Thursday, February 18, 2021

55. Jim Rogers on the Next Economic Crisis — Demographic Doom Podcast Transcript

This is the transcript for my Demographic Doom Podcast episode #55, released on 19 February 2021. The definitive version of this episode, with annotations, is housed on YouTube (19 minutes), with the audio-only version at Podbean. Available on most major podcast platforms, including iTunes and Google Podcasts. See the description on the YouTube version for extensive annotations, links and corrections. You can also comment on this episode there. The main website for this project is

This is the original script, written before recording, corrected after the recording to reflect what was actually said.

I'm Glenn Campbell. I call myself a demographic philosopher. I'm looking at life and trying to predict the future through the lens of demography, or the study of human populations. I'm trying to view humanity from a distance, like aliens would see us from space.

In this episode, I'm going to return once again the dire monetary collapse that is heading our way. I probably won't be saying anything new in this episode, just repeating what I've said before, but this time I'm going to give you someone else's perspective—that of Jim Rogers, a well-known investor.

Why do I keep harping on this? It's like I'm on the Titanic after it hit the iceberg. I know the ship is sinking, even if most of the other people haven't caught on. I have countless interests on board the ship, but my attention keeps coming back again and again to the fact that the ship is sinking and all my interests are going to be swamped.

And it's not like I'm even trying to warn people, because there's not a lot anyone can do. My audience right now is miniscule, but even if I had a million listeners who all agreed with me, there's little we can do to stop this. You can't negotiate with a sinking ship. It's still going down.

We've been in a pandemic for about a year now, and we're still recovering from the trauma of the Trump Administration, but all of that pales in comparison to the freight train that's coming down the track at us. It's a massive monetary collapse that will change everything. It will totally disrupt society and will make the pandemic look like a mere appetizer of disaster.

But don't just take my word for it. I'm going to start off by playing a 4-minute clip from Jim Rogers, a well-known 78-year-old investor. I don't know where the interview comes from, but it was apparently recorded in mid-2020, when the pandemic was less than 6 months old. I've done some editing to to it make it more compact.

So here is Jim Rogers...

This certainly has been the worst in my lifetime. We've had a huge rally because governments everywhere have printed and spent staggering amounts of money. But it just means the next time it's going to be worse still. You know, unless you think we'll never have economic problems and market problems again, the next one's going to be worse because [of] the debt. 

In 2008, we had a problem because of debt. Since then the debt has skyrocketed—skyrocketed!— everywhere in the world. So unless you think we're not ever going to have problems again, then the next one is going to be worse. People say it cannot get [worse]. It can get worse!

The printing presses are running at unbelievable speed. Every day, the Bank of Japan goes to work and cranks up the printing presses, and as he said, we will print unlimited—that's his word “unlimited”—amounts of money. That's happening all over the world.

I mean if you get into trouble, you just call up and say, “Help me, help me, help me, save me!” And somebody comes along and saves you. No, we haven't had any gigantic problems yet, but the debt is building up everywhere. 

Maybe I'm wrong. Maybe this time is different. Maybe the world has learned a solution so that it’s different this time, but I doubt it.

Six months ago [probably late 2019], the United States was the largest debtor nation in the history of the world. Never had anybody been so deep in debt. Since then, the U.S. has increased its debt by trillions—with a “t” trillions—more.

You know if you give me a few trillion dollars, I will show you a very, very good time. We will all have a wonderful time with a few trillion dollars, but somebody eventually has to pay the price, because somebody has to worry about paying it back. You know, these days are not good for old people. They are not at all good for young people. I have young children. Oh my gosh, America is leaving them a terrible, terrible legacy which they're going to struggle with all their lives. 

Whenever there's a problem in the world, people look around for an easy way to solve the problem. Once upon a time, there was a guy named “Marx”, Mr. Marx. Mr. Marx had a wonderful theory, and many people accepted it and tried it for a long time. Nobody believes in Mr. Marx anymore. We found that it didn't work.

