Revised
and originally published 5.05.2009
If
you watch carefully and listen to people natter about themselves you can
frequently construct a caricature of some interesting outer shell this person
might possess and, in the case of Warren
Buffett, this apparition materializes to be a piece of moldy cheese with
torturous caverns that contain forbidden cashes of truth. The object has an
interesting glittering surface patina on the exterior with a lot of hidden rot
on the inside. Buffett is known as a slick and far-seeing investor who made
billions with his investments. He is actually an inside influence peddler who
made a vast fortune with privileged information and intimidation of those with
lesser finance muscle although his public
advice, egocentric posturing and grand self aggrandizing performances and ostensive “wise counsel” defiantly omit basic facts
about finance and economics. He now confesses that massive government spending
of the O’Bozo variety will sink us in inflation. We already knew that. Where
was his wise counsel before all this?
We
should live in a world where, like physics, some reasonable laws are known to
govern many of our interactions and economics is clearly one of them. The
elementary tenets of capitalism are well known since ancient times and the salient fact
that massive spending by governments lead to inflation is obvious.
Such warnings are common[1]
such as outlined in the book Money
Mischief by Milton Friedman published some 20 years ago. But, there are
economic ‘experts’ and investment ‘oracles’ like Buffett who criticize much about our economy [mostly
for political reasons] and Republicans
in particular yet seem to get sweetheart deals with preferred stocks in
companies like Goldman Sachs , Dow Chemical,
Rohm &
Haas and wallow unobserved in other deals that the public is not
privileged to participate in. [2] Warren relishes
his perch on Olympus as the Sage of Omaha and boasted that his tax rate was
only 19% in federal taxes for 2006.[3] While posing as an investment
guru he taught [4] this. He and many other Democrats supported the massive
Obama spending follies that will surely sink our economy with silence about the
cliff we are approaching. His politics is more important than our economy
although he wants to make money from the current chaos.
Buffett
own words on inflation:
“The arithmetic makes it plain that inflation
is a far more devastating tax than anything that has been enacted by our
legislatures. The
inflation tax has a fantastic ability to simply consume capital. It
makes no difference to a widow with her savings in a 5 percent passbook account
whether she pays 100 percent income tax on her interest income during a period
of zero inflation, or pays no income taxes during years of 5 percent
inflation.”
He
hates gold like Keynes, but current gold spot prices tell us that an ounce of
gold sold for $19 in 1805, about the same price in 1905 and after FDR costs
$900 per ounce. So, we get an O’Bozo Tax and an Inflation Tax combined in one
neat political bundle of ‘change.‘
Facts from yesterday:
“After a testy
exchange with Sen. Judd Gregg, who suggested that President Obama’s plans to
hike federal spending would only increase the nation’s staggering national debt, Buffett relented by stating that, in the end, the U.S. government simply
will do what every other government has done in such circumstances. [Emphasis is mine in all quotes]
“A country that
continuously expands its debt as a percentage of GDP
and raises much of the money abroad to finance that, at some point, it’s going
to inflate its way out of the burden of that debt,” Buffett said.
“Experience proves that, he points
out.”
“Every country that
has denominated its debt in its own currency and has found itself with uncomfortable
amounts of debt relative to the rest of the world, in the end they inflate,” Buffett explains.
“That becomes a tax on everybody that
has fixed dollar investments.”[5]--Buffett Sees Massive Inflation to Handle Staggering Debt. Monday, May 4, 2009 2:34 PM By: Dan Weil
A translation: This
means your annuities and pensions will become worthless. Your long term CDs and
bonds will crumble away. High taxation in an inflationary era will mean a
transfer of wealth to the government, the least adept entity to handle any
social or financial problem in my view. Has anybody noticed the 30-year
Treasury bond soared
to 4% from 3%. It is going much higher.
