ETHShanghai 2023 | Fireside Chat with Jim Rogers - What’s next for the global markets: The rise of Asia Web3 Narratives
Suji: You mentioned your first time in China was 1984 right? I believe you start doing investments for over fifty years.
What’s the initial spark that leads you to say, I want to do investments, I want to use these financial tools as a way to recognize the work. What do you think of young people?
Rogers: When I was at university. I was like most other university students. I had no clue. What I wanted to do or who I was. I thought I was going to Medical school, law school and business school. I mean, I was confused like many other students.
Summer after I graduated, that spring I met a guy who worked on Wall Street I liked him and he liked that I knew nothing about wall street. I knew it was in New York. I knew something bad had happened in 1929 but that’s all I knew. I didn’t know there was a difference between stocks and bonds, but I went to Wall Street for this summer job only because I liked the guy.
And I fell in love with investing at Wall street. And I didn’t know. I couldn’t verbalize it at the time, but now I realize because it fulfills my passion and I had a passion which I wasn’t aware of. To know what was going on in the world and be aware of things happening everywhere. And here was the place. That they would pay me to do that.
Pay me to know about the world and everything that was happening and everything was changing. And if I did it right, it would pay me a lot of money. So I didn’t go to law school, I didn’t go to medical school, I didn’t go to business school. I didn’t do any of that. As soon as I could, I went to Wall Street. Got a job and worked on Wall Street and loved every minute of it.
They close the stock on weekends, which I didn’t like because it was so much fun and so exciting to me that I wanted to do it 24 hours a day. So it was a pure accident.
But it did meet and fulfill my passions, which is to know the world. So I would urge all of you, please figure out your passion, whatever it is, and pursue it. Don’t do what your parents say or your friends say or your teachers say. Figure out your own passion and pursue it.
Suji: That’s great. because I drop out so I don’t really have the phase. I directly entered the new world. Without years in college.
Rogers: Well, he’s a free spirit, apparently, so he’s figured out his passion. I hope all of you will, too.
Suji: Over the last four decades, five decades. When you started on Wall Street, there was no Internet. There was TV, radio, there’s the original automatic clearing system. Now people are trading on their phones, right ?, Investing not only stock bonds but something we can never understand. People invest in collectible pictures. It’s changed a lot. But I’m wondering, in your mind, what is not changing?
Rogers: Read human beings. Human beings don’t change. Human beings can really do some dumb things. Human beings can do some smart things. They’re more likely to do dumb things. But we all have the same passions that people had 500 years ago, 100 years ago. We do foolish things. We act on emotion rather than long-thought-out understanding. And this is especially true of investors.
Very few investors are successful investors, and it is partly because most investors want fast money. Most people want to be rich quickly. I want to be rich quickly, I want to be rich this afternoon. But it is a shortcoming and if you act on hot tips and everybody wants a hot tip, and before you ask me for a hot tip, I’m not gonna give you a hot tip because I know that hot tips can be extremely dangerous for investors.
We all want them. But if you act on hot tips, you’re not going to be successful, you’re probably going to be very unsuccessful. So if you want to be successful, try to differentiate yourself from other investors and act only on what you yourself know a lot about. Do not listen to hot tips, and then you will be a very successful investor and you will have a lot of money and you will probably have a good life.
The main mistake that human beings make, is not just in the investment world. Marriage, whatever it is, careers. People act emotionally rather than thinking things through learning what they’re doing and sticking to what they know.
It’s not easy and some of you will say it’s boring. If you want to be successful, be boring.
Suji: Last year, Bloomberg had an interview with you, and you mentioned that you don’t really have any cryptocurrencies. But you have physical coins, gold coins, and silver coins. You also mentioned your wife may have some crypto coins. And that leads to the macro market today. With the fear of the collapse of fiat currency, especially the US Dollar, the Fed keeps printing, and it seems like the coins, no matter whether gold coins, silver coins, or Bitcoins, are our last defender. What are your thoughts on this macro environment? Because it’s been, it’s been worse and worse in the last 15 years, right?
