

Jim Rogers:

99%, 99.5% are not going to use it then because treason means execution.

Grant Williams:

Yeah, exactly. Well, Jim, let me ask you about your own personal end game because you are someone who… I’m not sure. I’ve lost track of how many years you’ve been in Singapore. Have you reached 20 years in Singapore yet? It must be 15?

Jim Rogers:

No, we moved here permanently in 2007.

Grant Williams:

Okay, 13. Okay. You were very vocal at the time that, that was really an endgame of sorts for you, that you saw that Asia was going to be the future and you were going to take advantage of that and you kind of walk the walk and talk the talk and actually moved out there and put your beautiful kids through school out there, and they’re fluent in Mandarin. So, I’m curious to know how that personal endgame of yours has played out in those interim 13 years because the power dynamics in Asia are very different now to how they were.

Grant Williams:

Obviously China’s changed dramatically in that time, so I’d love to get an update on your thoughts about Asia being the endgame of sorts.

Jim Rogers:

Well, the base reason was, I wanted my kids to speak Mandarin and know Asia because it is the future, in their lifetime. If I hadn’t had children, maybe I wouldn’t have moved to Asia, because who cared how I wound up since I had one and then two children. To me, it was extremely important that they grow up speaking Mandarin and that they know Asia. That has worked in spades, Grant.

Jim Rogers:

I speak no Mandarin, so it’s nothing to do with me. Believe it or not, CCTV, which is the largest TV network in the world. It’s done three specials about my daughters because they got these blue-eyed kids who speak such astonishing Mandarin, and again, it has nothing to do with me. I speak… My children say, ‘Don’t speak Mandarin. You embarrass us.” If I say a word, one word. So, it’s worked extremely well. They know Asia. The downside of course is, my 17-year old says to me, “Oh gosh, you robbed me of my American childhood.” Now, she wants to go to university in America. I said, “Fine. Go. You can learn about America anytime, but you cannot learn perfect, fluent Mandarin anytime and you cannot grow up knowing Asia anytime.”

Jim Rogers:

So, she’s insisting on going to university, which is fine with me. I could care less. I could care, but no. So, it’s worked perfectly and you can ask me later about the 12-year old. They both… The Chinese are stunned by these girls and nothing to do with me; nothing to do with me.

Grant Williams:

Right. But, let’s talk a little bit about the kind of change in the relationship that China has with Asia since you moved out there because it really is a different beast all together. And I was reading the notes from the fifth plenary recently and some of the language in there, the Chinese are talking about military parity with the U.S. by 2027, I think it was, and Xi is a different kind of leader. So, I’m just curious to think of your thoughts about the rise of China, or any threats that may pose.

Jim Rogers:

You and I both know that throughout history, when you have a dominant power who is flat or declining and another rising power, it has often led to war. I’m not the first person to figure this out, especially in times when raw materials become scarce, has nearly always led to war; shooting war, shooting war. It’s absurd. Nobody’s ever won any of those shooting wars in the end, but that has usually been the way history has played itself out and I sit here and I say to myself, this is totally absurd. And I say to myself, in 15 years, everybody’s going to be telling 20-year old kids, you got to go kill those 20-year old kids because they’re evil and vicious and it’s all because guys were making mistakes in 2020, 2021 and it’s always led to this.

Jim Rogers:

And then, you tell the 20-year olds, “Okay, go shoot them. Go shoot them.” It doesn’t do any good for anybody in the end, but Grant, I can sit here and say this all day long; it doesn’t do any good. I know history and the problem with history is, the main lesson of history is, nobody learns the lessons of history. I can sit here and say, “Guys, it’s very clear how this ends.” They say, “We’re smarter than history.” You go to Washington now, Mr. Trump says, “Who cares about history? I’m smarter than history. I don’t need history.” Well, maybe he’s right, but very, very few people have been smarter than history and nobody learns the lessons of history.

Bill Fleckenstein:

Well, it seems in terms of not learning the lessons of history, we may be about to embark here in America on… You called it more money today, which is a better thing than calling it what they like to call it, but it seems like we might be about to head down on a path of accelerated fiscal spending and monetization to accommodate that. Obviously, it looks like we’re not going to get the super left outcome because it looks like the House and Senate are going to stay close to what they were.

Bill Fleckenstein:

Given that the Fed has told you that they’re going to generate 2% inflation, and they’re going to let it average that, they’re telling you they want it to happen and given that bonds yield next to nothing, do you think we’re finally approaching the moment in time where the bond market is going to end the 40-year bull run and we’re going to start to see rising rates, which the Fed will fight. That’ll start to be the endgame for the bond market in America? Because that will have rather large ramifications for other things because so many people today have never seen a period of rising rates. I don’t think they can even conceive of that, or even rising inflation.

Bill Fleckenstein:

And it seems like we might be on the cusp of a major change. I don’t know how close it is, but it seems that way to me. What do you think about that?

Jim Rogers:

Well, you’re right. Bonds have been going up for 39 years and I’m not even old enough to remember when bonds made their bottom, or their top depending on how you look. Fleck, that’s why I got a little silver right here in my pocket, just in case, [crosstalk 00:28:13].

Bill Fleckenstein:

Here, I got you beat. I got a little bar, a little silver bar.

