The problem, according to Jim Rogers, starts with the Fed and its short-sighted approach:

"There was a [financial] train wreck, yes.  Two or three – more than one, as you know. [U.S. Federal Reserve Chairman Ben S.] Bernanke and his boys both came to the rescue. Which is going to cover things up for a while. And then I don’t know how long the rally will last and then we’ll be off to the races again. Whether the rally lasts six days or six weeks, I don’t know. I wish I did know that sort of thing, but I never do."

The next shock’s going to be even bigger still. So the shocks keep getting bigger because we kept propping things up and this has been going on at least since Long-Term Capital Management. They’ve been bailing everyone out and [former Fed Chairman Alan] Greenspan took interest rates down and then he took them down again after the “dot-com bubble” shock, so I guess Bernanke could try to start reversing some of this stuff. 

But he has to not just reverse it – he’d have to increase interest rates a lot to make up for it and that’s not going to solve the problem either, because the basic problems are that America’s got a horrible tax system, it’s got litigation right, left, and center, it’s got horrible education system, you know, and it’s got many, many, many [other] problems that are going to take a while to resolve. If he did at least turn things around – turn some of these policies around – we would have a sharp drop, but at least it would clean out some of the excesses and the system could turn around and start doing better." 

Well, it's clear that Rogers is no fan of Bernanke... But what do you think of his thesis of a potential "Super Crash" - and how do you position your portfolio accordingly? For Rogers, apparently, one possible answer is commodities.

NOTE: Please keep in mind that TradeKing does not specifically endorse any of the securities or trading strategies mentioned. Depending on your risk-reward profile, this trade may or may not be suitable for your portfolio. The stocks mentioned are for educational purposes only.

[image: Hot Commodities]

Marcus,

The Japanese example is an interesting one - the country couldn't grow its way out of a recession, despite interest rates as close to zero as you can get. The Wall Street Journal every now and then makes reference to the Japanese economy - a case of a long, protracted malaise made worse by the unwillingness of Japanese policy makers to face cold, hard facts.

- The TradeKing Blog 

 Ben and his famous speech in 2002 that gave him the name "Helicopter Ben."

http://www.federalreserve.gov/boardDocs/speeches/2002/20021121/default.htm

Anyway Ben states that we are unlikely to face stagflation and Japan and its deflation. Reason #1 the Banking sector was insolvent #2 Large amount of government Debt.

Sounds just like us. Then he goes on to say, the main reason it continues is the decision of policy makers and government politicians not to reform policy and implement reforms and allow the institutions to go bankrupt. Another words they do not want to face the pain, sound familiar. So their economy is deadlocked. Sounds exactly like us. BSC was not allowed to fail. C is bankrupt and they keep it afloat. Oh that's right they need them to prop of Fannie and Freddie. Look at this C bought (  http://www.mffais.com/c.html ) 28,572,701 shares of Fannie Mae last month. Guess Paulson the liar said he had no need to prop them up. Look again folks, he pulled out the "bazooka". So Ben refuses to close LEH and a number of other banks? To top it off takes anything at the discount window.

The other thing about Ben is every single one of his statements has been an outright lie or he is 100% wrong all the time. Even a broken clock is right twice a day?

Ben said "subprime is contained"? (3/07)

Or "we do not expect spillovers from the subprime markets to the rest of the economy or to the financial system"? (5/07)

Or "monetary and fiscal policies are in train that should support a return to growth in the second half of this year"? (4/08)

Or "our baseline forecast is for moderating inflation"? (7/06)

Or ".... expect energy and other commodity prices to flatten out"? (7/07, right before the insane run in these prices began!)

Latest saying is inflation will moderate. Yeah we believe you Ben!

Now Ben stated that we are unlikely to face deflation like Japan because of the causes. Unsound banking system. And what else? Too much Government Debt! Sounds like us! From his speech that earned him his nickname:

What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.