Sean Stone interviews investor Jim Rogers on ‘Buzzsaw’.
Given brief bio:
Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.
Rogers says we need to cut spending with a chainsaw, not an axe.
And change the tax code, because tax code currently discourages saving and investment. It encourages debt. We have to change legal system, education system. We have to really start over.
Our current economy is based on consumption. Products are made using natural resources, including a lot of non-degradable plastic and chemicals, made from crude. We manufacturing goods on an industrial scale using increasingly limited resources. We have a huge infrastructure to maintain. One built when raw materials were cheap and plentiful. It takes many resources to maintain infrastructure on a mass scale.
Stone asks if he thinks that the Fed reserve should be overhauled, as it’s legally questionable because it is a private institution endowed with the power to print world reserve currency. Rogers believes that this ‘central bank’ should be abolished.
The world has gotten along without central banks in the past. We had 3 central banks in the US, the first two disappeared. We have problems without a central bank, history has often shown. But, we’re worse off with the central bank that we have, which will lead to many more problems down the road.
Stone asks if he would advocate a gold-backed system or something to back the currency, such as oil, as seems to be the case now?
He suggests reverting currency system to one of open exchange.
That’s the one the world seems to have had for most of the time is an ‘open market’ in currencies, where you could use whatever you wanted. This could include sea shells or gold or silver or paper money. Whatever you wanted. It’s only been in the last 80 or 90 years that the government imposed a monopoly that we had to use their greenback dollars. In fact, in the UK, when those laws were changed during the Depression, it was so strange what the government did. They had to make it a capitol offense. They would execute you if you used anything except pound sterling, issued by the bank of England as money.
But, if you go back and look before, people were making contracts in gold or anything they wanted to and it was fine. All sorts of things circulated as money. And the market decided which was good and which was not acceptable.
Should consumption tax replace income tax?
Can you imagine how much money the US would save if we didn’t have all these tax lawyers and tax accountants and many billions of hours spent doing income tax alone. But, if you had a consumption tax then nobody would have to pay income tax.
If you were a crook and you had a lot of income that you don’t pay taxes on. But, with a consumption tax everybody has to pay. If you go buy a new Mercedes, you’ve gotta pay consumption tax. This would eliminate tax evasion by criminals and make life a lot simpler. And, it would discourage consumption and encourage people to save and invest for the future.
It’s a waste to have troops stationed in over 120 countries, he says.
Their not doing anybody any good, except making us some enemies in some countries. We’re building a lot of tanks. They may help the people that build them but they do nothing for the future competitiveness or future productivity. Bring troops home. Let’s spend money on highways and schools.
I’m not sure how relevant the need to be competitive in the world is. But, limiting the amount we consume is becoming a necessity for many who are struggling. As people stop buying, producers will be forced to stop manufacturing products that don’t sell.
Replacing income taxes with taxes on what we consume seems wise. ‘Crooks’ who are rich could just as easily skirt around being taxed on what they consume as they do now on what they earn. But, future consumption will be curved by necessity whether it is taxed or not, I suspect.
Wasn’t the Boston tea party the result of a consumption tax levied by British on early American settlers?
America largest debtor country in history.
Many European countries are in a large amount of debt and have declining or aging populations. In Asia and the East, they have young populations, huge savings and little debt.
It occurs to me that our indebtedness is to a paper currency. How indebted can we be to an economy based entirely on consumption of natural resources? It’s not just what will we do when all the ivory horns are gone? Our continued disregard for nature is currently costing us fresh air and clean water, not to mention many species and future generations.
Stone encourages support of small scale agriculture and investment in local economy.
If you invest in a small business in your neighborhood, you have a closer relationship to the business that you’re investing in.
If we put these ideas together, we can bring troops home to farm using restorative, organic methods like sister planting and crop rotation, marrying animals back to farms in the process. Then indeed communities would be fed, families supported and life continuing. It would become an open market renaissance. The use of goods and services themselves as currency would return.