Growing Debt to Strip US of World's Top Economy Status, Investor Warns
03:47 GMT 16.05.2023 (Updated: 05:21 GMT 16.05.2023)
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WASHINGTON (Sputnik) - The growing national debt will lead to the United States losing its status as the world's number one economy one day and to the continued deterioration of its standard of living, with some other country overtaking the US's position, American investor Jim Rogers told Sputnik.
"In 100 years, it's going to be much worse. Young people in America are not going to have nearly as good a life as they had before. And some countries are going to rise to replace America as the number one," Rogers said. "What are the consequences? Continued decline in America's standard of living and in America's position in the world. It's happened to everybody. Every country that's been number one has made mistakes and spent a lot of money and gone into debt, has gone into decline."
Rogers recalled that 100 years ago, Britain was the number one country in the world, but then spent a lot of money, and went deep into debt.
"In 1976, they went bankrupt. Literally, the IMF had to fly into London and bail them out, give them emergency loans because they were bankrupt, horribly bankrupt," he recalled. "And the only thing that saved them was the North Sea oil. Then they discovered oil and the North Sea and that saved them. What does it mean? It means that other countries are rising ... America is going that way. But we don't have the North Sea oil to save us."
When asked about what country could overtake the US's place, the investor said that "it should be China," but expressed belief that certain currency constraints may prevent the country from topping the list of world economies.
"The Chinese currency is not convertible. It's not. It's blocked. The technical term, it's blocked. Well, you can't be number one with a blocked currency. It just cannot work," he added.
Rogers noted, however, that the Chinese are opening their currency and they're making it more tradable.
The United States is teetering on the brink of a default of its obligations if the Biden administration fails to get its Republican rivals in Congress to agree to raising the nation’s debt ceiling.
The Congressional Budget Office warned on Friday that the United States faced a "significant risk" of defaulting within the first two weeks of June if lawmakers fail to increase the amount of debt the country is legally allowed to take on.
Talks between President Joe Biden and top lawmakers on raising the $31.4 trillion debt ceiling are expected to resume early this week, after a planned meeting on Friday was postponed to allow staff to continue negotiations.
The Election Will Have No Effect On Economy
The US economy will experience economic issues by 2025 regardless of who is elected as the next president, Rogers told Sputnik.
"The US economy will have problems by 2025 whoever is president," Rogers stated.
Current officeholder Joe Biden officially launched his reelection campaign in April.
"He will say he will do everything he can to get reelected. And that means he will spend a lot of money on places where he thinks he can get votes," Rogers said. "That's what they always do, again this has been going on since America was founded. And he will do that. I don't know if it will work or not."
When further asked whether Biden's reelection would affect the US economy, Rogers said he suspects that the economy will be "bad" by November 2024.
"And then he will probably not get reelected because the economy will be bad, but I don't know," the investor said.
Biden may once again square off against his Republican predecessor, Donald Trump. Trump announced his 2024 presidential campaign in November 2022 and is currently the most popular candidate among registered Republicans.
On Situation With Frozen Russian Assets
Rogers does not see the situation with the Russian assets frozen by the United States-led collective West turn into a major problem given that not many nations support Washington's position.
When asked whether the frozen Russian assets may be transferred to Ukraine, Rogers said such a thing could happen and has happened.
When asked whether the frozen Russian assets may be transferred to Ukraine, Rogers said such a thing could happen and has happened.
"However, I don't think that would be very widespread because the number of countries that are supporting the US position is remarkably low. I think like 30 or 35 countries," he said. "So yes, that could happen to some extent, but there will be too many people who will want to get around the sanctions and the problems. If you add up the number of countries supporting the United States and the United Nations, they are not very many. ... That aspect, I don't see it turning into a huge problem."
In April, US Treasury Secretary Janet Yellen said the United States is in talks with its allies on the ways to overcome legal hurdles to use Russian assets seized abroad for the purpose of rebuilding Ukraine. Yellen added that the United States had already started transferring the assets seized from Russian individuals to Ukraine, but the same cannot yet be done with Russia's state-owned assets.
Rogers noted that assets freezes have happened numerous times but also said assets get unfrozen after conflicts end.
"Many people who have their assets frozen suffer for a while, but eventually, if nothing else, the war ends and the assets get unfrozen. And then people get their assets back and they start over," he said.
Rogers noted that assets freezes have happened numerous times but also said assets get unfrozen after conflicts end.
"Many people who have their assets frozen suffer for a while, but eventually, if nothing else, the war ends and the assets get unfrozen. And then people get their assets back and they start over," he said.
However, Rogers also went on to say that the freezing of Russian assets has undermined trust and made even allies of the United States nervous that such a measure may be used against them.
"Of course, everybody is worried," he said. "Right now, many of America's allies are looking for something to compete with the US dollar because they realize it could be used against them too... Now we have to be very careful, there is a different world. And we have to ask a lot of questions we didn't ask before. But I want to say to you again, this is all in the history books, this has all happened before."
After the start of Russia's military operation in Ukraine on February 24, 2022, the collective West has imposed comprehensive sanctions against Russia, including the freezing of nearly half of the country's foreign currency reserves - amounting to about $300 billion. The European Union alone froze assets of Russian organizations and individuals worth $23.3 billion, according to European Commissioner for Justice Didier Reynders.
"Of course, everybody is worried," he said. "Right now, many of America's allies are looking for something to compete with the US dollar because they realize it could be used against them too... Now we have to be very careful, there is a different world. And we have to ask a lot of questions we didn't ask before. But I want to say to you again, this is all in the history books, this has all happened before."
After the start of Russia's military operation in Ukraine on February 24, 2022, the collective West has imposed comprehensive sanctions against Russia, including the freezing of nearly half of the country's foreign currency reserves - amounting to about $300 billion. The European Union alone froze assets of Russian organizations and individuals worth $23.3 billion, according to European Commissioner for Justice Didier Reynders.