Rogers: Well, if you look at history, you will see that no currency has been the dominant currency in the world for more than a hundred fifty years. Nothing has lasted forever for many reasons that we don’t need to get into. But the US Dollar replaced the pound sterling, the pound sterling has only risen since the 1920s, and Britain was the number one economy/country, etc. in the world. There was no №2. But 50 years later, Britain was bankrupt, literally. The IMF had to fly into London and bail out Britain. Only 50 years earlier, when I say bankrupt, I mean bankrupt. They couldn’t pay their bills. And this was a country that a hundred only fifty years earlier, had been the dominant country in the world. So it’s always been changing before Britain or somebody else, etcetera, etcetera. So nothing has ever lasted forever.
I doubt if anything will ever last forever. The US has been on top for a long time, but the US is now the largest deter nation in the history of the world. I don’t particularly like saying that, I’m an American citizen and taxpayer, but America has gigantic debts. And the debts are going higher and higher every day, every week, every month. And it’s not going to end because in Washington, they don’t think it’s a problem. But I know from history that it is a problem.
The deeper in debt the US gets, the deeper the problem is going to be. In my view, it’s not a good time to be a young American.
I don’t have to pay for all this, you know, I’m an old American, but I’ve got young teenage children, they’re gonna pay, and they’re American citizens. They’re certainly going to face many problems in their lifetime, just as young British citizens did in the 1920s, in their lifetime, things went to hell. It’s going to happen to the US, whether we like it or not. A very simple story. I’m not predicting anything. I’m just telling you to read some history. And you will see how the world works. So the future of the US Dollar is not great. Washington keeps printing them as fast as they can. Eventually America is going to run out of trees for printing money so fast. And when that happens?
The world is gonna move to something else. I don’t know what at the moment. If you know, please don’t say it out loud. Give me a note later because I’m looking for what’s going to be the next competitor to the US Dollar.
In theory, it should be the RMB, but the RMB is still a blocked currency. I mean, you cannot just buy and sell RMB like you can Euros or. Dollars or something,
I wish that Beijing would have been moving in the right direction for 15, 20 years now, but it’s still not a completely convertible currency. You cannot be the world’s dominant currency if you are not convertible. They are moving it that way, but until it is convertible, the RMB cannot be the major competitor to the USD.
I don’t see anything else will be, but I do know that something will compete with and replace the USD as the world’s reserve currency. I am of the view that it’s not going to be cryptocurrency. Not me, I have never bought or sold. So short in the cryptocurrencies.
But people I know trade them all the time. I also know that many cryptocurrencies have disappeared. They are round to zero. So it’s not a one-way street. If you think it’s a one-way street, you’re going to be in trouble. But I don’t see cryptocurrency ever becoming real money. Yes, all money will be on the computer. Eventually, we will all have computer money. Already in China, you pay for the taxi with computer money.
China’s way ahead of the rest of the world, but everybody’s working on computer money, the US and other countries when they finally make all their money on the computer. The US is not going to say, okay, this is money now.
Do you want to use that money over there? You can. That’s not the way bureaucrats in Washington think. That’s not the way they act. It’s if they don’t want to lose control. Keep the monopoly so we will all have money on our computers eventually.
It’s probably going to be government money. It’s not going to be other people’s money, accept it. Crypto money can be around for hundreds of years. As training vehicles, but. Most governments do not give up control of monopoly. Even China, especially China, has been around long enough to know.
Suji: This is a really important effect and you witnessed the collapse of the British Pound, right? And you and your partner were involved in the collapse of several countries and it’s very interesting that the governments are the mighty monsters. They seem invincible that one day, as you say, even. The British Empire needed to ask for a bailout from the IMF.
Suji: The first time you traveled to China. At that time, there will be nearly no stock trading. There is nearly no equity or bond investment. Anyone there to do this is in some kind of gray area. But Hong Kong was the financial hub for over 100 years.
