Dramatic Spending Cut Only Way to Avoid Recession But US Won't Commit - Investor
02:25 GMT 18.05.2023 (Updated: 04:55 GMT 18.05.2023)
© AFP 2023 / MOHD RASFAN
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WASHINGTON (Sputnik) - The only way out of the looming recession for the United States is to cut spending massively, but it is not what Washington is ready to do, renowned US investor Jim Rogers told Sputnik.
"What's the way out? It'd be very easy. If Washington said 'Okay, we'll stop spending and we'll pay our debts,'" Rogers said.
"Now, do you think Washington is going to stop spending? They love spending money. It's not their money. The way out is just cut spending dramatically, cut taxes dramatically and stop spending. Are they going to do it? No, of course not."
Rogers also addressed the issue of US money printing, stressing that history has shown many times that when a nation prints a lot of money, it has inflation and the value of its currency drops.
"And sometimes the currency becomes worthless," he said.
"Countries spend a lot of money, the currency of the debt builds up, the currency becomes less and less valuable, becoming worthless, and so they give you new money. They tell you it's worth more, but it's still a problem. It's a country in decline. These are simple lessons from history. You can ruin your currency if you want and many countries have debased their currency repeatedly."
Elaborating on US-China relations, the investor stated that the absurd trade row between China and the United States will end up involving other nations before it ends.
On Tuesday, US President Joe Biden vetoed legislation that would have reinstated tariffs on solar panels from Chinese companies after American importers complained. The move comes in contrast to the Biden administration efforts targeting other aspects of China's economy, such as tighter export controls on semiconductor equipment.
"Nobody wins trade wars, nobody ever has and sometimes trade wars become shooting wars when they get really bad. The whole Chinese trade war is absurd," Rogers said. "I'm afraid America's more at fault than China. China has been more restrained but China's getting involved too. That's what happens in trade wars."
Rogers also said when the US like many countries faces problems like a recession the first thing they do is blame foreigners.
"China is so far doing okay, America so far is doing okay. But not as well as we would without the trade war," Rogers said. "And the trade war is going to get worse. And the trade war is going to involve other countries too before it's over. They always do."
Last October, Chinese President Xi Jinping said that the Chinese Communist Party (CCP) considers it necessary to accelerate the process of turning the country into a leading world industrial power, including in the development of manufacturing industry, astronautics, transport and network technologies.
"I've certainly been saying many times for a while now that China is going to be the next great country in the world and will be the most important country in the 21st century," he said. "And you know what is happening, you can see what’s happened in China in the past 20 or 30 years. That has started happening. And yes, that will continue."
Rogers went on to say that China will still have problems, like America did as it rose to become the most important country in the 20th century. Along the way, he added, the US had huge problems - from civil war to depression to massacres in the streets.
"So, China will have problems. I don't know what or when but I know they will. But in the end, 100 years from now, we will look back and see that China was rising. America had flattened out and maybe gone into decline just like Britain did... History is very clear. There's always somebody rising. And there's always somebody declining," Rogers said.
In early May, IMF official Krishna Srinivasan warned in an interview with Nikkei that increased trade tensions between the US and China would result in economic losses for both countries as well as Asia as a whole.
At the same time, Federal Reserve Chairman Jerome Powell said that the US may fall into what he hopes is a mild recession.
Policymakers at the Federal Reserve have projected that the US will experience a "mild recession" later this year that could take two years to overcome, minutes of the central bank’s policy meeting from March showed.
