While the US is struggling to deal with its own national debt, investor and author Jim Rogers believes Hilary Clinton, who is in Hong Kong, will be on the defensive in a series of Asian economic and political talks.
“America is the largest debtor nation in the history of the world, and [Hilary Clinton] is going to speak to the creditors,” he explained. “She is going to try to demand things from them, but the Chinese now know they don’t have to pay too much attention to America. She is going to ask them to continue to finance America, and China is going to say, ‘You, America, have to do something about your debt situation, because we don’t like what is going on.’”
“So she will be on the defensive, and rightly so,” Rogers added.
While the Republicans and Democrats in the US have until next week to strike a deal, Jim Rogers believes there will be some kind of publicity stunt so that each side will seem to have won.
“There will be some kind of deal,” he said. “They will continue to stay in business; America is not going out of business next week, I assure you.”
However, he has no doubts America will someday default.
“There is now way America can ever pay off its debt,” he said. “It will either inflate the money away, or it will change the rules, it will do something to default if by another name.”
Rogers believes the only way out of this situation is to cut expenses massively.
“The only way out is to take an axe…no, you have to take a chainsaw to spending in America and cut it very dramatically,” he said. “Because the creditors – China, Russia, other people – are starting to say ‘We are not going to lend you any more money, shape up!’”
The US failed to cut its spending for decades, choosing instead to accumulate debt.
“It is always easier to the politician to go and say, ‘I will give you anything you want, let me write you a check,’” Rogers said. “That’s how you get elected, that’s how you get votes.”
“As long as you can either earn the money, or borrow the money or print the money, you can get away with it. But now we are coming to the end of the line,” he concluded.