The clowns in Washington

In this Bloomberg video, commodity bull Jim Rogers expresses his displeasure regarding last week's Fed rate cut even though he and anyone else with natural resource investments have made a ton of money in recent weeks.

That is odd - expressing disappointment after having what may be your best five weeks ever - not something you are likely to hear from others on Wall Street. There probably aren't too many hedge fund managers or executives at big banks who last week commented, "You know, the money is flowing again and now it looks like there will be some good year-end bonuses, but in the long-term, this is not going to be good for the dollar".

Since Ben Bernanke and the rest of the voting members of the Federal Reserve made clear they are willing to let the dollar sink, broad equity markets have risen smartly, but commodity prices and related shares have soared.

You'd think that Jim Rogers would be hootin' and hollerin', but he isn't:

It pains me that those guys in Washington are so dumb. They're cutting interest rates, they're destroying the dollar - the U.S. dollar is making multi, multi-year lows and it's going to go much, much lower. I don't understand who these clowns are. They don't understand how markets work.

It's devastating to me and to many foreigners who are creditors of the U.S. and to many Americans it's going to mean that interest rates will move higher, inflation is going to be higher, commodities are going to go much, much higher -it's madness.

They have signaled to the world that they don't care about the value of the U.S. dollar and therefore commodities will go much, much higher.

At this point, interviewer Betty Liu noted that both equities and bonds rallied as a result of last week's rate cut - a comment that hopefully is not representative of the rest of the mainstream financial media. Movements in interest rates and bond prices are often confused by the man on the street, but they shouldn't be confused at Bloomberg (don't they teach you "prices down, yields up" on your first day at Bloomberg?)

On the prospect of more interest rate cuts as now encouraged by Dallas Fed President Richard "Ninth Inning" Fisher, Rogers had this to say:

The more they cut, the more long-term interest rates are going to go higher, and the more inflation is going to go up, the more commodities are going to go up, and the more the U.S. dollar is going to go down.

On the outlook for a recession:

Well, who knows, let's see what happens in Washington. If they keep making mistakes, the recession is going to be longer and deeper than any of us want and we should suffer, but if they do the right things, then conceivably, we'll have the pain, and we'll get it over with.

Recessions are not the end of the world. We've been having them for over 200 years in America and all around the world. They clean out the system - that's what they're designed to do - some people lose their jobs and some people have to suffer, but basically, overall, we all come out better after a recession. Let's hope that in Washington they don't bungle it like they usually do. They seem to be bungling it right now.

Never before has someone who has made so much money in the last month sounded so unhappy. Maybe if you have as much money as Jim Rogers, money really doesn't matter anymore.

In comments to subscribers at Iacono Research last week, I noted:

Of course this works out well for natural resource investments as evidenced by the dramatic increase in the value of the model portfolio and this is what I expected to happen, but, like many others, deep down inside I think I secretly held out some hope for some Paul Volcker-style tough-love that would perhaps better align with the nation's best long-term interests. Oh well.

Oh well.