Thursday, October 18, 2012

Beating inflation…

Via notes from Berkshire Hathaway’s 2010 Annual Meeting:

Question: What are key metrics you look for on inflation, and catalysts for a future rise?

Warren Buffett: You give me credit for more brainpower than I actually bring to the question. You can’t look at any metric. If it gets going, it creates own dynamic and is very hard to stop. We saw it in 1970s until Volcker came in with a sledge hammer. Prime rate was at 21% and governments up to 15%. We had a demonstration project 30 yrs ago. If we continue today’s policies, something like that could be possible. Trend is not destiny. We have power to control our future. We do it through elected representatives. I will go back, with what I see, currencies are [a] poorer bet and [I’m] not sure what it means for inflation. If inflation gets into saddle, faith in institutions could break down.

Charlie Munger: Contribute the most to civilization and counter the effects of inflation. To outsmart others isn’t the best way to do it. If you are best painter or best brain surgeon, you will always command your share of the economy around you. Talent is terrific asset to deal with it.