JIM ROGERS: People would think the US dollar is a safe haven, it's not. The fundamentals are horrible. Nobody in his right mind would buy the US dollar, but I own a lot out, because I'm not in my right mind. I'm assuming that the rest of the world is not in its mind either and they're all going to buy it.
I think the future of Hong Kong is continued decline. The only reason Hong Kong became Hong Kong was because of 1949, in Mao Zi time. Now, you don't need Hong Kong anymore. Shanghai was the largest financial center between New York and London before the before the war, Second World War, and China's opening up so we don't need Hong Kong anymore, and it's going to continue to decline.
Sure, you're going to have bankruptcies in China. I've got to remind you that America became the most successful country in the 20th century but along the way, we had 15 depressions, massacres in the streets, very long rule of law, this horrible civil war. Yet, we still became the most successful country in the 20th century. China's going to have a lot of problems, but I'm teaching my children Chinese. I'm not teaching them in Danish.
MATT MILSOM: My name is Matt Milsom. I'm here on behalf of Real Vision to interview Mr. Jim Rogers. Welcome, Jim. Thanks for having us.
JIM ROGERS: I am delighted to be here.
MATT MILSOM: We're hoping to hear your views today on the economic situation in Asia, and the situation between China and the States in the trade war, what's going on in Hong Kon and maybe in a few thoughts on the macro world in general at the end, if it's possible.
JIM ROGERS: Well, my advice is why don't you watch Real Vision? You can get the answers to all those questions, and you and I can go drink beer. Why are you asking about all of that?
MATT MILSOM: That Hong Kong situation in Hong Kong, how you see it developing from here?
JIM ROGERS: Well, I don't pay that much attention because I think it's all going to blow over eventually. China seems to be handling it very well. It's already smarter than most people, most governments, handle things like that. The best result is probably going to be that people should buy Shenzhen or Singapore, because money, some money will certainly leave Hong Kong. Shenzhen has a huge industry of its own. They're a gigantic technology city, as you know and it's very easy to get out of Hong Kong and go to Shenzhen.
Secondly, people are going to be worried about the future of Hong Kong, rightly or wrongly, and Singapore is a logical destination, the logical alternative. Even if it doesn't leave, in the future, people, when they think about Asia, they're not going to think about Hong Kong, most of them, so they're going to come to Singapore, Shenzhen or just buying some other place. I think the future of Hong Kong is continued decline.
The only reason Hong Kong became Hong Kong was because of 1949, in Mao Zi time. Now, you don't need Hong Kong anymore. Shanghai was the largest financial center between New York and London before the before the war, Second World War and China's opening up so we don't need Hong Kong anymore. It's going to continue to decline.
MATT MILSOM: You would expect the peg to go at some point, therefore, in that--
JIM ROGERS: I certainly would. When the renminbi, the Chinese currency, is convertible, yes, I would expect the Hong Kong dollar to disappear. Who needs it at that point? It's an extra expense. It's an extra problem. It's an extra everything.
Right now, the renminbi is not convertible, not fully convertible so they're going to keep the Hong Kong dollar. No, I would expect it to disappear, not just to drop the peg to the US dollar, it's going to disappear.
MATT MILSOM: Completely?
JIM ROGERS: Yeah. Why? Who needs some extra expense and extra hassle.
MATT MILSOM: In terms of the size of the actual country borders, it wouldn't be that much of it, it wouldn't be a big ticket relative to the actual currency of the Mainland?
JIM ROGERS: I don't know, it would not be. They would barely notice it. That's it. Shanghai used to be the financial center and it will be again. Certainly, will not be Hong Kong.
MATT MILSOM: You think the currency is now being weaponized in terms of renminbi and how it's been moved above 7. Over time, it got a bit of a rally at the moment of pre-October 1st--
JIM ROGERS: Any country, which has hundreds of billions of dollars of sanctions or tariffs imposed on it, the currency is going to go down, period, full stop. It's not just the Chinese, the Chinese are apparently letting it go down and not trying to control it. Anybody who has that x chopped on it is going to be affected, because it theoretically is going to hurt your trade balance of trade very seriously when you have those tariffs imposed.
Maybe China's saying, "Okay, we'll let it go, we're not going to stop it." To try to stop a currency declining when you've had hundreds of billions of dollars of tariffs hitting you, you have to be affected. To try to stop that decline would cost gigantic amounts of money. I'm talking basic economics, I'm not talking about China, US, anything, I'm talking about basic economics.
MATT MILSOM: You think that weakens over time, without a doubt?
JIM ROGERS: Weakens over time. As long as those tariffs are imposed, certainly, it's going to weaken the currency or any currency over time.
MATT MILSOM: I guess the 25-year plan being to take away the dominance of the dollar.
JIM ROGERS: There are already lots of people trying to do something about the dominance of the dollar. As you know, if the US gets upset with you, they slap you. They just stop you using the US dollar, or they stop you trading the US dollar, which many people say, "Wait a minute, this is supposed to be the international currency. That's not an international currency if it can be stopped by one nation." The US is now the largest debtor nation in the history of the world. No country in history has ever been this highly and debt. The US dollar has got very serious fundamental problems, and emotional and psychological problems, political problems, I guess we should call them.
