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Commodity guru and reknown investor Jim Rogers warns that the world could be heading again for 1970s-style inflation.
He said while concerted government efforts to bail out economies may have averted a depression, it would eventually lead to spiraling price increases.
"Whenever governments print a lot of money, you get inflation. That is the way the world has always worked," he said.
"I am sure inflation is going to go to levels seen in the 1970s, if not higher. It is not necessarily going to happen this year, but certainly over the next few years."
Rogers believes that the inflation risk would be more acute in China as exchange controls would trap funds and restrict outflows.
"It (the money) has only so many places it can go. You cannot go and buy a house on the (French) Riviera. More and more overseas Chinese investors would want to keep their money in yuan, as they know it would appreciate later.
Refuting claims that interest rates would need to remain low to avert potential deflation, he said central banks would have to hike rates in order to keep their economies under control.
"Governments around the world are going deeper and deeper into debt and this has got to be financed. Someone will have to pay higher rates eventually, " he said.
"Interest rates have already gone up to some extent. The US long-term government bonds market has already dipped beyond its low. The US government is trying to hold down interest and mortgage rates but there is only so much they can do."
Source: China Daily
Jim Rogers president of Rogers Holdings is George Soros former partner and co-founder of the Quantum Fund, and a truly legendary international investor who helped generate a 4,200% total return over a 10-year period .Jim Rogers is always bullish on Asia Commodities Agricultural Products gold and silver
