The U.S. stock market is headed for a major tumble, as the Federal Reserve begins to curtail its massive easing program, says international investor Jim Rogers, chairman of Rogers Holdings.
The Standard & Poor's 500 index on Monday dropped 43.85 points, or 2.1 percent, to 2,057.64, less than 4 percent below its record high. The Dow Jones industrial average lost 350.33 points, or 2 percent, to 17,596.35, and the Nasdaq composite fell 122.04 points, or 2.4 percent, to 4,958.47. The losses wiped out all the gains for the Dow and S&P 500 indexes this year.
"This is the first time in recorded history that all the major world’s central banks are printing staggering amounts of money,"
Rogers told MarketWatch.
"Now the world has this huge artificial ocean of liquidity. The people getting the money are having a wonderful time. But when it ends, it will be very nasty. The idea that the solution to too much debt is more debt is mind-boggling."
The economy has been in recovery mode since June 2009, and the S&P 500 has tripled since March 2009. But, "we have had economic slowdowns every four to seven years since the beginning of the Republic," Rogers said.
"We’re overdue for another problem. When this artificial sea of liquidity ends, we’re going to pay a terrible price," he said.
"This low interest rate environment will not continue forever. Bonds could go down for a long time, which will scare the bureaucrats in the central banks. This is why we might have a 10% to 13% decline in stocks,"
he said.
A recent polls shows that many Americans apparently have a similar gloomy view of the economy's future.
Republican pollster Ed Goeas warns that 72 percent of Americans fear an economic crash in on the horizon and that concern of such a catastrophe is the highest he can ever recall.
"Concern over the economy is the highest I've ever seen," Goeas told the Republican public policy organization Ripon Society,
the Washington Examiner reported.
Exit polls from the 2012 and 2008 state primaries and caucuses support such claims, the Examiner reported. The candidate who was considered by voters to be best on economic issues usually won that state's contest, the Examiner reported.
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