People are already-- the Chinese, the Russians, and the Brazilians and other people are coming up with an alternative currency and an alternative banking system to the IMF and up to the World Bank, and to the clearing system. There's already a movement afoot to eliminate the dominance of the US dollar. The fundamentals are certainly against it, just as they were against the Pound Sterling, once upon a time and other currencies. Now, you have political and psychological forces trying to do change that. It was going to happen.
I own a lot of US dollars, but my expectation, my plan is, it's going to get overpriced in the next term or might even turn into a bubble. At which point, I'm going to sell my US dollars, because that's going to be the end of the real dominance of the US dollar.
MATT MILSOM: That could be a 10-year.
JIM ROGERS: No, I don't think it'll be 10 years. It could be 10 years, it could be 30 years, who knows? I'm not very good at market timing but I would expect it to be in the next period of turmoil, which will be coming in the next two or three years.
MATT MILSOM: Recently, China struck the oil deal with Iran, doesn't seem to be making a lot of headlines but it strikes me as a big story given they're able to pay in their currency at a massive discount as possible.
JIM ROGERS: It's part of what I just told you about, that people are already trying to do something about the previous serious dominance of the US dollar. You already have two big countries, Iran's got 80 million people or something and China's got 1,000,000,003. They are already eliminating the US dollar, which would have been unheard of 20 years ago. Even with those two countries, it would have been unheard off 20 years ago, but now it's happening. Russia and China are starting doing the same sorts of things, which would have been impossible. It wouldn't have even known how 20 years ago, but now they're figuring it out and they're doing it.
MATT MILSOM: I guess one belt, one road is all a part of that plan.
JIM ROGERS: Yes. I'm not sure that they-- my view, they're probably independent. The elimination of the dominance of the US dollar is Path A, one belt, one road is Path B, but they happen to work together. Yes.
MATT MILSOM: $17 trillion now of negative yielding debt.
JIM ROGERS: Never happened in world history, Matt. It's absurd. It's a bunch of misguided bureaucrats and academics who don't know what they're doing. They're hoping this has never happened in world history. Never in world history has this happened and it's going to be a gigantic disaster for all of us.
MATT MILSOM: How does it end?
JIM ROGERS: Badly. No, bankruptcies. There are many states and cities, not just in America. Germany, Germany's got cities that are in trouble. Forget, we haven't even talked about Spain yet or Italy or some of the other places. No, many places are going to have serious problems. Once interest rates go back to normal, it's going to cause a lot of, lot of bankruptcies and problems around the world.
MATT MILSOM: I just don't see how they can.
JIM ROGERS: They cannot, no, they cannot. It is physically, economically, any word you want to use, impossible.
MATT MILSOM: For rates normalize?
JIM ROGERS: Yes. Well, they can normalize but somebody's got to pay a serious price. We're not going to sit around here with negative interest rates over the next 30 years. It never happened. The reason it cannot happen, anything can happen, but it's not going to happen.
MATT MILSOM: All of those numbers, that's all outside the States, pretty much?
JIM ROGERS: Well, you say outside the States, it's hard for everything to be outside the States with $17 trillion US. The States is involved, whether we like it or not, because everybody's involved-- Germany, Japan, these are big, big economies we're talking about. America cannot escape the effects.
MATT MILSOM: Let's say we've got a quiet period ahead of us. I would have thought given the 75th anniversary of the PRC.
JIM ROGERS: We do have a quiet period ahead of us?
MATT MILSOM: In the next three weeks.
JIM ROGERS: Three weeks, oh, maybe three days. Okay. Maybe three weeks.
MATT MILSOM: Up to October, the Golden Week, let's say, first of October. I think beyond that, the potential for the proper weaponization of the currency and the actual renminbi to properly move starts to rear its ugly head.
JIM ROGERS: Well, you're exactly right, but that's probably-- that's more Washington, DC. Washington is the one who keeps banging away at this.
MATT MILSOM: You think they're right to?
JIM ROGERS: I think they're right to?
MATT MILSOM: Yeah.
JIM ROGERS: Well, first of all, I've never known a trade war to be right. I've never known anybody who wants a trade war, I've never known a trade war to be good for anybody, anytime in history. Now, Mr. Trump knows he's smarter than history. He doesn't have to worry about that, because he's smarter than history but history would indicate that he's not right. It is going to be a problem one way or the other.
We've always found ways to sort out problems like this. I cannot find it. I'm sure there must be. Anybody complaining that the Chinese have stolen their intellectual property, Congress had a hearing recently, they couldn't find anybody, couldn't find it to verify.
MATT MILSOM: Who was willing to say it?
JIM ROGERS: Or who was willing to say it. Yeah, maybe that's it. Maybe they're saying they've been stolen but they didn't want to tell Mr. Trump, they didn't want to help him. Be that as it may, yes, Chinese companies come to America, American companies go to China, they start doing business in those countries. They have to take their production methods. If you're General Motors and you start producing somewhere else, you're not going to leave your production methods back in America, you have to take them with you. Is that stealing or is that just a normal course of business?
