ETF.com: You said the world is going to have serious problems in two to three years. What do you see causing that? Where do you see that emanating from?
Rogers: The main cause is the Federal Reserve, and Washington, D.C., more broadly. They're accumulating gigantic debts and doing huge amounts of money printing. That can’t last; it's going to cause problems for all of us down the road. If you're looking for a single culprit, it's Washington, D.C.
It's already happening. In 2015, for instance, twice as many stocks were down on the New York Stock Exchange as were up. It was disguised by the averages, but the averages are dominated by 15 or 20 big stocks that never go down.
Most stock markets are down around the world. Japan is already in recession. It's just not visible to the press or to the public yet.
Something similar happened in 2007: You had Iceland go bankrupt. People didn't even know where Iceland was or anything about it. But then that led to Ireland, which led to Bear Stearns, which led to Lehman Brothers. Before long, everybody knew something was wrong.
That's the way these things always work. It starts with an outlier or marginal place, working its way through to, "Oh, my god, why didn't they tell us?" My point is, it's already happening; it's just not in the headlines yet.
ETF.com: Is there anything anyone can do—the Fed or anyone in Washington—to prevent the collapse you see coming?
Rogers: I don't know. Historically, in America, we've had economic difficulties every four to seven years since the beginning of the Republic. We're overdue for a recession, timewise.
ETF.com: You mentioned you're not buying any stocks at all. You don't have a favorite region?
Rogers: No, I'm not buying anything anywhere. I'm looking at places and I have ideas on my list, such as some of the Chinese industries that are going to do well no matter what. But mainly I'm not doing anything.
ETF.com: Do you have any opinion on the fixed-income markets? Do you see interest rates going up or down?
Rogers: I'm short junk bonds in the U.S. Interest rates have already started going up a little bit in the U.S. and other places.
My view is that I wouldn't buy Treasury bonds with your money. But I know that central banks have more money than I do, so I'm only short junk bonds.
ETF.com: Last year you liked sugar, and it's turned out to be the best-performing commodity this year, with gains of nearly 50%. Do you still like sugar, and do you have any other under-the-radar investments people should take a look at?
Rogers: Sugar is going to continue to go higher over the next few years. Sugar—even though it's done well in the last year or so—is still down 70% from its all-time high. Sugar could triple and still not make an all-time high, so you can see how low it still is.
I can’t think of anything else worth buying. Some of the Chinese companies ... like I told you, pollution control: Those companies are going to do extremely well no matter what happens in the world.
I'm just waiting, because I know that when everything collapses, even good, sound companies that are booming usually go down for a while, too.
Contact Sumit Roy at [email protected]