Jim Rogers – The Future of Money

Witnessing Money being reinvented.

How do you imagine paying for your cup of coffee in a future world where almost everything is digital? Do you see our financial system serving our rising need for sustainability and resilience? Moreover, will blockchain technology open up unimagined possibilities for decentralized financial transactions? We meet Jim Rogers, a legendary hedge fund investor, and ask him all these questions. He is one of the two founders of Quantum Fund and Soros Fund Management and the Rogers International Commodities Index creator. The outcome is an exciting conversation about the future of money and why human beings don‘t learn from history, especially when it comes to debt.

QUEST: What is your perspective on the current financial situation in the world as an investor and expert in the global financial markets?

Rogers: In America, we’ve had the longest bull market in history. There certainly has been a huge amount of money printing and vast amounts of debt, unlike anything in world history. This is happening all over the world. So, we are probably nearing the end, and when the end comes, it will be the worst in my lifetime because we had a big debt problem in 2008 and 2009. Since then, the debt has skyrocketed worldwide.

So, it will be horrible the next time we have a problem. We already see signs of it coming. We saw very high prices. We saw a lot of money printing and a lot of new investors coming into the market.

QUEST: What will the real outcome of this be? In terms of changes?

Rogers: It will mean huge stock market, bond market, and property losses. It’s going to cause bankruptcies in companies, countries, and governments. It’s not as though I’m making this up. This has been happening for hundreds of years and is here again.

Quest: So, is it one of these shifts and changes you have experienced in your lifetime, but bigger?

Rogers: One of the main lessons of history is that people do not learn the lessons of history. It’s all there for people to read. But people don’t for whatever reason. We recently had a president in America who did not know the lessons of history, and if he did, he didn’t care. He thought he was smarter than history. On the other hand, I know I am not smarter than history. I’ve seen this before, and I have read about it before.

QUEST: I’m very much interested in how you define money. The background of this interview is talking about the shifts and changes about to happen, like digitalization and other changes that shape the future of our planet. As someone who has spent his whole life working with money and thinking about it, do you have a personal view of it?

Rogers: Well, throughout history, people have used many different things as money. The simple answer is that money is whatever people will accept as a medium of exchange or a store of value. But nearly always, if a government says this is money, if a government makes it official, that is what people will use as money. Whether it’s seashells or silver, whatever it happens to be. If people then have money, they can accumulate it and develop wealth. They can also exchange their money for other things with the hope of getting even wealthier.

One of the main lessons of history is that people do not learn the lessons of history. It’s all there for people to read. But people don’t for whatever reason.

There have been times such as maybe 80-90 years ago when people used other things as money, but then the Bank of England said, well, no more! The only thing you can use as money is our money; if you don’t use it, it is an act of treason. Treason means they execute you, so most people used the money from the Bank of England as it was the most important bank at the time.

Again, people can use whatever they want, but if the government says this is money, it will be money. The government has more guns than most of us, and so most of us use what they say is money.

QUEST: So, it’s a governmental thing? It’s not something we all agreed on but instead, just follow?  Rogers: Most of us will follow the rules. Man may not like the rules, but we usually have to follow the rules. QUEST: In general, how do you see our current financial system? We are experiencing and witnessing these turbulences occur over and over. But like you say, they have gotten worse because debt is much higher now. What would you say are the biggest flaws in our financial system, being that it’s a system created by man?  Rogers: History shows that debt always leads to problems, especially excessive debt, and we have staggering amounts of it. With America as the largest debtor nation in the history of the world now, it’s unbelievable how much debt Japan keeps building up, England, and other major economies as well. So, I would say the main characteristic of today’s economic situation is debt, like has never existed before. And history would indicate that this will lead to problems unless somebody can come up with a solution.

I would say the main characteristic of today’s economic situation is debt, like has never existed before.

QUEST: There are no precautions to regulate acquiring too much debt. So, the increase in debt seems to be a political failure, not the system itself. Is this something you agree on? Rogers: Well, most politicians and bureaucrats think that they’re smarter than everybody  else, and they think that they can keep things under control and solve any problem. But, of course, they’re not smarter than anybody else and certainly not more competent, but they always think they are. So that’s one reason when problems develop, they get so bad. People get into situations that they think are ok but are not.

QUEST: Do you think we will learn this time, or will we have to learn from what will happen?

Rogers: Well, the problems will be so bad that people will have to come up with solutions; whether they’ll be good or bad solutions is a different question. But mankind is pretty simple. We always have the same problems over and over. They get really bad sometimes, we solve them for a while, but then they return.

This time, the problems will force more of us to pay attention. And yes, maybe we will solve the problems for a while. But until we do something about the staggering amount of debt that exists in the world, we’re not going to have a real solution to the problems that have been building up for a long time. But I’m afraid we’ll just move it over for a while, and then the next time it comes, it’ll be even worse. The more we build debt, the worse the problem eventually becomes.

QUEST: Aren’t there governments and organizations that have been alerted about excessive debt? So why are we not tackling the problem at hand?