Jim Rogers:

The problem with that is, you go down to the grocery store and say to the guy, “Look, here it is.” The guy goes, “How do I know that’s real?” And then he’s going to say, “Okay, Mr. Fleckenstein, I’ll take it, but I can’t make change.” Then what are you going to do? Three loaves of bread, you going to give him a whole silver bar? Come to my grocery store. I’ll give you four loaves of bread for a bar of silver, even if it’s fake bar of silver.

Jim Rogers:

Yes, as I look around the world, it’s very clear to me that the only complete bubble I see is bonds. Bonds nearly everywhere are in a bubble. We’ve never had interest rates this low in the history of the world and never in the history of the world…And, it’s clearly artificial. It’s a bubble whether we like it or not and as you know, all bubbles end and they all end badly. It doesn’t mean there’s not other bubbles too, but this is… We’re at The End Game. You should watch The End Game, you should listen to The End Game because this is one that is clearly there everywhere in the world. Interest rates can go lower still, possibly bubbles… Strange things happen, but this is the end. Do not put your children in long-term bonds.

Grant Williams:

Jim, you talked there about we’re reaching the end here and obviously the zero bound for interest rates, one would have thought was a clear demarcation of an endgame of sorts. Now, rates have gone negative in five or six countries, the Swedes very noisily kind of repudiated them and brought rates back to zero and have said in studies that it just didn’t work. But now, we’re seeing the Bank of England readying themselves for negative rates. Do you think we’re just at this point now where they’re going to have to try this or they’re going to have to force negative rates on people in order to try and prolong this a little bit further, or do you think the market will ultimately repudiate the idea of negative rates?

Jim Rogers:

It hasn’t worked anywhere but Grant, they don’t know what else to do.

Grant Williams:

Yeah.

Jim Rogers:

All they know is what they do. They’re all bureaucrats and academics that don’t have a clue. So, no, they’ll try more. They will say, “Don’t worry. Don’t worry. We’ve got the answer.” Well, you better worry, especially when the government tells you don’t worry, you know it’s coming to the end. But they don’t know what else to do. There’s nothing… If you went to the Federal Reserve tomorrow and said, “Guys, this is not going to work.” They would say, “Too bad. This is what we’re going to do because nothing else we can do. But going to raise interest rates to 3%, ha.”

Bill Fleckenstein:

I think you make a good point, Jim. They only know how to do one thing, and they’ve demonstrated that repeatedly in the last 20 years; this era I kind of cause the activist central bank era, where they won’t let markets clear and because of the problems they’ve created. So, now it would seem if we’re near the endgame of them being able to print money like mad, and hold rates at zero, while trying to generate inflation, something’s going to give. If the buying market starts to give, they’ll assert yield curve control for a while and that will buy them some time, but it seems to me that the most likely outcome is that they will, in market terms, they will lose the bond market and when that happens, which can’t be a long ways away. It could be a couple of years. It seems to me that it’s going to create a whole lot of pain in a whole lot of areas. Does that seem reasonable to you?

Jim Rogers:

Well, but if they do revert to MMT, and the British are already basically doing it; they haven’t announced it, but they’re practicing MMT, that could prolong things for a while. It’s not good for my kids, but for a while, people could say, “My God, look at this. This is fun. It’s free money. It’s free money,” and they keep buying whatever they want to buy because that money keeps coming out of the trees. Just go outside and money falls out of the sky and they’ll keep buying bonds and keep interest rates down. It’s just, the longer you do it, the worse it ends, but why not?

Jim Rogers:

Now, I know you will tell me why not and I will tell them why not and they’re going to say, “Go away and leave us alone.” You’re one of those crazy guys who believes in sound money.

Bill Fleckenstein:

Well said. Well said, Jim.

Jim Rogers:

Sound economy. We don’t care about crazy guys who say sound economy.

Grant Williams:

Jim, one of the outcomes of this, almost no matter which way this goes, is this great debate around deflation and inflation and everybody’s kind of caught up in that because it really is the one turning point that if you can get it right, after 40 years of deflationary pressure, if we are seeing a return to an inflationary environment, and some people have waxed extremely eloquently on that possibility and a lot of hardcore deflationists are starting to jump on the inflation train. I know this is something that you have talked about a lot and written about very early in the piece. Where do you think we are now in that transition period from deflation to inflation?

Jim Rogers:

Well, Grant, as you know, the world is in serious trouble right now, so nobody’s got any money to buy anything. A lot of people don’t have any money to buy anything, so we have deflation. If I don’t have a lot of money to go down and buy up all the beer in the beer hall, I’m not going to buy any beer and that’s what’s happening. The price of beer goes down and so, we have very little demand pressure now on anything because the world is a disaster. I own gold and silver, I’m not buying it right now because I know in Asia, many people are being forced to sell their silver and gold to buy rice, to buy food.

Jim Rogers:

India is the largest gold market in the world, but the Indian economy is suffering, so a lot of people are having to sell their precious metals. So, because of the state of the world economy and the mistakes the politicians have made with the virus, we have a period where there’s not much demand and therefore, not much inflation. History would show that, that’s going to change and come back. In fact, as I look around the world at asset classes, I told you that the bubble I see, the obvious bubble, is the bond market in most countries. The cheapest asset class I see in the world is commodities because stocks are making all-time highs in the U.S., bonds, we just discussed; property in much of the world has been extremely expensive and is under pressure, so the only cheap asset class is commodities. Agriculture is a disaster. Sugar’s down 80% from its all-time high, 80%. That’s not a typo, Grant. 80%. Silver’s down 60% from its all-time high. That’s the only cheap class I see; asset class.

