The last one urged people to "buy American" stocks. This one is a warning about the side effects to be expected from the extraordinary fiscal and monetary measures that have been taken to turn around the economy.
A little background: Buffett's father Howard was kind of a psychopath about inflation--he thought FDR would turn the US into the Weimar Republic. His son was never as bad, but throughout his career the specter of inflation has always guided his investment decisions. In 1977 he wrote an essay for Fortune called "How Inflation Swindles the Equity Investor" which is the best analysis of the effect of inflation on corporations I've ever read.
Buffett almost guarantees that one day the United States will face higher inflation as a result of the actions being taken. Yet here we sit with the 10-Year Treasury yielding 3.53%.
P.S. Some might argue that this op-ed conflicts with the last op-ed he wrote, in which he urged Americans to buy equities. If we're in for inflation, stocks will do poorly, like they did in the 1970s. But read the first op-ed closely and you'll see that Buffett recommended only that Americans buy equities as an alternative to cash, which is perfectly consistent with his thinking in the second op-ed. In fact, if you fear inflation your money may be best off in equities (public or private, in the sense of being a business owner), even more so than gold.
Disclosure: Long Berkshire Hathaway
P.P.S. If you're a member of SumZero, you can see my write-up of a stock I think will do well in an inflationary environment.
Comments
You can follow this conversation by subscribing to the comment feed for this post.