But right now, there's another one called “More Money Today”—MMT. Give me some money. More money, free money. Well, everybody loves it, so many people are starting to try it. Nobody's saying it out loud, but the British are doing it, some people [in] China, the Japanese are doing them. So we're going to find easy ways. Politicians always find easy ways. Will it work in the long term? As I said, being a young person in America right now is not a good thing to be. All of us peasants know. We may not have studied economics at an Ivy League university, but we know that when you print money and borrow money, subconsciously, we know this leads to problems. 

As I said, watch Kitko news. You will see that the world is really doing strange, unusual things. Never before in the history of the world have interest rates been negative. Never before has a major bank like the Bank of Japan said: “We will print unlimited amounts of money.” Sure, Zimbabwe prints unlimited amounts of money. Countries have done it, but now you have major people doing it. So, yeah, this could turn into a huge bubble.

So I like his folksy manner, but it's entirely calculated. This is a guy who was educated at Yale and Oxford, so I think that whole "peasant" bit is a bit contrived. But a folksy manner is just what you need right now to explain this thing because it's really quite simple. The US government and others around the world have been spending far more money than they're taking in. This was true before the pandemic and it's doubly true now.

The only way governments can cover this shortfall is by printing money. They effectively print it simply by issuing bonds. Some of those bonds are purchased by central banks like the Federal Reserve, which creates new currency in return, but to me, whether it's bonds or cash is immaterial. As soon as a government issues a bond, money is effectively created, because investors trade bonds among themselves as though they were cash.

As Jim Rogers points out, this money printing just can't go on. You can construct all sorts of fantastic theories like Modern Monetary Theory—which he calls "More Money Today"—but you can't defy the laws of physics for very long. If you keep printing money, bad things are going to happen that put a stop to it.

In Zimbabwe or Weimar Germany, the bad things were pretty straightforward: If you keep printing money, the value of each unit of that currency will fall, leading to hyperinflation. You can't get something for nothing. There's no such thing as a perpetual motion machine, even though they've tried to do it again and again. Some of really look good, these perpetual motion machines, but they always fail in the end.

And the question comes up again and again: If the government can just print unlimited amounts of money with no ill effects, then why does anyone pay taxes? Logically, that's where things are leading: No one pays taxes and the government just prints money to give out to people. You know, intuitively, that cannot work, so the system has to break somewhere along the line.

In the case of the US dollar, the dynamic is much more complicated and unpredictable than it was for Zimbabwe. For example, I would have never predicted that a worldwide pandemic would lead to an all-time high in stock markets. Economic historians will be dissecting that for ages, writing books and papers trying to explain why it happened, but it's just not normal. It's not a healthy response to an obvious economic injury. What is feels like, anecdotally, is the government has printed all this new money, and it's all going into asset inflation rather than into consumer inflation.

It's easy to get sucked into the rabbit hole of trying to figure out what is happening right now, but I'd rather look at the end result. The end result of runaway money printing is that your currency is debased, devalued, and that process is going to cause a lot of other bad things to happen all thoughout society and the economy. I'm not willing to predict what will happen and when, because I've been burned too many times by that. I'm only predicting "bad things". When things blow up, they can blow up in unpredictable ways. 

Think of the Trump administration. That Trump would get elected in 2016 was entirely unpredictable and outrageous two years earlier, and lots of events come out of the blue like that. They will eventually seem to make sense in the hands of any competent historian, but they couldn't have been predicted before they happened. The fabric of history is like that: In a complex system, you don't know the exact ways things are going to interact.

What you can predict with some certainty is what happens to packages of things. Take Planet Earth. I have no idea what human society will look like in 500 years. I can't predict the news stories or the human events 500 years from now, but I can predict—or at least astronomers can—exactly where in space Earth will be 500 years from now. It's a very simple calculation, even though life on Earth is very complex. 

Likewise, I can't predict how the economy will evolve over the coming months or what world events will happen. What I can predict is that the current economic model is unsustainable and has to collapse is some dramatic fashion. Whether you're a government or an individual, you can't keep spending more money than you make. You know the end result: a debased currency and a gutted government. You just don't know what sort of crazy things humans on board the ship are going to be doing as it is going down.