Bill Fleckenstein:

And it seems that more people are recognizing that, at least from the precious metals sector. You have a position, I have a position, I assume Grant has a position; we never really discuss that. But, I think that a lot of people don’t have any position in precious metals and I think that one of the reasons why they’ve behaved as well as they have in this period where there are no real price pressures because of the points that you make, I think there’s a lot of people that are recognizing they’re going to need to have some precious metals given what looks like what’s coming down the pike.

Bill Fleckenstein:

So, I think that’s one reason why the metals have done as well as they have, even though there’s no apparent pressure on inflation yet, and no real currency pressures yet; well, at least in G7 world.

Jim Rogers:

But Fleck, silver’s down 60%. Platinum is down. Platinum is cheap on a historic basis. Palladium and gold are up, but other than that, precious metals… Well, the other two are not up.

Bill Fleckenstein:

Right. I mean, they haven’t done anything silly. I’m just saying, you could have made money on them if you had purchased them in the last group of years, whether it’s five years or 10 years, but your point survives. They haven’t really done anything silly yet; that’s for sure, and the rest of the commodity complex has not done anything for at least a decade, some longer than that.

Bill Fleckenstein:

But, don’t you think that the… If we had, had a discussion about what was going on in the world when gold had its last run that ended in ‘11 or ‘12, it didn’t seem to me that you had the same level of institutional interest that appears to be getting behind the metals in this go-around because I think more people can see that these policies that are being advocated will lead to reasons why you need to own the metals. Doesn’t it seems to you like there’s more of a recognition that you need these things from an insurance standpoint, sort of like… People use to think in the 50s, 60s and 70s, you need to have 5% or 10% in metals and then we have 30 or 40 years where no one wanted to have any of them.

Bill Fleckenstein:

It seems to me, that’s changed a bit. Do you think that’s true?

Jim Rogers:

Well, to some extent, yes, obviously that’s why gold is near its all-time high, but also Fleck, there are people now who are saying we should put our money in cryptocurrencies instead of gold and silver. Now, I’ve told you what my view on that is, but so, some of the demand, that if we didn’t have cryptocurrencies right now, a lot of those people would be buying precious metals, but they have turned to cryptocurrencies and the idea that this will save them.

Jim Rogers:

By the way, many cryptocurrencies have disappeared already. There were a few thousand that are gone, so you know what my view is, but back to your question, some of that demand that would have gone into gold and silver, is going into cryptocurrencies.

Bill Fleckenstein:

For sure.

Grant Williams:

When you think about possible end games, one end game you and I spoke about when we last sat down and chatted, and that was you were heading off to try to invest in North Korea and when you reached the end, in terms of the investment world, you kind of think that, that’s where North Korea sits; so, the end of that rainbow. I’m curious as to how you got on with that project and what the latest update is on investing in North Korea.

Jim Rogers:

Well, I quickly will tell you Grant, it’s illegal for Americans to invest in North Korea. It’s illegal now for Americans to go to North Korea. I’ve been to North Korea twice, but it was legal then when I did that. It’s no longer legal, so my investment project in North Korea has gone nowhere. I don’t want to go to jail. I’d rather be poor and out of jail than rich and in jail, so I have not invested in North Korea because there’s no way.

Jim Rogers:

Now, the North Korea story continues to develop and the 38th parallel is going to open in the foreseeable future if you ask me, and then the Korean peninsula is going to be an extremely exciting place to invest, but I’m an American so there’s nothing I can do right now. And there are other countries, too, South Koreans cannot invest there, Japanese cannot invest, Russians can, so I don’t know what passport you have, but if you have the right paths for it, you should get on a plane to North Korea. It’s happening.

Grant Williams:

Yeah, just on a broad perspective, what are the investments? Is it commodity-based, is it industrial plant machinery-based? What are the aspects that North Korea are attractive to outside investors potentially?

Jim Rogers:

Well, as recently as 1970, North Korea was richer than South Korea.

Grant Williams:

Yep.

Jim Rogers:

Grant, communism and the Kims, Mr. Kim and his kids and grandkids, can ruin anything and they ruined North Korea. They totally ruined North Korea, a combination of Kims and communism, oh my God. But, they have huge natural resources; that’s why they were so rich before and they have very large disciplined, educated, cheap workforce, right on the Chinese border. You put that together with South Korea, which has major manufacturing and capital ability, with a large population, it’s going to be great. Then, you’ll have 80 million people on the Chinese border with an open economy that can manufacture, raise capital, cheap labor, lots of natural resources, et cetera.

Jim Rogers:

Japan is very much against it. Japan is trying to stop it because they cannot compete with an open Korea and they know it. But, North Korea’s for it, South Korea’s for it, China’s for it, Russia’s for it. The main problem is the U.S. army. If you get out a map, you’ll see that the only place that the U.S. can have troops on the Chinese border and the Russian border is South Korea.

Grant Williams:

South Korea.

