good afternoon welcome to capital account i'm lauren lyster here in washington d.c. the zeer has lines for friday october twenty sixth two thousand and twelve u.s. g.d.p. picked up in the third quarter beating asked him as the two percent increase was driven by personal consumption and federal government spending according to the

commerce department defense spending increased thirteen percent versus a versus a decline of point two percent the prior quarter ok well short term election year reports aside jim rogers is in studio to give us a longer term perspective and offer his predictions for the year ahead plus japan remains mired in deflation according to price data out today as reported by reuters which goes on to say the pressure is on for the central bank to deliver more stimulus to keep the country from recession now you may recall japan began q we in two thousand and one and has been keeping it zombie banks in a state of suspended credit animations since the early ninety's how does this lesson jive with forecasts of what stern central bank induced inflation disgusts and bunga bunga berluti tony has reportedly been sentenced to four years in prison for tax fraud in these tough economic times are we seeing the untouchables actually

becoming touchable let's get to today's capital account. our guest today is someone with decades of experience investing with particular focus on commodities i think he's admitted i think he's said that he's been a horrible market timer but lucky for us he focuses on the long term and we want his opinion on the big economic picture it's not difficult to understand why you maybe wouldn't pay attention to the short term noise when you get a report like today's u.s. gross domestic product estimates ok the last one's before the election i should mention the bureau of economic analysis reported the third quarter g.d.p.

advance estimate was two percent that was higher than the one point eight percent analysts were estimating or expecting and definitely higher than the one point three percent of the prior second quarter now what contributed to the increase consumer spending and federal government spending wouldn't you know namely the sharpest increase in defense spending in more than three years according to media reports what did not contribute exports fell business investments were weaker you know all the stuff you actually want to see increasing so joining me to help us see past the noise on a broad range of big picture topics is none other than jim rogers investor and author of the book a gift to my children a father's lessons for life and investing among many others and someone that i am so happy to finally meet in person and have in studio after years interviewing you over there you are right i rather be here than on skype the overshoot about the ball and now it's better now that it's just too but i'm happy to have you here in the flesh versus so thank you for being here

my pleasure ok well let's get past the noise you say you don't pay attention to the noise we have these g.d.p. numbers out today which were fueled by federal spending what you know before the elections you know longer term looking out next year or you're looking for a recession now what do you think would be the trigger obviously the fiscal cliff is what we hear thrown around a lot in the us to proscribe the debt has been going through the roof and the debts getting worse and worse worse and. here europe japan and nearly everywhere in the world in america we've had economic slowdowns every four to six years since the beginning of the republic where you can next year two thousand and fourteen we're going to have another one for whatever reason and it's going to be worse next time because the debt is so much higher and yes they're spending a lot of money in two thousand and twelve there's an election in november of two thousand and twelve so washington is trying to get reelected that happens every four years this is not unusual but you should be you were very worried about next year so then are you saying that you're predicting and expecting

a recession fiscal cliff no fiscal cliff no matter what you think this is a timing thing this is common doesn't matter what they do in washington we know they're going to make it worse no matter what they do they're going to spend more money the debt is going to go higher and higher going to mess with the tax system it's not going to be good in the next two thousand and two we had a recession in two thousand and seven and eight we had another when it was worse because the debt was higher wait till the next one the debt has gone through the roof so the next time around but it's good for you you'll have something to report you know that is the flip side it is nice to have economic news even if it's bad for our sakes but not for everybody else is not for my personal sake you mention taxes and i think it's quite interesting because we do have this fiscal cliff and we have people clamoring saying hey we need to do something about the deficit now you have eighty c.e.o.'s from companies that are actually there are politically connected guys saying we need a plan like a simpson bowles that includes spending cuts but it also includes tax increases or revenue increases obama saying that he wants to raise taxes on the wealthy do you