Stock markets right now are a reflection more of human sentiment than a reflection of fundamental value. In the end, fundamentals will win, but in the short term, stock markets can do some crazy things, as they've been doing over the past few weeks. Even today, as I'm recording this, the S&P 500 is near its all-time high, even as the pandemic continues. This bubble may have popped by the time you listen to this episode, but it's inflated now, and I would have never predicted that a year ago.

One thing you can predict about money printing is that the government will eventually lose the ability to borrow. Either the government will default on its bonds, or inflation will erode their value, in which case no one will want to loan money to the government at affordable rates. The end-game for the US government it that either will collapse altogether, or it will have to find some way to live within its means, spending only the taxes it actually takes in. That sounds like a good idea, but it's far messier than it seems, because you can't just cut the government budget in half without major political upheaval. 

The other thing that you can reasonably predict is a massive evaporation of wealth. Essentially, wealth consists of paper promises, as I described in Episode 52. For example, you could have pieces of paper that are redeemable for chickens, and those pieces of paper are only perceived wealth. It is only perceived wealth, not realized wealth, because you don't actually have the chickens in hand. You only have a promise of chickens.

The general state of the world right now is that there are far more promises outstanding than can possibly be redeemed. That's what Jim Rogers means by too much debt. For example, there are far more government bonds than the government can ever pay off. That's simple mathematical reality, especially if there is no more significant population growth to fuel the economy.  

Wealth evaporation happens when markets realize that all those pieces of paper aren't worth nearly as much as people think they are. If you thought you had a piece of paper that promised you a thousands chickens, but it's really only good for a hundred chickens, then you've lose wealth as soon as that fact becomes known. Until that time, you can trade your piece of paper as though it was worth a thousand chickens, but once we know it's not possible, then wealth evaporates.

And I think that's what's coming down the line for anyone with assets, be it a house or fine art or a 401K plan invested in the stock market. Suddenly, during some unspecified future crisis, people are going to discover that they're not nearly as wealthy as they thought they were. Vast amounts of wealth can vanish almost overnight and have done so in the past—for example when a stock market crashes. All it takes is a change of attitude from investors, shifting from greed to fear. In a panic, people's portfolios of promises can be devalued in an instant.

Not just wealthy investors are affected, but anyone with an IRA or a bank account. And onnce people start losing this wealth, they're going to stop buying things, especially those things they don't really need, as I describe in Episode 41. This passes the crisis along to people who do not have any assets, who are living paycheck-to-paycheck, because they'll lose their job in these non-essential businesses.

The late 20th Century was a period of globalization, where the world become increasingly integrated. I predict the 21st Century will be a period of localization, or fragmentation, where all sorts of big systems like governments break down and people have to rely more and more on local solutions. The pandemic has already started the ball rolling, confining everyone to their own country. Even if all those restrictions are lifted tomorrow, people have become more localized now and more conservative in their spending and may not want to travel. In any case, we will never again have the same level of global integration we had in the 2010s. Increasingly, it will be every country and region for itself, trying to find solutions to its problems within its own borders.

I take the Fall of Rome analogy very seriously. At its peak, the Western Roman Empire linked most of Europe together into a unified system. But it was an economically unsustainable system that eventually collapsed on itself. It took a lot longer to collapse than I would have predicted at the time, but it did collapse. What emerged in its place was a lot of independent fiefdoms fending for themselves.

When the big collapse comes, in whatever form it takes, humans will continue to survive, just as they survived after the Fall of Rome, but they are going to do it in ways we can't predict right now. There will be a lot of compromises on the road to survival that we aren't willing to make today. They will be forced upon us.

But we will survive. Humans always do. We're clever. We're resourceful. When pushed to the wall, we'll figure things out and come up with new ways to organize ourselves. It's just going to be a very painful journey getting there.


Written, recorded and edited by Glenn Campbell. For annotations, links and corrections, see the description on the video version of this podcast. You can also leave comments there. See here for all my podcast scripts on this blog.

{Above reconciled with actual: 2/19/21}
{This script backed up to Email on: 2/19/21}
{Visual version of this script backed up to Twitter on: 2/19/21}