Jim Rogers:

So, they don’t want to leave and that’s the problem and Trump’s not strong, wasn’t strong, or hasn’t been strong enough to overrule them and Moon in South Korea hasn’t been strong enough, so it’s going to happen, but somebody has to deal with the American army first, or it will never happen. But, never is a long time in history.

Grant Williams:

Yeah.

Jim Rogers:

So, that’s what’s going on. Again, if you’re allowed, go to North Korea and look around.

Grant Williams:

So, we’re just a couple of assassinations away from that being a really nicely investible market.

Jim Rogers:

Well, but again, the American army’s a pretty strong army. There’s 10,000 troops there and they don’t want to live.

Bill Fleckenstein:

Jim, a lot of people have felt it doesn’t seem like it’s quite such a popular thought right now, but I remember in the last 15 or 20 years, there have been periods where people thought that the Chinese would make the renminbi convertible, and they’ve made a couple of maneuvers in the last couple of years. Do you think that is something that’s on the Chinese horizon and what sort of timetable would you think that they might have, given your vantage point of being out there in Asia, and watching this closely?

Jim Rogers:

Well, as you’ve just pointed out, they have been opening their economy and their financial market. That just started in 2005, really very slowly. This is not 1920. This is 2020. If I were the Chinese, I’d do it this afternoon. Last week, they opened up financial markets more and more, but still, it’s a blocked currency and it’s not freely tradable, et cetera; although, it is getting more and more open.

Jim Rogers:

It’s going to happen, Bill. It’s going to happen by 2015. No, 2018, 2020. Don’t worry, by 2020, it will be open. It’s coming. They’re not listening to me. They’re doing it on their own timetable whether they’re right or wrong, it doesn’t matter, they’re going to do it their way. But once they do it, I mentioned before that when the U.S. dollar turns into a bubble, if it turns into a bubble and I have to sell, I’ve got a couple of possibilities. If the renminbi is convertible by then, and it might be, then the renminbi will be an obvious possibility of where I would put my money. But, at the moment, it’s a blocked currency.

Jim Rogers:

There have been no, very few, in fact, I know of no periods in history where people tried to smuggle their money into a blocked currency. They’re always trying to get their money out of a blocked currency.

Bill Fleckenstein:

Right.

Jim Rogers:

So, I’m not trying to smuggle my money into China to get into a blocked currency.

Grant Williams:

While we’re on the subject of China, I’d love to get your thoughts on what’s happened in Hong Kong in the last year. Obviously, we’ve seen enormous social unrest based around some of the legal changes they’ve made there, particularly the extradition bill. What’s it like on the ground in Asia, particularly with you based in Singapore, which is obviously sitting there with its arms wide open looking to kind of scoop up a lot of the people that are supposedly leaving Hong Kong, but wanting to stay in Asia?

Jim Rogers:

Well, anecdotally, there is some of that. Some people leaving Hong Kong and coming to Singapore. Not as much as one would… If you read the press, there’s going to be a drove, a mob. From what I can see and I’m not a good… This is anecdotal. There is some, but not huge amounts yet. Part of the reason, apparently, is because the people in Hong Kong are content. They don’t see any changes in their lives, any problems, and Britain has offered amnesty or passports to a few hundred thousand people and apparently, in Hong Kong, they’re saying if they leave, the trouble is gone. We get rid of the troublemakers and everything is fine in Hong Kong. We carry on as we were before without mobs in the streets.

Jim Rogers:

Now, I don’t know. I’m just giving you anecdotal evidence so far. As you know, the Hong Kong stock market is strong, the currency has not collapsed. As you know, Ant is trying to list in Hong Kong, as well as Shanghai, so it looks, from what I can see on the ground, and maybe that theory is right, that the troublemakers leave and fine, we get on with our business. Again, back to Singapore; there’s some but not the mobs that might have happened.

Bill Fleckenstein:

So, when you look at the U.S. stock market, do you have much exposure to the U.S. stock market, given all the crazy things that have gone on? How do you think about what’s going on here in our equity market?

Jim Rogers:

At the moment, if I were buying, and I am, I wouldn’t be buying in the U.S. because the U.S. is near an all-time high. Now, there’s some parts of the U.S. market which have not participated and they’re probably great bargains, but having said that, the Japanese market’s down 45% from its all-time high and the Bank of Japan says, “I’m going to go to work, print money and buy ETFs.” Bill, if he’s going to buy ETFs, I’m going to buy ETFs. He’s got more money than I do.

Jim Rogers:

Listen, the Bank of Japan, he’s very clear, I’m going to buy Japanese ETFs so I buy Japanese ETFs. The Russian market is hated. I bought more Russian shares yesterday. The Chinese market is down 40% from its all-time high. I bought more Chinese wine stocks. You probably don’t know there are; I hope you don’t there are Chinese wine stocks…

Bill Fleckenstein:

Chinese wine? Chinese wine stocks? No, I didn’t know that.

Jim Rogers:

See? Hooray, hooray, hooray, I’m going to buy more. People going to the bars [crosstalk 00:48:32]…

Bill Fleckenstein:

Is the wine any good?

Grant Williams:

It doesn’t matter.

Jim Rogers:

Who cares?

Bill Fleckenstein:

I care.

