HA! Comedy gold!
That’s like 100% probability. Mathematical certainty.
just some gems from buffett and CM:
[Q - What are key metrics you look for on inflation, and catalysts for a future rise?]
WB: 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 its 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 If inflation gets into saddle, faith in institutions could break down.
Currencies are a poorer bet than they have been in a long time but I do not know what that means for the near future. Remember that your money can be inflated away but your talent cannot. As long as you are the best at what you do you will be entitled to your portion of profits.
CM: 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. The best defense is to contribute to the world and to try to make yourself more talented.
Your thoughts on inflation?
The best thing to combat the threat of inflation is to have a lot of earnings power of your own. If you’re the only surgeon in town, you’ll be OK [because you can simply raise your prices to keep up with inflation and people will pay it]. Charlie and I think it’s best to own fine businesses that can price in inflationary terms and don’t require big capital investments. See’s Candies can handle an inflationary world and maintain value.
Unfortunately, most businesses will not come out well in real terms. Earnings might be up, but the business will be compelled to invest more and more dollars into the business to stay in place. The worst businesses compel you to put more and more in, without any rise in profits.
[CM: Most people will see declining returns [due to inflation]. One of the great defenses if you’re worried about inflation is not to have a lot of silly needs in your life – if you don’t need a lot of material goods.]
Buffett: Inflation is going to affect you. Long term, even a small amount is bad. It’s certain we’ll have inflation over time. Volcker opined against an FOMC [Federal Open Market Committee] 2% target for inflation. It is something of a slippery slope. Current policies are bound to have inflationary consequences. Inflation is a classic way to reduce the cost of external debt. Federal revenues are going down. Politicians say that taxpayers pay for this or that, but if taxes are less now, who’s paying? The real payers are [those affected by] the shrinkage of the value of the dollar down the road. The people who are really paying are those that are buying fixed income investments now—the Chinese, for example. That’s the ultimate price of stimulus. The easiest thing to do [inflate] is the likeliest. The best protection from inflation is your own earning power. The second best is owning a wonderful business, such as Coke, that doesn’t require capital. With Coke, you’ll get your share of national earnings.