think regardless of who is elected come january of two thousand and thirteen or further on in this election year next year we're going to see income taxes increase well i would hope not because many studies show that tax increases are not good for an economy maybe. there have tax increases but cut it elsewhere but you know even the child of these two thousand years ago they had studies which is raising taxes is not good. economy this is not news that raising taxes is but no i don't think that taxes but they should not raise taxes what they need to do miss list is cut spending they need to cut spending more than that with a chainsaw they need to go in there and cut spending do we spend staggering amounts of money on nothing well and look at bring up a chart of deficit spending how the deficits just compare over time over the years and how staggering they have become i mean look at second only to think that was world war two that huge deficit as

a percentage so yes huge staggering deficits you say the debt is even just so much larger than it was in the last recession do you think it's going to make a material difference this time though because going back to the ninety's there was a recession ninety two that was a big topic of the election was government debt and it was a fraction of the percentage of g.d.p. it is now so what kind of a material difference would it make with the largest debtor nation in the history of the world not the largest debtor nation in the world the largest debtor nation in the history of the world it cannot go on much longer maybe we'll get through the next recession with going higher but sooner or later and sooner it's getting sooner this is going to be a catastrophe eventually the market's going to say we're not going to give you any more money you're spendthrift we don't believe you anymore the same happened to the u.k. in the in the one nine hundred seventy s. they were the richest country in the world after the first world war three generations later they were bankrupt bankrupt they couldn't even sell government bonds do you think there would have to be another viable reserve currency before

that happens for the united states. bankruptcy may lead to another viable world currency probably because there's nothing on the horizon right now the euro as well as it's constructed now is not properly constructed to be to service the world maybe if we have a new euro if it's reconstructed if it's reorganize it would work we don't have an alternative right now can't be the end can't be the renminbi you know. in trouble we're in trouble so you think that that the country could potentially the united states could have some kind of huge event in the foreign exchange market or some huge bond market lapse before there's another reserve currency is this we don't say could we'll let me tell you what's going to happen whether it's the next recession and thirteen or fourteen or the one after that spanish where we are get this skyrocketing right ok so then as things get more desperate as we see another recession if we do and things are that much worse because there is more debt do you

think that we'll see more political will to actually go after some people with criminal charges at the top echelons of banks or government because just looking at the past economic crisis we did see in iceland the first time that a prime minister was was. went to trial or were had criminal charges for his role in the financial crisis berlusconi just got prison time for tax evasion which reportedly he may or may not serve do you think we could see anything like that in the u.s. where we've seen really no political will to go after a sister in the late eighteenth thirty's the head of the new york stock exchange with jail his name was whitney one of the finest old family names in american history went to jail a lot of people went to jail even in the one nine hundred ninety s. when we had the s. and l. crisis something like a thousand people going to cheer nobody's going to jail now this is so absurd and so outrageous and the reason is because all the people who caused the problems are connected in washington so they don't go to jail if you did or i did it straight to prison i know but do you think that that trend will continue or do you think we'll

see the untouchables become touchable as things become more dire when they call for this out when i mean i listen to you when the next crisis comes yes you're going to have people because it's going to be so bad and people are going to be so angry and already angry but i'm going to be really good but other people will be angry too the next time around and so yes you will see people going to jail as they should i would want to get angry i want. going back to two thousand and eight there was the debate. on inflation and deflation which persis today i know a lot of concern about the impact of central bank stimulus i actually want to rewind to two thousand and eight play a clip of hugh andrey and liam halligan let's take a look. we believe that quantitative easing cannot succeed ok i get my i don't take it one step further and say you should worry about inflation because of quantitative easing can't succeed in this environment and it is profoundly deflationary to see howard enormous increase in budgets money can be

deflationary i found to see how massive go issuance huge government borrowing generally. expenditure monkey business inflation comes in from the deflationary. and yet that is what we've seen happen so why do you think inflation massive inflation hasn't played out as some predicted despite all the central bank printing even maybe despite what derry say you predicted when you said an inflationary holocaust was coming. this way your problem is you don't do shop at your but all i do know is up in ireland are you if you went to the shop you would know that prices are going up whether it's groceries education health care entertainment tolls everything is going up cept maybe housing but everything is going up in prices there is inflation in the world and it is going to continue to get worse and there will be an inflationary holocaust before this is over or you're