Jim Rogers:

I’m buying the stocks. Some of it is actually very, very good. I will tell you a story later if you want to hear it, but… People stopped going to the bars, people stopped going to the restaurants and most people in the world don’t know there are Chinese wine stocks, but someday, people are going to go to the restaurants and the bars. They’re already starting in fact again, and I hope someday, smart guys like you, living in cool Seattle, are going to be drinking Chinese wine and I will sell my Chinese wine stocks.

Grant Williams:

Jim, you can’t dangle a story about Chinese wine and say, “I’ll tell you later.” You’ve got to tell us the story about Chinese wine.

Jim Rogers:

Well, I just… You know LVMH?

Bill Fleckenstein:

Yes.

Jim Rogers:

Moët Hennessy.

Bill Fleckenstein:

Yep.

Jim Rogers:

It turns out a few years ago, they decided they were going to have the Mouton Rothschild of China. They searched around, they found property that they think is the best place. It’s down in the southwest. It’s up high, it’s the second highest vineyard in the world, and they spent a lot of years, the first two or three years… They threw the wine out. It didn’t meet their standards. But now, they are selling wine, which they think will be the new Mouton Rothschild. They only have capacity for 25,000 cases per year, at the moment, and they can only expand to 30,000 cases. They sent 600 bottles to Singapore. That’s how I know about it and they’re not going to sell it all in China because they want it to be an international brand. Obviously, you don’t want to just be a hot Chinese brand.

Jim Rogers:

So, that is what is happening with Chinese wine. There’s another wine called Grace, which is a Chinese wine, which my wife thinks is very good. I own three Chinese wine stocks; that’s been the worst. So, back to your question, Bill. Grace wine, my wife loves, stock I hate. I bought more recently…

Bill Fleckenstein:

I think it’s a great idea, not that you need my opinion, but I think it’s a great idea.

Jim Rogers:

Well, I don’t care if you buy the stocks, buy the wine.

Bill Fleckenstein:

I’d rather buy the stocks and drink the wine that I have from Burgundy.

Jim Rogers:

I’ll leave that to you.

Jim Rogers:

By the way, the first Chinese wine stock I ever bought was… It was some Frenchman 120, 130 years ago, went to China, Shandong province, and said we got to start a winery and it’s now the sixth largest winery in the world, and you’ve never heard of it.

Bill Fleckenstein:

What’s the name of it?

Jim Rogers:

Changyi, C-h-a-n-g-y-i.

Grant Williams:

It sounds remarkable close to a Singapore prison to me, Jim.

Jim Rogers:

It is. It’s very close to the same name and the same name as the airport, but it is the sixth largest… It’s a shock. It’s the sixth largest vineyard in the world.

Bill Fleckenstein:

Wow, that’s interesting. [crosstalk 00:51:40] I’m going to flip the equation upside down. Are you short anything anywhere?

Jim Rogers:

No, not short on anything because it’s a very good chance that this is going to wind up in a blow off. I don’t know how the election’s going to come out, but either way, frequently in history, after you have a long period of rising markets and lots of free money and apparently more free money coming, you have a blow off and I have shorted bubbles in my life, successfully in the end always, but oh my God, it’s not any fun being short a bubble.

Bill Fleckenstein:

No, no.

Jim Rogers:

Especially in the early stages of a [crosstalk 00:52:23].

Bill Fleckenstein:

I’ve been there done that, too. Not much fun.

Jim Rogers:

I know you have. I know you have. What you need in a market like that is a 26-year old because 26-year olds think that their smarter; they think this is normal. This is normal and I’m getting rich.

Bill Fleckenstein:

The old hire the kid, yep.

Jim Rogers:

Yeah, I’m very smart. I’m making all this money because I’m smart. Well, the last thing you want when the bubble ends is a 26-year old, but in the early days, you want to find as many 26-year olds as you can.

Bill Fleckenstein:

Yeah, I don’t know about the rest of the world, but talking about America, I think it’s impossible to try to be short, especially because across the broad spectrum of securities, fundamentals don’t matter anymore because when you look at the amount of the index funds, how much of the money they put in every day, and then you look at the size of the option market and the speculation that goes on, you might be exactly right about stock. We could pick bunches of names we could talk about and think, “Well, gee, they really shouldn’t be where they are,” but you can’t make that bet today, in this day and age. I don’t know how come people keep trying. It seems to me nearly impossible.

Jim Rogers:

Well, especially with, as you pointed out before, the central banks are just going to print and print and print. While that’s happening, money’s got to go somewhere. I hope some of it goes into my Chinese wine stocks…

Bill Fleckenstein:

Well, now that you’ve told… It will now, after you’ve told everybody you own them. They’re going to beat a path to those stocks.

Jim Rogers:

I’m sure everybody’s going to dump them. They’ll start shorting, saying, “That guy, what does he know? Chinese wine stocks? Yeah right.”

Grant Williams:

Jim, I think just about the only place we haven’t touched on is Europe, so I’m curious to get your thoughts on Europe, because they’re not in an end game of their own. Obviously, Madame Lagarde is threatening not only much more negative rates, but she seems to be out in the vanguard of this whole move to Central Bank digital currencies, too, and with good reason, I think she’s going to need one of those before too long. What are your thoughts on Europe, because it’s been this kind of fragile construction for such a long time now, but it’s hung in there somehow. Are we near any kind of end game in Europe, or would you think that just drags on for a while as well?

