Legendary investor Jim Rogers has become something of a moral philosopher. Happily enough, he does it well.
Here, in an excerpt from a recent interview, Rogers reflects on the morality of punishing people who save and invest their money in order to bail out people who speculate. By that he means that artificially low interest rates, coupled with the possibility of inflation, punishes savers. We are pursuing these policies because we, and many other countries, are trying to save our financial system by bailing out people who borrowed more than they could repay.
In the long run, punishing virtue while rewarding vice leads to calamity.
Rogers explained it well:
Throughout our history – any country’s history – the people who save their money and invest for their future are the ones that you build an economy, a society, and a nation on.
In America, many people saved their money, put it aside, and didn’t buy four or five houses with no job and no money down. They did what most people would consider the right thing, and what historically has been the right thing. But now, unfortunately, those people are being wiped out, because they are getting 0% return, or virtually no return, on their savings and their investments. We’re wiping them out at the expense of people who went deeply into debt, people who did what most people would consider the wrong thing at the expense of people who did the right thing. This, long-term, has terrible consequences for any nation, any society, any economy.
If you go back in history, you'll see what happened to the Germans when they wiped out their savings class in the 1920s. It didn’t lead to good things down the road for Germany. It didn’t lead to good things for Italy, which did the same thing. There were plenty of countries where it wiped out the people who saved and invested for their future. It’s usually a serious, political reaction, desperation in some cases, and looking for a savior and easy answers is usually what happens when you destroy the people who save and invest for the future.
Perhaps this is why, with so many economic indicators looking better and better, many people are not feeling it.