The argument over the Federal Reserve’s interest-rate decision is waged among several fronts. Will Fed Chair Janet Yellen and colleagues hike, and if so, when? Should they bother, and will it matter? And if they do, will it stick? 

Jim Rogers, a longtime critic of the Fed and doubter of its potency, figures the Fed will try to lift rates before too long. But, ultimately, he believes demanding and panic-prone capital markets hold more power. And the Fed will not likely be able to forestall another outbreak of financial stress. 

The Fed is “probably going to raise interest rates – maybe even this week and certainly this year,” says Rogers, founder of Rogers Holdings and an original partner in George Soros’ Quantum Fund. 

“What’s going to happen is, the rates are going to go higher, markets are going to go down, people are going to call up and say, ‘You must save civilization,’” he predicts. And then, in his scenario, “They’ll panic and then come riding to the rescue” by easing monetary policy again. 

It should be said that Rogers has been skeptical of the entire enterprise of central banks using extraordinary measures to help support markets and revive economic growth, so this jaded view of the Fed’s future path is merely an extension of those views. 

Yet he does give voice, colorfully, to a more mainstream line of concern among market participants that the markets themselves are tightening credit conditions and reducing the Fed’s room to maneuver without risking deeper pain in emerging markets currencies and economies. The Wall Street Journal this week, too, noted that other central banks have had to reverse attempts at lifting rates in the post-crisis period.

Rogers suggests the markets have been “panicking because we’re going to start having financial problems in the world in the next year or two – we already are.” 

It’s been six years since the financial crisis began to subside, and he points out that some financial-market ruptures tend to reoccur every four to six years. “We’re overdue – the markets are smart enough to know that.” 

Rogers has not been enthusiastic on U.S. stocks for most of the bull market, and has been a longtime bull on China’s growth prospects and many commodities. 

At the moment, he says he owns no U.S. stocks and has “some shorts” there. He owns some Chinese and Russian equities and is bullish on agricultural assets, even though none of them will escape the current pressure on commodities and developing-market assets. 

On these “depressed” markets, Rogers says, “Even if we have problems, at least they’re already down some. They can always go down more – probably will.”