sure you just get somebody to go you should start going to the grocery store and you will see go to a restaurant go to a restaurant i promise you i do all my own shopping i do all of that i'm talking about the kind of one nine hundred seventy s. inflation that you really see and feel that that's major why have most most countries in the world acknowledge that there's inflation now in australia china norway taiwan you know everybody in the world says you know we've got inflation except here in this town this is no inflation that's because there's an election the bureau of labor statistics doesn't have inflation but they lie about it there isn't place and it's going to continue to get worse be very careful go home about some groceries in stock oh no i know groceries are expensive fuel has been expensive though we've seen it go up and down health care health care education colleges tuitions up four point four percent inflation but do you think that inflation was going to be higher given the central bank stimulus we've seen i don't know what you mean by higher whose measure it depends on where you are as you

measure it the way that you might go and we'll go there is again there is a good fortune i don't shop there is a guy named john williams who measures in place and he says it's well over six percent now he measures that the way the government should measure it some of his to show stuff. it's over nine percent there is inflation in the land right now i don't measure but i can see what's happening and then the fact that bonds have done so well do you see that as any indication that people are expecting deflation are they wrong i didn't have to because the united states going to mr bernanke is over there with his printing press as you know the central bank now buys over seventy percent of the government bonds in america now if you'd said that five years ago or ten years ago people would have thought you were totally nuts you could not happen in america now what's happening of course is that if you give me that kind of printing press i could drive one straight through the roof and that's what mr bernanke is doing by the way a full disclosure i'm short bonds at the moment short of a month or two ago but there is not short of the two or three times in the role so

i don't think just because i'm short bonds are going to go down but i am short as we speak but that means you think that other people are going to think they're going to go down because i've heard you say it's not about what you expect it's what you expect everybody else to expect to write for you course that's the way the markets work as we will see i'm sure bonds at the moment all right i don't know how much longer this bond i don't know how much mr bernanke you can run his printing presses or what will happen if he's not at the fed anymore in the next president is at the helm so we're going to break we'll have so much more with you mr rogers with who are so happy to have in studio that's in just a moment also still ahead could apple be following in the footsteps of it and i mean microsoft one of our guests predicted this could happen a few weeks ago he also predicted apple's earnings would disappoint will delve into that and respond to some of our viewers in tonight's loose change but first our closing market numbers.

we both agree we agree we have to bring the tax rates down i felt the same as the president did. you agree let's come back to something the president i agree on and then to you agree that the voters have a choice perhaps when you are wondering who to vote for when romney and obama agree on so many things remember you do have other options come november sixth tune in to see the second round of debates between the major third party candidates on october thirtieth you. and. i will fight all the natural gas i also promised that i'd fight every single day a member of the. right of my own family.

all right welcome back jen rogers has laid out what he sees on the horizon so now let's talk about what to do about it what investors what average folks should be doing again he's investor and author of the book a gift to my children among many

others he's in studio today not in singapore where we normally talk to him early in the morning for you late for us now we're in a civil hour let's talk about commodities because you are the commodities guru and you've been bullish about commodities for a while definitely well before two thousand and eight which commodities are you bullish on. most bullish on agriculture as we speak right now agora we have serious problems facing the city i recall that you know we've been consuming more than we've been producing for a decade now which means inventories are very very low with the we're running out of farmers i mean the average age of formers in america is fifty eight in japan it's sixty six in australia it's fifty had more people study public relations in america than study agriculture we're running out of form you should learn how to drive a tractor i should i really should it's not a bad plan if this whole media thing doesn't work out ok so you're bullish agriculture when should retail investors get in is there a good time or

