Warren Buffett Issues Grave Warning About Inflation

JonDouglas

Senior Member
Location
New England
Some snippets from an FEE article and other sources it references:

“We are seeing very substantial inflation,” Buffet said at a Sunday shareholder meeting. “It’s very interesting. We are raising prices. People are raising prices to us and it’s being accepted.”
“We’ve got nine home builders in addition to our manufactured housing and operation, which is the largest in the country,” the investor continued. “So we really do a lot of housing. The costs are just up, up, up. Steel costs, you know, just every day they’re going up.”
Warren Buffett says Berkshire Hathaway is seeing 'very substantial inflation' and raising prices https://t.co/x7exFgzjGe
— CNBC (@CNBC) May 3, 2021
“Food prices jumped 3.9 percent in 2020,” Hannah explained. “Unfortunately, this trend seems poised to continue. The US Department of Agriculture estimates grocery bills could increase by another 3 percent in 2021, while some experts are betting on even longer-term problems.”
She notes that meat prices increased 5.5 percent last year, while there was a whopping 11.3 percent increase in the price of fruits like apples and strawberries.
Food and housing inflation are just the beginning.
More at Source:
 

JonDouglas

Senior Member
Location
New England
Does this mean that we'll get a good interest rate on savings? I doubt it.
The old adage "too much money chasing too few goods" comes to mind. As you might recall, when inflation is high/higher, banks tend to pay higher interest rates; however, the increase cost of goods and services for you could offset any savings gains.. Bottom line: There are clues but I've no idea.
 

I've been predicting runaway inflation for years, wrong so far. I don't know how we can avoid it longer term, its where deficit spending and trade imbalance has to lead; in my non-expert opinion anyway.
Does this mean that we'll get a good interest rate on savings?
That would be nice, however I worry more about what rising interest rates will do to the real estate market. At mortgage rates of 6+% the market has to take a big down turn, not something I would want to see again.

Oh well, I am just along for the ride, no one who can make much difference cares what I think - no calls from Joe lately...
 

Gary O'

Well-known Member
Location
Oregon
Inflation has been with us for a very long time
Nibbling here and there

But now?
Its on a feeding frenzy

Talk about perpetual motion

The economy is chasing itself

No stopping it
Hope we can slow it down
 

JonDouglas

Senior Member
Location
New England
I am amazed at the housing boom going on around me right now. I haven't seen anything like it in a long while and it's happening in the midst of economic jeopardy a great many people are experiencing due to the past and present covid affair. I hate seeing all the tree-filled land being gobbled up. Who is paying for all this work given current economic conditions?
 

JonDouglas

Senior Member
Location
New England
I helped pay for it a couple days ago
Couple sheets of 7/16 OSB
Over $100s

I remember being mad when it was eight bucks a sheet
Several sheets of plywood aside, any idea who'd be financing the purchase and clearing of acreage that hasn't been touched in decades to build bunches of new subdivisions across multiple towns by a variety of builders given highly uncertain demand?
 

Gary O'

Well-known Member
Location
Oregon
Several sheets of plywood aside, any idea who'd be financing the purchase and clearing of acreage that hasn't been touched in decades to build bunches of new subdivisions across multiple towns by a variety of builders given highly uncertain demand?
Well, the Koreans, and other foreign entities have been 'financing' it all for a few decades now.
My float camp friends in SW Alaska ship most their product that direction
 

JonDouglas

Senior Member
Location
New England
I haven't kept up since the '90s
China would be under 'other foreign entities'

Heh, China has a huge economic problem
They NEED us, and everybody else......as customers
Which brings us back to the question: Who has the greatest amount of money to chase scarce goods (a.k.a. inflation) and why would they do it given the dour economic times cause by the covid problem? Do people even think about these issues or are they more into how well the barrsta will do with their cup of banana frappuccino?
 

MarciKS

~♥~
i'm not a math and money person but here's what i don't understand...

we can't afford to buy much because of prices. they want to raise prices more which will make us buy even less. when the prices are lower we buy more. so how does raising the prices even more make any sense? they can't rake it in if we're not buying it.
 

911

Well-known Member
Location
USA
If the government keeps slamming money into the economy, inflation should be expected. The more people buy, the less is available and there you go. Demand up, supply down. How much are you willing to pay for that new car or those great looking pork chops?
 

JonDouglas

Senior Member
Location
New England
Another bit of news popped up. Bank of American says, "Buckle up! Inflation is here" and "Transitory hyperinflation ahead." These sstatements are based on this - the biggest jump since BofA started counting:

 

JonDouglas

Senior Member
Location
New England
As a rule, no

It comes with a fat society

Its a 200 year cycle

Look at history
Look at what hyperinflation did in Germany prior to WWII. The cost of a loaf of bread went up into billions of marks. People would do well to understand how these things work lest they wake up to find it has bitten them in the ass, wallet and bank account included. Throttling down your economic engine is only a good idea if it's revving too high. There's increased demand because supply isn't forthcoming. Throwing more money out there without conditions doesn't necessarily help supply.
 
Last edited:

AnnieA

Senior Member
Location
Down South
We're shifting from pandemic immediate concerns to post-pandemic fallout that will likely last years . So long as inflation is a bump in the road and doesn't lead to prolonged hyperinflation which was worrying financial experts back in September 2020. TradeSmith investment advisors originally published the article and Nasdaq editors reprinted it.


How Weimar Germany got hyperinflation and how America could too

Excerpt:

Unfortunately, the United States has the recipe for Weimar well within reach. The mountain of debt already exists and will only grow taller by the month.​
What’s more, a very large chunk of that debt (more than a third of it) is held by overseas investors, who are now pondering the combination of losses via inflation and losses via the currency (by way of a declining dollar) simultaneously.​
Then, too, we are seeing signs of a greatly increased appetite for large public works projects, and sharp increases in labor and wage costs, even as broken global supply chains contribute to a potential shortage of goods.​
...​
One of our chief realizations from studying Weimar Germany is the conviction that, if you take the willingness to inflate away a debt mountain, combine it with the political force to pay wages and spray money around no matter what, and then mix rising prices due to good shortages with a dose of inflationary psychology, runaway inflation is what you get.​
And runaway inflation, if allowed to reach full gallop for a period of years, can become hyperinflation if left unchecked.​
The last time America had to deal with anything like this, or even close to it, was the late 1970s, when Federal Reserve Chairman Paul Volcker increased interest rates into the high teens to kill off inflation. Does such backbone even still exist today? And would a counter-inflation move that aggressive— given that Volcker’s ruthless interest rate hikes ushered in a brutal recession — even be possible?​
We doubt it. But perhaps we’ll find out.​
 
Last edited:

JonDouglas

Senior Member
Location
New England
Anyone remember the infamous phrase, "It's the economy, stupid." There's a good chance we'll see who's stupid this time around.
 


Top