Now, no matter, no matter it's a cryptocurrency, ETF, or whatever. Seems it’s the same pattern again, Mainland is a great area. Somehow people are gathering here in Singapore or Chinese here like they don’t even speak Cantonese. They use Mandarin, and they do the same thing. Do you think it’s gonna repeat the same pattern of using modern vehicles, using advanced technology and copying the model in Hong Kong, and doing that in Mainland? Do you think it’s gonna be very hard that the Chinese story has already lost track for geopolitical reasons?
Rogers: Sorry, by saying the world is always changing, and it always will. In 1950, in America, Baltimore was the third largest and most important city. Most of you have never heard about Baltimore, it’s still there. In the top 25 in size of United States cities, most of you never heard of Baltimore, but in 1850 it was the third largest city and extremely important in many ways for being the trading center, etc. It’s still there, but it’s not nearly as important as it was. That has always happened.
Hong Kong before 1949 was not a very significant place. Yes, it was there, the British colony. Along came the communists in Mainland China. So Hong Kong, because China closed off, had to be successful. It was a British colony. So it became a successful financial center, but there was nothing else.
China was closed. The world has always changed, and it will continue to change. I like Hong Kong a great deal. I love Hong Kong, in fact. People used to prefer Hong Kong to Singapore. Now, for all the reasons you know about. The main answer to your question is, whatever we think today is not going to be accurate in 15 years.
Think of any year in history. 1900. Everything people knew in 1900 was wrong 15 years later. You pick into history, the simple exercise. And you will see everything that you knew for a fact and lived their lives accordingly, was wrong 15 years later. Whatever we know today is going to be wrong in 2038. It’s gonna be dead wrong in 2038. Don’t make your plans without figuring out how the world is going to change, including China.
China 15 years ago, that country didn’t exist anymore. China has changed so much. That’s true of China. Everything in history is true of every country. So whatever we all know now is going to be difficult. Even Hong Kong, the Hong Kong of 15 years ago, no longer exists.
I don’t know who is going to be the financial center of Asia. Before the second world war. Shanghai was the most important financial center between London and New York, but before the second world war, New York, London, Shanghai. Those who major in financial centers of the world.
Along came the second world war and a few other things, and that’s changed the significance of Shanghai. But Beijing wants Shanghai to be imported again, and it will be. China’s going to be the most important country in the world in your lifetime. So Shanghai will be extremely important again, or Shenzhen or somewhere it’s going to change.
So everything we think about Hong Kong. As fun as it is, it’s not going to be true in a few years. It wasn’t true a hundred years ago. I doubt if it’ll be a hundred years from now, just in Baltimore is no longer significant. And I can give you other countries, Liverpool a hundred years ago. It was an unbelievably prosperous and important city.
Everything changes, including Hong Kong.
Suji: Last question. You’ve been legendary investors. You’ve been trading everything for a long time. So you know the regulator, you know, especially the US regulator. CFTC, SEC. So now, especially the US regulator is having a really interesting attitude to the new assets, no matter their cryptocurrency, NFT. You know, as you say, it can be money. Has this thing happened in history, like in your time, a very hostile attitude to the new asset class, but eventually they were proven wrong? And what happened in your time? What do you think will happen in the near future?
Rogers: Read about what’s happened before. Human beings don’t change that much. A hundred years ago, people could use anything we wanted as money. We wanted to write a contract that I would pay you with 100 head of sheep. It would be a valid contract and sheep could be money.
Anything could be money. Along in the 1930s. The Bank of England, which was the most important bank in the world at that time. They said you can only use the pound sterling as money in the future. You cannot use anything else as money anymore, and if you do, it is an act of treason.
Treason means they execute you. You know, if you commit treason in any country in the world, they execute you. So the Bank of England. They wanted to make sure you listened and you obeyed them. They made it an act of treason to use anything except a pound sterling as money. Needless to say, people stop using other things. So it has happened before. You ask if it’s happened in my lifetime. I was not around in the 1930s but. Read about it. And I do know that most countries, most governments.
I don’t like this about governments, but the facts are that most governments have guns. And if the government says X, you will do X, most people will, because you don’t want them to come around with their guns, to knock on your door.