Jim Rogers:

Well, when you say Europe, I presume you mean the UK as well. The UK has staggering debts now and it’s like Japan or the U.S., it’s just incomprehensible how much higher the debts are going, and they’re going, and they’re doing it. They’re printing money and they’ve started MMT quietly, without announcing it, so maybe English stocks will go higher, but it’s artificial. It’s not so artificial in other parts of Europe, but we discussed Switzerland before. Other European countries seem a little less unsound; I don’t want to say sound, less unsound, but I don’t see any huge values anywhere in Europe.

Jim Rogers:

There may be. It may just be because I’m lazy and haven’t done enough homework. I’m sure if you bought European airlines or hotel chains or restaurants or anything to do with travel and tourism, you might be okay, but I am not… It’s an accurate statement. I’m buying Russia, Japan, China, and it’s probably laziness. I’m sure there’s things to buy in Europe, I just don’t know them. In fact, may-be I should by some Lufthansa today.

Grant Williams:

When you talk about Russia, are you looking at… Some of the people I’ve been speaking to are looking at the banks in Russia, which seem extraordinarily cheap and some of the resource stocks there, particularly. Is that what you’re looking at or are there other pockets of that market? I know the whole market is crazy cheap, but I’m just interested in where you’re looking.

Jim Rogers:

I actually… What I bought yesterday was a Russian shipping company. The banks everywhere in the world are very cheap, Grant, and in my view, they’re going to disappear because you look out the window and you’ll see a bank on every corner. But, if you also look out the window, you’ll see 18-year olds in a garage somewhere coming up with fintech, fintech, fintech, as fast as they can and my kids will probably never go to a bank when they’re adults. I don’t know what’s going to happen to all these banks, these branches that are sitting. I guess they’ll be old-age homes. Who knows? I don’t know what’s going to happen to them in the end.

Jim Rogers:

In fact, if you can come up with a way to buy up all the empty bank branches, we can start an REIT or something and we’ll get rich, but I don’t know what’s going to happen to them. So, my answer to you is yeah, banks are cheap. A, I don’t know their balance sheets. I cannot decipher their balance sheets well enough to make a decision and B, I am basically not optimistic about the fundamentals because of what’s happening with technology. Blockchain is going put a lot of the back offices out of business. Blockchain is going to put a lot of people out of business. Electricity put a lot of people out of business, too. We’re not going to get rid of electricity. Blockchain, while that’s going to ruin a lot of people, it’s going to make a lot of other people.

Jim Rogers:

Anyway, the answer to your question is I’m not buying banks, but that’s maybe laziness. In Russia, also in Russia, well, I told you shipping. I own shares of the stock. Aeroflot, I own Aeroflot. Nobody went to Russia, travel stopped. I own a restaurant chain because Russian tourism; there’s never been Russian tourism. I suspect it’s coming from zero, so it’s not going to get worse. What else do I own? I’m a director of a large fertilizer company and I’m a director of an agriculture company, a farm company, too.

Jim Rogers:

Every day, Grant, every day Russian farmers wake up and say, “Thank you, Mr. Trump. Thank you, Mr. Trump. Thank you, Mr. Trump,” because he puts sanctions on Russia and so Russian agriculture is booming. It has to. There are always unintended consequences to everything, especially sanctions. Some people suffer for a while but then there are other people who make out like bandits, so I own Russian… It’s an international… It happens to be a Russian company.

Grant Williams:

Yeah.

Jim Rogers:

But it’s in London and Moscow, but I own, and I’m a director, of a Russian fertilizer company.

Bill Fleckenstein:

Wow, we’ve made it all around the world.

Grant Williams:

We did. How about that?

Jim Rogers:

More or less, more or less, we haven’t gotten to Zimbabwe yet, and I did buy a few shares in Zimbabwe recently; not enough to even mention, but you talk about a… I’ll tell you a great catastrophe for both of you guys, although there’s nothing I can, none of us can… I went to Venezuela not long ago, because you talk about a catastrophe, it’s a total catastrophe, but now it’s illegal for Americans to… We’re citizens of the land of the free. We’re not so free, I’m afraid. It’s illegal for me to buy shares in Venezuela, although I would love to.

Bill Fleckenstein:

Really? I’m curious, Jim, everyone knows it’s extraordinarily depressed, but what’s the catalyst that would get you to want to do that? Do you think it’s so bad it’s going to have to get better, or I’m just curious as to your logic for why Venezuela?

Jim Rogers:

Well, it’s a catastrophe.

Bill Fleckenstein:

Right.

Jim Rogers:

And I’m always attracted to catastrophes and historically, if you buy a catastrophe, usually five or six years later, you’re going to be in great shape. Now, obviously there needs to be a catalyst. It’s irrelevant to me right now whether there’s a catalyst coming or not because it’s illegal. Again, I don’t want to go to jail and be rich, I don’t want to be rich in jail, but if you’re not an American, or if you’re not subject to sanctions, you might think about Venezuela because Venezuela has been there a long time and I don’t think it’s going to disappear. If you buy a catastrophe which disappears, of course you made a mistake, or unless something changes.

Bill Fleckenstein:

On the other hand, Argentina is also a catastrophe and it just keeps going from one basket case to the next basket case to the next basket case.

Jim Rogers:

I didn’t suggest you go to Argentina.

