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Global economy will perform better then the American economy.
Legendary investor Jim Rogers has in an interview to The Economic Times warned that the very measures taken by the recession-hit western
countries to spur growth could cause a bigger crisis for the world economy. His sentiments find echo in German Chancellor Angela Merkel’s exhortation that central banks should return to ‘independent and sensible monetary policies’.
The crux of Roger’s argument is that the central banks have printed a huge amount of money which the real economy may not able to absorb. All this money may fuel asset prices again. In the long run, he warns, this liquidity deluge would lead to high inflation and interest rates and a worse economic downturn
.
Such a stark warning would appear premature at this stage. After all, the annual rate of inflation has fallen to below zero in the Eurozone and elsewhere, too, inflation is hardly a concern. Those belonging to Roger’s camp would argue that excess liquidity in the global system could create another commodities bubble led by oil. This will cause inflation to rear its head again. In that case, it is argued, the central banks would not be able to act quickly enough for fear of causing a deeper crisis.
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