Maybe I know the adherents of cryptocurrency. But I know all the arguments. Yes, yes, yes, yes. I presume you do, too. But I cannot conceive of most governments giving up the monopoly under control. They love knowing everything you do. And if you have money on the computer in the future, which it will be. And governments love it.
It’s sheep that they don’t have to print, they don’t have to transport it. It’s all right on a computer. And they know everything you do. They’ll call you up one day and say. You’ve been drinking too much tea. Stop drinking so much tea this week. Cause they will know everything you do and they love you. I say I hate it, but they love it. We all have our views of what will happen in the future, but I have read enough to know that most governments love control and power and regulations, and they love knowing what you are going to do. So I hope you’re right. I hope it all going to disappear. I hope all bureaucrats will disappear, I hope all the politicians will disappear, I hope we can all live our free lives the way we want to.
The title of today’s talk is about the Rise of Asian Web3 narratives, and you have kindly shared your views on the Sino-US political tension just now. But in Asia, it is not just about China, right? That’s another superpower India, that is also rising. You’ve been advocating that China will be the most important nation, for at least this decade. Just wanted to also hear your view on why China is gonna be one of the most important nations within Asia, maybe compared to India.
Rogers: I wish I knew why. China’s the only country in the world that’s done it. Whether it’s a fact, no other nation has done it. Maybe it’s your grandmother. I don’t know what it is about China. This is done more than once.
China’s also collapsed, totally collapsed, a catastrophe several times in history, as you know. But for whatever reason, after being at the bottom for decades. China has turned around and risen to the top again. For some reason, China does it. If you can figure it out, you will be very, very rich.
India has had some great successes, parts of India, not the whole, you know. India as we know it now has never existed before on the world map until recent decades. Parts of India have been wildly successful, for parts of Germany have been about parts of Africa have been wildly successful at times in history. But China is the only nation that has done it recurringly. And I don’t know why.
If history is any indication. For the next few decades, China will continue to rise and become more successful. Richer, but one thing about history along that line. China has rarely had international wars. If you look at Europe, they always have international wars, they are always shooting each other. China at time wars. My god, the Chinese have slaughtered each other many times in history, but for whatever reason the Chinese have an international war you have to sail off to fight Cuba or to fight Brazil.
He was too busy slaughtering each other. I’m not saying this is good, I’m just saying this is a fact of life. So I would suspect that anything that happens as far as international conflict with China. It happened because the world has ships and planes now and some countries like international conflict. China will be involved just because of who China is becoming.
As recently as 1980, you mentioned India. India was much more successful than China. You know the rest of that story, I’m not as optimistic about India as the Indians are. India has the world’s worst bureaucracy. They learned bureaucracy from the English. And then they took it to a higher plane, so I’m not nearly as keen on India and some people are much more keener around China. China basically has one language, one ethnic group.
As you know, India has many languages, many religions, and many ethnic groups. Which usually leads to some kind of problems.
In some of your recent interviews, I’ve heard you speaking about the global recession, which is one of the worst in your lifetime. Can you tell us more about this phenomenon? And if you have to pick one country in Southeast Asia, which country would you have confidence in coming out of this global recession in a better shape than any of the other countries in this region?
Rogers: We’ve had recessions throughout history every few years. At the moment, I’ll use the US since it is the largest economy. It’s been thirteen years since the US has had a serious economic problem. That’s the longest, by the way, in American history.
That doesn’t mean it can’t go on for fifty years, but it never has lasted this long. Much less long. So historically we’re getting close.
I can see all the problems, which always happen before the recession, inflation, higher interest rate, and overcapacity. I mean, I can read about previous recessions. It’s all right there. Anybody can see it and those things are starting to happen again. You have new people coming into the market after a long period of good times and new people say, I’ve discovered this new thing called the stock market. It is fun, it is easy, and you can make money. Easy money. It always happens by the way, it happens at the end of every long period of prosperity and it’s happening again. So I can see, we are going to have more recessions, as we always have.
I would suspect that the next recession is going to be the worst in my lifetime. And the reason I say that, is for those of you who remember 2008, you know of a very wretched time because there was so much debt in the world. Since 2009 my god, debt is everywhere.
