Thursday, December 8, 2011

Jim Rogers: US Lies About Inflation, Unemployment

Unemployment and inflation rates are worse than the numbers that hit the newswires suggest because the government is able to tinker with the methodology to sugarcoat how bad the economy really is, says international investor Jim Rogers.
"The government lies about the numbers that they put out. Don't take your advice from any government, or you are going to go bankrupt," Rogers told Newsmax.TV in an exclusive interview when asked if unemployment rates will ever return to pre-recession levels.

The official unemployment rate fell to 8.6 percent in November from 9.0 percent in October not due to strong gains in hiring by due to a shrinking labor force, as would-be job seekers quit looking for permanent work, the government reports.

Even so, the figure is probably much higher, Rogers adds.

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"They make their unemployment figures look better but that's because they jiggle the numbers. If you use independent sources for unemployment, you will see we have serious problems still despite the government jiggling the numbers."

Inflation rates are also misleading, Rogers adds.

Officially, the consumer price index rose 3.5 percent on year in October, according to the Bureau of Labor Statistics, although inflation stripped of volatile food and energy prices came to an annualized increase of 2.1 percent.

The Federal Reserve tends to focus heavily on the latter when setting interest-rate policies and insists inflation rates are hovering within comfort zones.

The government lies about that also, Rogers says.

"Anybody who buys, who goes shopping knows that prices are going up. Buy food, education, insurance, just about everything that we buy, prices are going higher and the government tells us there's no inflation," Rogers says. "Some independent measures say it's over 6 percent already ... it's going to go much higher because they keep printing money, and as long as they keep printing money, it's going to get worse. So prepare yourself for much higher inflation."

The Federal Reserve has expanded the money supply in an effort to ward off crippling deflation and spur investment and ultimately, hiring.

Such polices have weakened the dollar and applied inflationary pressures to the economy, while unemployment rates remain high, critics charge.

"The problem is having any system that is dictated and where the government has a monopoly — that leads to the problems because they (the governments) always learn to cheat and lie."

Meanwhile, fiscal and monetary stimulus policies have swollen the government's balance sheets, making debt burdens so heavy that the U.S. is moving into dire straits.

"America is actually in worse shape than Europe. Europe as a whole is not a big debtor. The U.S. as a whole is the biggest debtor in the history of the world plus we have our own states, which have big problems: Illinois, California, New York," Rogers says.

"In Europe they've got some states that have serious problems such as Greece, Ireland, etc. But as a whole they are in better shape."

"The reason we are looking at Europe right now is because their debts are coming mature as we speak and soon they are going to be coming due in America, and we are going to have those problems, too."

Don't look to either one political party to save the day, as both Republicans and Democrats are both guilty of spending beyond their means.

"As far as I am concerned, a pox on both of their houses. Mr. Bush did the same thing. The debt skyrocketed under Clinton. The debt skyrocketed even more under Bush. Debts under Mr. Obama, they've gotten worse and worse and worse. The Republicans talk a very good game right now and I hope that they are right when they say we are not going to let spending go higher. I hope that they are right about it," Rogers says.

Even Ronald Reagan wasn't as fiscally disciplined as he should have been.

"When Reagan was president, the national debt doubled. Here was a man if anybody in the past 50 years who said 'we're not going to do this anymore,' and the debt doubled under Reagan."


Jim Rogers

Warren Buffett

Nouriel Roubini