Fed failure within 10 years

Jim Rogers predicts the failure of the USA’s third central bank:

With Bernanke’s term due to expire in January, Rogers says he will be remembered as “the guy who set the stage for the demise of the Central Bank in America. We’ve had three central banks in America. The first two disappeared. This one’s going to disappear too in the next decade.”

“It’s not a possibility,” he adds, “it’s a probability. People will realise that these guys have led us down a terrible path. The Fed balance sheet has increased by 500 per cent in the last 5 years and a lot of it’s garbage.”

Unlike the wider market, Rogers does not set great store by the Fed’s decision shortly before Christmas to taper its bond buying measures from $85bn per month to $75bn. The announcement put pressure on gold and drove US equities to a new all-time high, in what Rogers views as a relief rally.

“The US went up because people said, ‘Now it’s done, we don’t have to worry anymore.’ But somewhere along the line, markets are going to start suffering. They’ll taper until the markets start hurting and then they’ll panic and loosen up again. They’ve got themselves in a terrible box.”

“It’ll turn into a bubble or a very inflated situation, but eventually the markets will say, we’re not going to take your garbage anymore, whether it’s treasury bonds or currency.”

As you know, I disagree with the inflation call, but I don’t disagree that the Federal Reserve will collapse in bankruptcy sooner or later. As I have repeatedly noted, I expect a political and financial collapse of the US empire by 2033. The pace of problematic events appears to be picking up speed; not even the reported 4 percent economic growth and new Dow highs appears to have dented the average American’s pessimism.

The stage is being set. But when the curtain will fall, I do not know. Every government and every financial regime comes to an end sooner or later, but it usually much easier to see the end date in hindsight than in real time.