Bill Fleckenstein:

No, I know. I was just…

Jim Rogers:

I know the of Argentina. It’s astonishing. It’s amazing how they do it.

Bill Fleckenstein:

It is pretty remarkable.

Jim Rogers:

I think they’ve defaulted what? Seven times in the last few decades? What’s staggering to me is that people keep buying it. I’m not buying Argentina. I know the story. I’ve been to that rodeo. I’ve seen that rodeo, but maybe you go to Argentina and when Venezuela is legal, I’ll buy the Venezuela, okay?

Bill Fleckenstein:

No.

Grant Williams:

Jim, let me ask you one more question before we wrap up. I just looked at the time. Just, from a mental perspective, every time I speak to you, I’m struck by how simple you make a lot of this sound in terms of you look at a catastrophe and five or six years later, invariably as long as there’s a catalyst, you’re going to be doing okay, and history, again, proves that you’re absolutely right. But so few people have the ability to withstand those five or six years. How do you mentally get yourself in that frame of mind where you can look at that longer term and you can invest for five or six years down this track and then not get caught up in the enormous amount of noise and volatility that tends to happen between one or the other?

Jim Rogers:

Well, one is I’m not as smart as you, not as smart as those people that you wish you were talking about. And secondly, I don’t pay attention. I usually start small. I remember once, I was investing somewhere… I think it was in one of the African countries, and the broker said to me, “Well, shall I send you a report ever day, sir?” I said, “No, no, no. Never send me any prices. I don’t want to know because if they go up, I might sell and if they go down, I might panic and sell. I don’t want to know.” I’m making a basic, fundamental long-term judgment here that I expect, in a few years, this is going to make a lot of money, so don’t send me the prices. And then periodically, if I get around to it, I look and sometimes I would add to my positions and build the positions that way.

Jim Rogers:

But no, in dealing with things like that, at least my story historically, not in the early days it was, but now is just don’t pay attention. I told you about a couple of Russian stocks I own. I have no idea what the price is. I couldn’t tell you the price of Aeroflot today and don’t want to know. Please don’t tell me. Please don’t tell me the price of Aeroflot.

Grant Williams:

If I knew, I’d still keep it secret from you, but I don’t know unfortunately. I haven’t looked at Aeroflot in years.

Jim Rogers:

Hooray.

Grant Williams:

Well, Jim, it’s been a fantastic hour and 15 minutes. Thank you so much for taking this time so early in the morning. I’m glad we got that coffee for you and got you all amped up on caffeine.

Jim Rogers:

Well, thank you. It’s terrific to see… I haven’t seen you, Grant, in a while, but Fleck, I haven’t seen in God knows how many years.

Bill Fleckenstein:

I think it was in ‘08. We were both in New Orleans at a conference. I think that was the last time that I saw you and then, right after that is when you moved to Asia, or right around… Maybe it was ‘07; somewhere around in there. It was just before you left for Asia, I think.

Jim Rogers:

Right. Because I live in Asia now, I don’t see as many people in the U.S. as before. I do come to the U.S. for whatever. I’m on some boards and thing like that and my family, but no, I don’t come to the U.S. like I used to, obviously when I lived there, and I don’t travel a lot. Although, I will tell you… I’ll give you the long version to bore you. I was at my college reunion a year or two ago and they asked me to talk about… Oh my God, we got this crazy guy who’s been around the world. They called it… Not Indiana Jones, but who’s the guy that went around the… Phileas Fogg.

Grant Williams:

Phileas Fogg, yeah.

Jim Rogers:

Our class’s Phileas Fogg. They wanted me to talk about going around the world, so I gave a story about going around the world twice, which I’ve done once on a motorcycle, once in a car, and one guy raised his hand and said, “Well, Jim, what’s your next adventure?” And I, a little embarrassed, said, “Well, my family and I are going to drive from the Atlantic to the Pacific, across America, this summer.” I said, “That’s not much of a… “ And he raised his hand and said, “To us, that’s a big adventure, all us old guys who went to college with you.”

Jim Rogers:

So, we drove across the U.S., my daughters, my teenager, the 16-year old, she was 16 then, organized the whole thing. She said, “I’m American. I don’t know anything about America. I want to do it.” So, I said, “Okay, do it. You organize it. We’ll do it.” And at one point, she said to me, “And one of the things we need to do is, we need to see a Texas oil tycoon.” I said, “Oh, that sounds great. Texas oil tycoon. I wonder if there are any left,” and then I remembered T. Boone Pickens. So, I got in touch with T. Boone and we went to see T. Boone. We thought it would be about 10 minutes; we were there two hours. We’d still be there, if T. Boone didn’t die. He died a few months later, but it was fabulous sitting there with T. Boone Pickens. He’d been married five times, given away hundreds and hundreds of millions of dollars. What a guy, what a life, what a story.

Jim Rogers:

And, again, to talk too long, at one point, my… She was 10 at that point. T. Boone was telling a story and my daughter, my 10-year old, raised her hand and said, “Wait. Excuse me, Mr. Pickens, is that arbitrage?” We all nearly fell off , even me. She’s my daughter and we’re stunned. Poor T. Boone. There’s this blue-eyed, blonde 10-year old girl saying, “Isn’t that arbitrage?” So, it was a good trip. It was a very good trip, to drive from the Atlantic to the Pacific, and if you haven’t done it, I urge you to do it.

