Paper Chase

Looking out at the road rushing under my wheels
I don't know how to tell you all just how crazy this life feels
I look around for the friends that I used to turn to to pull me through
Looking into their eyes I see them running too
--Jackson Browne

Jim Rogers suggests that this may be the year of the currency crisis, and notes that he's on the hunt for currencies that will hold value. This, of course, is the chronic problem with all fiat currencies. Over time, bureaucrats attempt to paper over all problems and the currency heads toward zero.

Mr Rogers also clarifies the reason for the USD's recent rise. The dollar is not increasing because of its value as a safe haven. Rather, people have borrowed gobs of dollars over the last few years at cheap rates and then sold them to buy all sorts of speculative assets. Now these assets are coming down in price, and speculators need to buy back dollars to cover their 'synthetic' short positions. It's a gigantic short squeeze, essentially.

What to look for in a sound currency? Jim Rogers thinks currencies of well managed countries with large natural resource bases may be attractive.

Seemingly, however, unless a currency is explicitly backed by gold (or some other asset with similar monetary properties), then fiat printing encourages a chronically flawed condition that promotes a futile search for the 'right' piece of paper confetti.

position in gold