When does sage investor Warren Buffett predict higher inflation?
*Reuters, by Jonathan Stempel, March 9, 2009:
"Buffett says economy fell off cliff"
"On Monday, he said the country still faces an 'economic Pearl Harbor,'
experiencing a 'close to the worst-case' scenario of falling business
activity and rising unemployment.
He called on Democrats and Republican policymakers to set aside
partisan differences and unite under the leadership of President Barack
Obama to restore confidence in the banking system, fix the economy and
communicate their efforts better.
'People are confused and scared,' he said. 'People can't be worried
about banks, and a lot of them are.'
Buffett said Americans, including himself, did not predict the severity
of home price declines, which led to problems with securitizations and
other debt whose value depended on home prices continuing to rise, or
at least not plummet.
'It was like some kids saying the emperor has no clothes, and then
after he says that, he says now that the emperor doesn't have any
underwear either,' Buffett said.
RECOVERY COULD TRIGGER MORE INFLATION
Berkshire's own stock has fallen by about half since September, with
growth in some units such as auto insurer Geico Corp offset by weakness
elsewhere, including jewelry retailers that Buffett said have 'gotten
killed.'
He said Berkshire will write less catastrophe insurance this year after
investing roughly one-third of its available cash in high-yield
securities issued by General Electric Co, Goldman Sachs Group Inc and
other companies.
Maintaining his long-term optimism, Buffett said that while the economy
'can't turn around on a dime,' he believes that 'five years from now, I
can guarantee you that the machine will be running fine.'
He added, 'We do have the greatest economic machine that man has ever
created.'
But he said an economic rebound could trigger higher inflation once
demand rebounds. 'In economics there is no free lunch,' he said. 'We
are going to attempt to have a lunch that to some extent we're going to
pay for later.' "
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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