Grant Williams:

Well, that is an apple that definitely did not fall very far from the tree.

Bill Fleckenstein:

Yeah, no kidding.

Jim Rogers:

Well, I hope you can find T. Boone Pickens. Invite me, too, if you can somehow see T. Boone Pickens again. That’s worth the trip.

Grant Williams:

All right, Jim. Thank you so much for your time. Bill and I appreciate it and I know the listeners will, so we’ll bid you adieu.

Bill Fleckenstein:

Yeah, Jim, it was really great to see you again and we’ll have to do this again before we get too much older.

Jim Rogers:

Well, that would be fabulous. Let’s do it again when the world comes to an end. Every time the world comes to an end in the next few years…

Bill Fleckenstein:

There you go.

Grant Williams:

There we go.

Jim Rogers:

This is a recurring program, I can see.

Grant Williams:

Well, that will be our next series, The New Beginning. We’ll get to it eventually.

Jim Rogers:

Well, we got to get all the end. It’s The End Game. There’s going to be more than one end game. We haven’t even finished with Japan’s end game yet, much less the U.S., much less the UK. You’ve got an endless, endless number of end games coming up.

Bill Fleckenstein:

We sure do. We sure do. Yes, we do.

Jim Rogers:

All right guys. Bye [crosstalk 01:08:30].

Grant Williams:

Thanks so much.

Jim Rogers:

See you again. Bye-bye. Come see me in Singapore.

Bill Fleckenstein:

We might do that.

Grant Williams:

Done.

Jim Rogers:

Thank you. Bye-bye. Bye-bye.

Grant Williams:

Well, I hope everybody enjoyed that as much as Fleck and I did. As I said, after a lot of the mind-bending conversations we’ve had, with the likes of Mike Green and Chris Cole in recent weeks, it was a real pleasure to have a slightly less taxing hour, but nonetheless, it was every bit as insightful and as always with Jim, some really interesting things to think about.

Grant Williams:

So, hopefully you enjoyed that as much as Fleck and I did. He will be back with me next time, whenever that may be. All that remains is to thank you for listening; to remind you that you can follow us on Twitter. You’ll find me at @TTMYGH and you’ll find Fleck @fleckcap. Please take a moment, if you wouldn’t mind, to rate and review the podcast. It really does help if you can just click. Leave us a quick review and click on as many stars as you think you can handle. Every little bit helps. Thank you so much and we’ll see you next time on the next edition of the End Game.

Bill Fleckenstein:

I still can’t believe I can’t get anyone to follow the thought process of getting to the Japan end game because he had the same reaction that every other guest has had; that they think that the JGBs will cease to exist and as opposed to no, they’re just going to expunge half the debt. Half the debt is left over; they’re doing a do-over, but nobody seems to get that point. Nobody seems to get that point.

Grant Williams:

I’m going to… I’ve still got buddies in Japan from my summer there 30 years ago. I’m going to speak to them and ask them to give me the name of the guy we should ask that question to in Japan.

Bill Fleckenstein:

Because doesn’t it seem like that they are the furthest along in this experiment?

Grant Williams:

Absolutely.

Bill Fleckenstein:

And yet, it’s quite clear to me that no one’s given this any serious… No one we’ve spoken to thus far has given it the level of thought that even I have because I can’t get that question answered.

Grant Williams:

Yeah, the problem, as I see it, is that if you take the problem, here’s what’s going to happen, what’s the outcome? There are two wildly different outcomes at either end of the spectrum, but there is the same number of dots you could take from the start to each of those outcomes. It’s, well, it could go this way, 1-2-3 steps, massive inflation, currency collapse. 1-2-3 steps in this direction, deflation, yields go down go down.

Bill Fleckenstein:

You can’t really get to deflation because they took their debt to GDP from what? 400% to 200%. They got the bonds. They won that round.

Grant Williams:

I agree, but what’s the mindset in Japan.

Bill Fleckenstein:

That…

Grant Williams:

The big problem that they’ve got is that big deflationary mindset. People don’t spend money.

Bill Fleckenstein:

But now, all of a sudden, if you were worried about deflation because you had too much debt and then you didn’t have too much debt anymore, how would you worry about deflation?

Grant Williams:

As long as you can get the Japanese to go and borrow, which I’m guessing that’s what you could, but the problem is, if you’re Japanese, you haven’t been able to inflate your debt away, like everybody else can.

Bill Fleckenstein:

No, but they don’t need to inflate it away. They bought it.

Grant Williams:

No, I’m talking about the new debt because presumably once you get there, you then start lending again. You build up the debt again. The whole idea of expunging it is so you can create it again.

Bill Fleckenstein:

Right.

Grant Williams:

That’s the whole point of doing it.

Bill Fleckenstein:

That’s right. That’s why I keep asking people, what will it look like on the other side of that because it seems like that’s kind of where we’re going and anyway, it just…

Grant Williams:

Well, I’ll ask some of my buddies in Japan who we should speak to, to get it.

Bill Fleckenstein:

Okay, okay.

Grant Williams:

Nothing we discuss during the End Game should be considered as investment advice. This conversa-tion is for informational and hopefully entertainment purposes only. So, while we hope you find it both informative and entertaining, please do your own research or speak to a financial advisor be-fore putting a dime of your money into these crazy markets.

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