Nothing really. He's made over billions in the market and I've made tens of dollars (maybe a lil more). Buffett's respected and I'm unknown. Nobody listens to me. Everyone listens to him.
Okay, we do have one thing in common, we both think this increasing government expenditure is going to drive up inflation.
I wrote about this as recently as last week. I even wrote about this earlier on December 16, 2008 in response to the last FOMC cut:
The Rate Reminds Me of One of those Horror Movies...
Where a cop fires all six shots at an approaching monster.
With no bullets left, he desperately Proceeds to throw his gun at the monster. The Fed has already spent all of its bullets and has now thrown their gun at the approaching Recession Monster". Today's rate cut is the absolute last resort in what rate cuts can do.
Unfortunately, it doesn't seem like it will have much effect in stopping the Recession Monster. It's quickly growing into a full blown Depression Monster. In modern horror movies, this is when the authoritarian government officials decide to use their most powerful weapons like the A-bomb.
The Fed will be using the most powerful weapon at their disposal, the printing press. If this monster does not die by itself, the government will start printing a massive amount of cash and inflation. Due to the elimination of the gold standard, the flow of the printing press is now decided by "rational" government officials instead of a set certainty. This desperate solution might work. It appears there's a deflationary spiral going on right now, and if the Fed pumps just the right amount of inflation through its press, it can potentially offset each other.
That requires a lot of trust in our leaders. I like to believe that our leaders are much smarter now than they were during the last Depression. I'll give them the benefit of the doubt. Maybe the use of the A bomb will destroy the monster, without destroying our own cities. 80/20 that our officials wont fuck it up.
This is what the Oracle was talking about during this weekend's shareholder meeting:
Reflecting on the near implosion of the financial system last fall, Buffett said officials should be judged more leniently when facing "as close to a total meltdown as you can imagine."
But he warned that efforts such as the Treasury's $700 billion Troubled Asset Relief Program and the $787 billion fiscal stimulus plan passed this year by Congress will have to be paid for, one way or another
And with political leaders showing little inclination to raise taxes, one sure way to pay for excess spending is to inflate the value of the currency, Buffett said. The biggest losers in a surge of inflation, he added, would include holders of bonds and other fixed-income assets.
"I haven't had my taxes raised," said Buffett, who has run Berkshire for more than four decades. "My guess is the ultimate price will be paid by a shrinkage of the value of the dollar."
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