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Buffett on the Dollar: It's Going Down

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August 19, 2009 – Comments (5)

That's the only logical conclusion if "Unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar’s destiny lies with Congress."

Really? We expect Congress to do the prudent thing here.

Full editorial is here. Recommended reading, and hopefully heartening for those of you who have chosen to invest outside the US with us at Global Gains.

5 Comments – Post Your Own

#1) On August 19, 2009 at 3:05 PM, kdakota630 (29.58) wrote:

Since Buffett is one of President Obama's advisers, perhaps that means the President isn't listening.

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#2) On August 19, 2009 at 3:08 PM, ikkyu2 (99.32) wrote:

The President has very little to do with setting fiscal policy.

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#3) On August 19, 2009 at 3:35 PM, vitrified (98.64) wrote:

Tim, the Chinese government is also spending a lot of money, though they have big reserves. If you have clear thoughts on the matter, can you comment on the prospects for inflation in China (and other emerging markets) versus the US and how closely we might expect changes in exchange rates to match differences in inflation?

I guess I am not sure I fully undertand how much investing abroad (where inflation is likely to ramp up in many other places, as well) will counter that risk. 

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#4) On August 19, 2009 at 4:17 PM, russiangambit (29.25) wrote:

I actually wonder why Buffet is coming out against inflation? Stocks will skyrocket intially, I think. That will be excellent time to sell them and buy some hard assets like real estates with them. Of course, the economy will be destroyed afterwards, but nobody seems to care. Majority of politicians don't look further than next week.

Or may be Buffet is trying to avoid market downturn based on the deflation news lately and tries to remind us about the inflation to keep the stocks inflated?

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#5) On August 19, 2009 at 4:23 PM, TMFMmbop (40.59) wrote:

@vitrified The risk isn't just inflation, but inflation exacerbated by countries such as China dumping dollars (or refusing to take new ones) because they no longer trust our ability to keep our fiscal house in order and therefore protect the value of their surpluses.

Re: inflation in China. The government there will do pretty much all that it can to keep that from happening because it would just destroy the hundreds of millions of rural peasants who live near the poverty level.

But these are uncertain times, and I think the best solution is to get exposure to a basket of currencies, with particularly emphasis on something like the real or the rupiah, which is underpinned by signifcant natural resource assets.

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