Investment guru Jim Rogers believes that it would be "terrible" if the US Fed did cut interest rates. If the Fed were to cut rates, dollar could collapse faster, he added.

According to him, if the Fed starts cutting interest rates, the US dollar will totally collapse, which he believes is going to collapse over the next few years. The rate cut move, he said, will just accelerate the decline of the US dollar and then inflation in America will get worse and worse as it spirals up with the decline in dollar.

Excerpts from CNBC-TV18's exclusive interview with Jim Rogers:

Q: What do you think of the sub-prime issue?

A: It is a credit problem and is spreading to the emerging markets, takeovers and into private equity buyouts; it is not just in housing where this problem has developed.

Q: Lot of the people - lot of bulls - said it is still a financial market intervention; it is not going to spill out into the real economy. What is your view on that?

A: Tell that to people trying to get a mortgage and to them, who are trying to build new houses now. In most parts of the world right now, I would urge the people or the bulls who said that to go down to the local homebuilder and offer some mortgage to people who are buying houses. I do not think you would get many takers but if you do, then you should take it if you believe that everything is okay now.

Q: Now the Fed fund futures are proposing a cut by the end of the year. Some believe that Greenspan was willing to help the financial market, but they do not think Bernanke is going to help them out. What is your assessment that the Fed is going to do here?

A: I do not have a clue but it would be terrible if the Fed did cut interest rates. We have huge inflation in the world right now and if the Fed starts cutting interest rates you are going to see the US dollar totally collapse; it is going to collapse anyway over the next few years though it will just accelerate the decline of the US dollar and then inflation in America will get worse and worse as it spirals up with the decline in dollar. Anybody who thinks that the Fed should cut rate is going nuts; the Fed reserve was not instituted to bail out Wall Street, Lehman Brothers, Bear Stearns and a few people like that. The Fed reserve was established to keep a sound currency; let us hope they do it.

Q: There was a report out last week, which started comparing the credit slowdown, the credit knockdown we are seeing in the US, to the Japan’s financial crisis in 1990s. Would you make similar comparisons?

A: The US stock exchange is down 7%, which is hard to compare to Japan in early 1990-99 when the market were down 75%. Yes, if the US stock market goes down about 30-40%, then we can start worrying about other things but the markets down 7% from its all time high. It is madness to think that the Fed has to come galloping to the rescue.

The Fed is not designed to bail out Wall Street, I hope. Greenspan used to bail out Wall Street; let us hopes this guy doesn’t do it. He is not very smart but he may not do it.