There are people who are in favor of trade war who's saying that the Chinese are thieves for intellectual property, and I'm sure they are. I'm sure there are some, but not worth this. When America took over from the UK, the Americas destroyed the UK shoe industry, the UK tailoring apparel industry, totally destroyed it. You think we weren't taking their knowledge, or in today's services, that we were stealing their intellectual property? We were, but that's the way the world works.
MATT MILSOM: That's competition.
JIM ROGERS: That's competition. Yes, that's movement of capital. That's movement of people. That's the way the world has always worked, and always will.
MATT MILSOM: Let's say we're in a world of eight or nine to the dollar in terms of renminbi. I'm assuming we're thinking massive deflation, bankruptcies galore in north Asia, competitive admonitions--
JIM ROGERS: Bankruptcies galore in the world if that happens. China has said, Beijing has said, they're going to let people go bankrupt. It's not like America. Well, we never let anybody go bankrupt. London, we prop up everybody. Tokyo, oh my God, we prop up everybody but China, communist, that they are, so we're going to let people go bankrupt. If they fail, too bad. That's how capitalism works.
I don't know if they mean it. I don't know if when it happens, if they'll really let people go bankrupt. They've started, some are going bankrupt. You're going to see it. When it happens in China, it's going to shock a lot of people, including me, I just told you it's coming. It's a lot of other countries and companies are also going to have serious, serious problems with that thing.
It's going to make China much more competitive to the rest of the world. That's going to have big effects on a lot of places, including the debt markets, where a lot of debts are written in US dollars.
MATT MILSOM: Given the amount of indebtedness in China, per se, as a multiple GDP, you'd think that they'd have to create massive inflationary wave post that deflation in order to float away the debt, eventually.
JIM ROGERS: It's not just China, the US is the largest debtor nation in the history of the world, the UK is mindboggling how deep in debt as a percentage of GDP the UK is or many countries. You get out the statistics and you cannot conceive that anybody could get that deep in debt. Japan, Japan's got staggering internal debts. We all do. It's not just China.
Sure, you're going to have bankruptcies in China. I'll remind you that America became the most successful country in the 20th century, but along the way, we had 15 depressions, massacres in the streets, very long rule of law, this horrible civil war. Yet, we still became the most successful country in the 20th century. China's going to have a lot of problems, but I'm teaching my children Chinese. I'm not teaching them in Danish.
MATT MILSOM: Where do you see the Sing dollar going through all this?
JIM ROGERS: Well, the Sing dollar, like all currencies, is going to go down against the US dollar, because the US dollar is going to go much higher. Singapore doesn't like to talk about its debt but Singapore has debt, too. The IMF says that the Singapore debt is over 100% of GDP. There is serious debt here. Now Singapore would say yeah, but we got a lot of asset, too. They do. There's no question about that.
Once interest rates start going higher, normally, your debts get worse and your assets don't get better so the Sing dollar is going to suffer too, but it's mainly because the US dollar is going to be so strong in the term that people look for a safe haven. People would think the US dollar is a safe haven, it's not. The fundamentals are horrible. Nobody in his right mind would buy the US dollar, but I own a lot out. I'm not in my right mind. I'm assuming that the rest of the world is not in its mind either, and they're all going to buy it for [indiscernible] reasons.
MATT MILSOM: Where do you go when that dollar blowoff happens?
JIM ROGERS: You want to know how to get rich in 30 seconds? My plan, probably, the renminbi may be convertible by the end, the Chinese say it will, who knows? If it is, it will be down a lot because people would be dumping it. We presume to get out. My dollars will be high, the renminbi will be low and I will go from US dollars to renminbi and/or gold also often goes down when the US dollar gets very, very strong and financial markets are in turmoil. I'll sell some of my dollars and buy renminbi, sell my dollars and buy gold. It's very easy to get rich. We just did it in a few words.
MATT MILSOM: 40 seconds. It's a good plan. Gold is still-- you were not a gold bug, but you've always been there.
JIM ROGERS: No, I own gold, I've own gold for a long time. I first bought my gold in 1971. It was illegal for Americans to buy gold in 1971, but I did. I went up to Canada, I went to Switzerland, to Canada and bought a little bit of gold. Listen, it's tiny. I didn't have any money at those days, but even the tiniest little money I had, I bought a little gold. I've never sold any gold since 1971.
I've continued to buy it over the years. Not a lot in recent years, I started buying more this summer, because I could see what was happening, but no, I still own plenty of gold and silver.
MATT MILSOM: I guess the fact that it doesn't yield much or anything doesn't bother anyone now.
JIM ROGERS: Bonds don't yield anything either. Most things don't yield anything these days.
MATT MILSOM: The yen, it's still seen as a safe haven?
JIM ROGERS: It is seen as the safe haven. Not by me, but it is. It's like the US dollar. The US dollar is not a safe haven but people think it is and that's the status of the yen as well. To my shock, I have had two number one best sellers in Japan this year. It's a mistake, but I have and both of them talk about-- the second one is called, "A Warning to Japan," and I talked about this place is going to be a disaster.
If I were 10