Global Economy Will Plunge Into Long Recession in Coming Years, Prominent Investor Warns

WASHINGTON (Sputnik) - The global economy will go into a long recession in the coming years and face very serious issues about which everyone should be concerned, veteran US investor Jim Rogers told Sputnik.

"We will have very serious problems in most of the world, you should be worried," Rogers said. "It's going to be a long recession this time."

Rogers predicts this global recession will last between two and four years.

"We will not see the light for a long time, it's going to be bad," he said.

Rogers believes the recession may have already arrived considering the soaring inflation and high interest rates.

Concerns over a recession intensified across the United States after the Federal Reserve Bank of Atlanta forecast a 1% contraction in GDP for the second quarter. The US Commerce Department reported a 1.6% decrease in GDP for the first quarter. An economy is considered to be in a recession if there are two straight quarters of GDP decline.

A cluster of economic data of late has also suggested that the United States may well be headed for a recession.

Rogers thinks that the Biden administration's efforts to deal with the spiking inflation are hopeless, and they look unaware of what they are doing.

"The central bank said there was no inflation, and then they said it's temporary. And then they started trying to do something about it. They're not very smart people. They don't know what's happening. They did not know, they did not see what was happening. And then they said it was not happening. Now they're trying to do something to catch up with it."

A closely-followed barometer of the US services sector hit 20-month lows last month. The United States also saw the highest number of job cuts in 16 months in June, a private-sector employment tracker said in monthly data on Thursday that indicated the red-hot US labor market may be cooling. That came after the Labor Department reported a day earlier that job openings declined to 11.25 million in May from 11.68 million in April.

US inflation has been persistently running at four-decade highs since late last year, with the closely-watched Consumer Price Index growing at an annualized rate of 8.6% as of May.

"Before this is over, interest rates are going to have to go much, much higher before this is over. As I said, there could be things which will calm things down for a while, such as peace in Ukraine," the investment guru added. "The problem is here, it's very deep, this problem. We have never had so much money printing in the history of the world and we've never had so much debt."

He believes that persistent and unrestrained money printing makes a US recession inevitable and likely imminent, adding that he will sell — not buy — into a market rally that tries to defy this.

When asked whether he believes that the recession has already started in the United States, Rogers replied: "It probably has."

"We can all see that things are not as hot as they were a year ago. Things are starting to slow down, whether it has started now or not, is starting in August or September, doesn't really matter. We are in a period of time when we are either in a recession or going to have one soon," he said. "I would suspect it has already started because of inflation and the interest rate. But as I said before, there could be something after if something calms down in Ukraine and everything would be smoothed over for a while and then we would still have problems later on after everybody gets excited about Ukraine. The problems will come back, they are too deep to go away in a few weeks."

The Federal Reserve’s target for inflation is 2% per year and the US central bank has vowed to raise interest rates as much as necessary to achieve the target. However, economists have said they fear the Federal Reserve’s aggressive interest rate hikes will land the United States into a deep recession.

Rogers Predicts Demise of Dollar Amid Loss of Trust, Neutrality

Rogers has also ventured that the US recent actions will accelerate the shift away from the dollar.

When asked whether the future of the dollar is under threat, Rogers noted, "I own a lot of dollars at the moment. I expect them to be higher for a while because people are worried and when they're worried they look for a safe haven."

"They think the dollar is a safe haven. It's not, because we are the largest debtor nation in world history. But no international currency has lasted more than 100 or 150 years," he stressedd. "I don't like saying it because I'm an American but I'm afraid that what Washington has done recently is going to accelerate the move away from the dollar.

Rogers went on to say that the US dollar has been on top for a while and many people are already starting to look for something to compete with the dollar.

"Because the international currency is supposed to be neutral, anybody can use it for anything they want," he pointed out. "But in Washington, they have started changing those rules. If they don't like you, you cannot use the US dollar or they confiscate your US dollar. So many people around the world are trying now to find something to compete with the dollar. Russia, China, India, Brazil, Iran, many countries are looking for something to compete with the dollar."

This year’s rally in the dollar — which is up 9% against a basket of six major currencies — has strengthened its standing as the world’s reserve currency, helping the Federal Reserve somewhat in its aim to fight the worst US inflation in 40 years. But central banks elsewhere are also trying to raise the value of their currencies to tame relentless inflation in their own backyards.