Even China has debt now. In 2009, China helped save the world because it didn’t have much debt. And so they started spending money and helping save the world. But now even China has debt. Not as much as the West, but a lot of debt. So the next time has to be a very bad recession for all of us. So I hope you’re worried.
Which country and Southeast Asia? Now that’s a good question. I’m just thinking immediately of Indonesia because it’s the largest. I have never been a big fan of Indonesia, but I have noticed it in recent months anyway. Indonesia seems to be changing for the better. I have investments in Indonesia. Indonesia seems to be running, starting to run itself the way you and I would run a country. But that’s not the answer to your question.
I don’t have an answer to your question. Maybe Cambodia is making changes, but Cambodia is a tiny country. And Cambodia has a lot going for it. It doesn’t have gigantic debt problems like some countries could know why it would lend money to Cambodia.
Obviously, I live in Singapore. So I would expect Singapore to be okay. Singapore is well-placed in the future.
The question is in regard to Singapore and its role in the global economy and whether there are specific opportunities that you see forcing Singapore, such a small country, of course, but a atrategic one. This is in the context, not on the personal side. I followed your words and footsteps to move my family from California to Singapore 20 years ago. So thank you for your words there. More so, from a Singapore perspective, is there something that the government or the leading companies or global companies can do from Singapore that where there isn’t this opportunity elsewhere, especially being neutral to China and the US?
Rogers: Oh well. Singapore is doing its best to be a friend of China and of the US. That’s a very difficult thing to do in the long run. Whether we like it or not, eventually people usually have to take a side. But at the moment, Singapore is a very good place to be because it is a friend of both. And as long as that continues and the world continues to exist, Singapore would be a good place to be. Having small countries in the world that have done extremely well, Switzerland is a very successful country. It’s tiny. In relation to the rest of Europe, there are countries that have done well and are small. And I would hope. In Singapore, since I live here, I would hope that Singapore will continue to do well. But Lee Kuan Yew, you and you remember Lee Kuan Yew said Singapore may not exist in 50 years, 40 years from now.
Since he said it. Because he understood what happened to places. He did say that if Singapore gets in trouble in those 50 years, I will come back. From the grave and I will save Singapore, he hasn’t come back yet, I haven’t seen him so I guess we’re okay at the moment, but he was. Wise person, and he understood history, especially from his perspective. So he has said that we might have problems in the next 50 years, and we possibly will, most countries do it. So be prepared. Be careful and be prepared.
I don’t know how the world will end, but I do live in Singapore. I don’t plan to leave unless I have to. Unless something happens.
Singapore has played it very well. It is multilingual. Which is very wise as we certainly know now, and that is useful in the world in which we live. And Singapore is a free market, financial market, and trade market, which is very useful. And it has been. It will continue to be.
Singapore is getting richer, which is usually good. A potential problem is that Singapore has built up a lot of debt.
Singapore is the answer to that. I mean, if you look at the IMF. The IMF says that Singapore is one of the most indebted nations in the world. I presume the IMF is correct and simple arithmetic. Singapore’s answer but we have a lot of assets. We have a big debt, but we have big assets set and that’s probably correct.
A potential problem with that is that when bear markets come, assets can decline, but debt doesn’t decline, it is still there. The moment Singapore has built up big assets, which is good, it is a fairly open society and fairly open market which is looking at history that has been a useful recipe for success.
Singapore has more or less stayed since its independence. Similar to Switzerland, Switzerland stayed neutral, which by the way because during the French Revolution, all the French fled France and had to go somewhere. So they went across the border to Switzerland. And that’s why Switzerland became a financial center. And all of these French were trying to get away from the French revolution and there was Switzerland. Don’t think the Swiss grew up. It came from heaven, or it came from the Swiss Revolution, just as Hong Kong became very successful because of the Chinese Revolution. They wanted to get out of China, so they fled to Hong Kong. There’s usually a reason for things and out. Anyway, Singapore has been successful. I suspect that it will certainly be successful for a while. But nothing has lasted forever.