a bad time for just noninstitutional average investors i've told you before in the world's worst markets the single worst trader in the world short term trader in the world if you don't own any culture buy some now and then try to figure out the way when to buy the rest of it but i quote your prices are going to go much much higher we're not going to have any food at any price the farmers are dying and retiring ok and so until we get more farmers have got to get on to that agriculture i also heard you recently say that commodities played into your strategy with j.p. morgan i heard you say in a radio interview that your short j.p. morgan and that you are critical or concerned about their head of global commodities that masters doesn't really know what she's doing or something so what specifically are your concerns i said that you are concerned about the head of mine is and i know it's masters so i'm wondering when you're. there are i would name names but i am sure j.p. morgan calls and part of the reason i'm sure j.p. morgan calls is because of their commodities department. as well why their

commodities department what are your concerns specifically. the head of the department doesn't know as much as some people know about commodities and sometimes that person i won't say whether it's a male or female gets overextended and makes mistakes and i suspect you're going to find more mistakes coming out of the j.p. morgan commodities department so i am short the calls but there are many reasons to be short j.p. morgan many reasons to be short lots of them short lots of stocks around the world short india short a lot of things it's not just j.p. morgan i'm sure that's not top of them poor j.p. morgan ok fine but what about their silver position does that worry you at all or there have been many concerns in the blogosphere about what they're doing with silver i know i see all that stuff i don't have a clue i don't know what the situation is morgan says that they don't have any naked positions in silver i have no way of knowing ok but i know that's a huge discussion in the internet ok and then in addition you said you're short

other things like india what about asia because yes our viewers are familiar with your story everyone asks you about china so i'm not even going to do that i want to ask about some other asian countries maybe other developing countries smaller countries are there any that you're excited about any other growth stories props and market all of my money in the media and more i would i can't tell you how excited i am about me and my own fortune the stock market is that big and very few ways to invest there for me is a stock market investor but it is so exciting i mean in one nine hundred sixty two burma was the richest country in asia they closed up now fifty years later me and more of the poorest country in asia but they're opening up it is one really exciting so do you think if you had to pick one country and asia that's the one to watch that could be really exciting you would be one country in the world it would be me and more right now north korea is another excite. country angola there or the area yeah really things happening in north korea what give us that give us that because you always hear the other side in the western mainstream media in the

american mainstream yeah it has this in the kid the kid grew up the first one went to school in switzerland he knows how it is in the other part of the world but all of his generals when they were captains and lieutenants they went to moscow and beijing now they go thirty years later and they say oh my god you can't believe what's happened in beijing you can't believe what's happened in moscow and nothing's happened here so everybody in north korea with any power wants to change things and it's going to open up and they're going to merge with south korea in the next few years don't listen to american propaganda no no i don't listen to japanese propaganda the japanese are just too but it's going to happen interesting what where do you go for your sources on stuff like that are cheap. let's talk about. fine i'll let you get away with that what about gold mining stocks we've seen them underperform gold and i was just at a conference grant jim grant conference and paralysed on was talking about how supply is constrained it's more difficult to get to gold it's not as easy to get to and also the capital expenditures are huge for mining gold so if you will invest in

miners you want that cap ex behind you how do you look at gold mining stocks eleven hey down by i'm short i'm ignoring i don't own any gold mining stocks i do own go do own silver. the problem with gold mining stocks is there are hundreds of them it is mark twain says the definition of a gold mine is a hole in the ground with a liar at the top of the hole there are certainly good good gold mine in stocks sure i don't own them and part of the reasons i'm too i'm not smart enough to know which ones they are why do you think why do you think that they have underperformed because it's easier to buy gold now i mean you can buy gold coins you can buy gold bars you can buy so many ways to buy go now and i'm not the only person who knows that many gold mining stocks have been turned out to be disasters in the past twenty years what do you think about physical gold versus east. person i own i owned futures and i own physical gold ok for the average person would you would you

think that e.t.s. are a good way to go or no because it's not really physical gold it depends if your average for a well you know average person should probably buy gold coins as long as they don't pay too high a premium ok and you could you know you know well gold coins you can buy small amounts with each you know it's usually difficult to buy small amounts on what i would buy gold coins put them aside when the when the revolution comes you've got some gold coins under your pillow you know i'm going to go try and get some and stuff them under my pillow tonight if i can afford it jim rogers thank you so much for affording us the luxury of having you in studio now i know where you keep your gold i want to go. ahead and say i don't know i spent was there are there is are going to leave it there i'm not no thank you so much jim rogers investor and author thank you.