Rogers: The problem with that is, let’s say that someone in America said we have a huge problem, so you must elect me, and I will solve the problem. So he gets elected, and people say, ok, let’s finally solve this problem, and he does. After six months or a year, people will say, wait a minute, this is too hard. This is too painful. You didn’t tell us it would hurt this much, and he will be thrown out of office.

Maybe you could be elected once, but you would not last long because you would have to do such difficult things. History is clear that we don’t really accept things until we have to or until things are so bad that we’re forced into change.

The main characteristic of today’s economic situation is debt, like has never existed before.

QUEST: In the future, do you think we will use more technology to regulate matters surrounding debt and overcome these problems? 

Rogers: Well, of course, we’re going to use more technology. We always have. 100 years ago, they started using telephones, and 50 years ago, they began using computers. Whenever technology advances, more and more people use it. At first, they’re afraid of it. Now everybody has a mobile phone. So, as technology continues to advance, we’re going to continue to use it.

Eventually, all money may be on the phone. Nearly every country is working on digital money now, so we will probably have it. All governments want digital money. It’s cheaper for them. They don’t have to print, transport, or protect it.

But the problem is then they will know and control everything we do, that’s one reason they like it. They will call you one day and say, you’ve had too much coffee this month. Don’t drink so much coffee anymore. Technology is going to change everything. It always has, and it always will. Is it good for you and me? Not necessarily. Some of it will be. Some of it will not be.

QUEST: Sounds to me like we will be living in a different world if the future involves digital money on our phones fully controlled by governments.

Rogers: We have always faced a different world. You can pick any year in history, say 1900. Everything people thought in 1900 was wrong 15 years later. Pick any year in history, and everything people believed in that year was wrong 15 years later. So, we have to figure out what will be true in 2037, and then we will survive. But I promise you, whatever we think now will be wrong in 2037.

I wish it were easy. It would be wonderful if it were easy. If we could just read Chapter 3 and find the answer. The problem is there is no answer. There is no chapter three that has the answer.

QUEST: I know you are not a big fan of cryptocurrencies, but do you believe they will hugely impact the finance sector?

Rogers: All governments are working on cryptocurrency. When the American government or any government says ok, this is money, they’re not going to say, but if you want to use the other money, you can. Governments don’t like to lose control. They don’t like to lose their monopoly. So someday, everybody is going to use crypto money. But it’s going to be government crypto money. It’s not going to be somebody else’s crypto money. In fact, this is already the case in China. You can’t take a taxi or buy ice cream with money. You have to use your computer money. China is ahead of the rest of us. We’re all working on it, but they’re so far ahead.

You can pick any year in history, say 1900. Everything people thought in 1900 was wrong 15 years later. Pick any year in history, and everything people believed in that year was wrong 15 years later.

QUEST: Do you think we are in a transformational shift toward a more Asian-dominated world after the 20th century having been the American Century?

Rogers: I certainly think the 21st century is Asia’s and China’s century. But nearly every 100 years or so, the world changes, and somebody else is on top, some other currencies on top as well. The 19th century was the century of Great Britain, and the 20th century was the century of the US. So, I can see the 21st century being the century of China.

QUEST: We have always had this narrative that innovation comes from individual creativity and freedom. Do you think the innovation pace will remain the same, or will it be accelerated?

Rogers: Well, China has 1.4 billion people. They produce more engineers than any other country in the world. India doesn’t produce as many engineers, but India and China combined produce millions of engineers yearly.

Some of them are very good, and some will come up with great new things. I hope American engineers do too, but we don’t have nearly as many engineers as China or some other countries.

We will continue to have change, and a lot of it will come from China. Yes, China is too closed. Many countries are too closed, but they still come up with a lot of great things in their history, and I suspect they will continue to do so.

QUEST: What would your advice to the young generationbe? We talked about everything we think at the moment being wrong 15 years from now. What would your message be for the generation growing into the time that is 2037?

Rogers: If you want to survive and be happy, the only advice I can give you is to figure out what you love and your passion and follow it. Don’t listen to your teachers. Don’t listen to your friends. Don’t listen to your parents. Instead, you find what you love and follow it with passion. People like that are the most successful in life because they do what they love every day. And even if you’re not successful, you’re happy. You don’t care if somebody else is more successful than you.

Short Bio

Jim Rogers, a native of Demopolis, Alabama, is a renowned author, financial commentator, and successful global investor. Co-founding the Quantum Fund, the portfolio gained 4200% in 10 years. After retiring at age 37, Rogers continued managing his portfolio and became a full professor at Columbia University. He achieved a Guinness World Record by motorcycling 100,000 miles across six continents from 1990-1992, chronicled in “Investment Biker.” Rogers embarked on a three-year round-the-world journey, covering 116 countries and 245,000 kilometers, detailed in “Adventure Capitalist.” His book “Hot Commodities” (2004) and “A Bull in China” offer investment insights, while “A Gift to My Children” and “Street Smarts” provide life lessons. Rogers has had number one bestsellers in Japan, including “The Future of Japan” and “A Warning to Japan” in 2019.

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