ok it's friday so let's wrap up with loose change and your feedback because this hybrid we've been doing has been working out well so demitri apple reported earnings last night after the market close i'm sure tons of people know already what happened but rather than you was right in line with expectations e.p. as the earnings was worse than expected but if you watched our show you'd already be expecting. so it's not as if it was going to collapse or quarter business or stop them quite concerned but this is the issue the expectations of that realistic . and highly unrealistic indeed they did disappoint on earnings reggie also warned about apple's margins in the pressure and why he thinks margins are going to be pressure going forward apple did report gross margin forty percent versus forty point five percent expected in december thirty six percent versus forty three percent expected so probably smart to go listen to reggie middleton's interview oct

second wouldn't you say. a lot of things he's going to call the tops he says of being interesting which is google softened and as google saw from above you can see right there bill gates of microsoft boehmer might make off with it because they have a new microsoft surface to look up about some of the big market cell phone but i'm going to say them and that's surgery for their google ok so we have google is the snake here google is the. direction that's given a given go and microsoft's going to run with it bill gates looks pretty interesting in a way you know it's interesting it's sort of already said he said that it's the competition from google android that's one of the impacting factors for apple absolutely very smart graphic dimitry well thank you very much lauren but i want to religious growth. so that brings me to another issue that we're going to meet your comments on our rumble in the monetary jungle was really what triggered most of the

discussion argument and discourse this week on facebook and our you tube and all of this various social media outlets mike norman on one side karl denninger on the other opposing ends of the spectrum on debt deficit government spending q we dimitri you've been on top of this on facebook and the discussion has been going on let's play a sound bite and get your response. to your ad full employment and then you know that the deficit is where it should be. ok so one statement what's your reaction and what's been the reaction all because i think you're confusing me here that it is kind of confusing that when you hear this remember or and it was basically a matter the reason why micromanage saying that is because he believes that what's most important is full employment and everything and he also believes the government can actually spend and get and get the economy going and what i want to make clear is that what michelman is missing is that yes if you do spend you can get full employment and you'll get everyone a job what kind of jobs are they going to be that's a plantation economy that's why it's hard core collectivism and that's essentially

what he's advocating but he does believe the government can actually do it and not miss allocate capital that's where i think he and called in a group i disagree that's where i will disagree with my chrome and anyone else who who who suggest that we there is no matter and then a dollar bill that abolishes a dollar bill with an interest to it and if we could just print print print and of course you know anyway but that's not one of kind of the main sticking points in the discussion on our boards and on i was a huge one and i was a huge i was i was a big i mean all the really people get confused about and i can sympathize because i did too until i understood essentially this is my perspective that it's just simply a snazzy way to it's not is a collectivist style economic approach real quick before we go i want to respond to a few comments about me and that debate some people were very kind said lauren handled might beautifully that i was constantly trying to speak over the other guys but lauren did a good job taking control i also received some negative one said lauren was too rude and snarky with my kids these are challenging but yes like they should be

welcomed and treated with currency. courtesy i just want to be clear before we go and that all of our guests are respected with mike i felt i needed to be a little tougher with trying to get him to to let me go to break those kinds of things do you change the nature of the debate that it's never about the views i absolutely respect every single person that comes on this show and gives us the honor of expressing them with that that's all we have time for thank you so much for watching us be sure to come. back next week in the meantime you can follow me on twitter you can go to facebook to hulu or steal our work have a great night. download the official ati application so choose your language stream quality and enjoy your favorites from our touch t.v. is not required to watch on t.v.

all you need is your mobile device to watch r.t. any time any of the. you know how sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize that everything you thought you knew you don't know i'm tom harpur welcome to the big picture.