The Real Buffy the Bozo:
Here
we have a sage that omits predictable terminal economic and financial events
while reaping applause from his subjects and big profits from troubled
corporations. He peddles his trust like a North Beach
His
lust for money is illustrated in this quote:
“I’ll tell you why
I like the cigarette business. It costs a penny to make. Sell it for a dollar.
It’s addictive. And there’s fantastic brand loyalty.”[6]
This reads better as:
I’ll tell you why I like politics.
It costs a penny to make a tax bill that swells into a dollar, then a million,
then a billion, then a few trillion. And there’s fantastic brand loyalty from
the low-class voters who get paid for their votes. Just keep the welfare
payments high and the jail terms light. It’s addictive.--rycK
I hate to be one of the
persons to say: “I told you so![7]”
but this was predictable. I have several blogs in this point in the references
below.
There is no
way to recover from this massive debt but to print more money, probably default
on some bonds here and there as O’Bozo wants secured bondholders to do to save
the UAW at Chrysler and other instances. Our currency might collapse.
We
will test the luster of gold again and very soon as our currency becomes
worthless. The government will rush to limit ownership of gold if they can.
A
quarter hour ago one of the case stooges, Federal Reserve Chairman Ben Bernanke told Congress this
about inflation:
“However, he added that even after the
recovery begins, "the rate of growth of real economic activity is likely
to remain below its longer-run potential for a while."
“That will leave slack
in the economy, keeping inflation low, which in turn
suggests that the central bank will keep
interest rates low for some time”[8]-- Bernanke says U.S. recovery ahead, housing near bottom.” Tue May
5, 2009 11:32am EDT
If
Bernanke knows, and he must, that massive spending is inflationary then how
does he know the inflation and interest rates will both be low?? These policy
vectors generally run in opposite financial directions. He is either lying or
has some ‘secret ‘ plan to claw back the Fed money from the banks at propitious moment or, more likely, he is just stooge parroting the
O’Bozo political line about spending and that is not a problem.
What
is slack? Is this a mental disorder or a physical ailment such as slack
jawedness? Did Buffett give us some ‘slack’ when he held back on the impending
massive inflationary pressures by his silence? I will cut Bernanke some slack
and suggest is just a lying stooge thus encompassing both ends of the argument.
This slack appears to be some kind of Neo-Marxist cramdown. We are going to pay
big time for all this. Those who wanted ‘change’ are going to get a bundle.
Where do we
get these fools?
rycK
Comments:
ryckki@gmail.com
[1] Friedman Predicts the Destruction of the Dollar. The late, great Milton Friedman in his
classic book prophetically revealed how Obama's reckless monetary policies will cause
hyperinflation and destroy our nation https://www.newsmaxstore.com/nm_mag/free_mischief.cfm
[5] Buffett Sees Massive Inflation to Handle
Staggering Debt. Monday, May
4, 2009 2:34 PM
By: Dan Weil http://moneynews.newsmax.com/headlines/warren_buffett/2009/05/04/210480.html?s=al&promo_code=7F1D-1
[6] ^ Burrough,
Bryan; Helyar, John (1990). Barbarians at the Gate: The Fall of RJR Nabisco. New York
[7][7] Oh, that was hyperbole.
I really don’t. I like to ridicule liars, incompetents and people who peddle
half truths to trusting citizens. Here are some of my blog views on this point:
The Shrinking Capital Base and Our Very Grim Future.
Our
Choice Now: Cut Expenses or Go Down the Road to Financial Oblivion.
Our
Economy is Crashing as the Liberals Celebrate. Print Money and Increase
Government!!
The
Babbling Brooks of the NYT Babbles Blunders into a Financial Reality Zone.http://rycksrationalizations.blogtownhall.com/2009/02/10/the_babbling_brooks_of_the_nyt_babbles_blunders_into_a_financial_reality_zone.thtml
Protectionism
and the Beginning of the End for the World Economic System Explained.
Battling Nostrums at
The New York
[8] Bernanke
says U.S. Tue May 5, 2009 11:32am EDT
http://www.reuters.com/article/newsOne/idUSTRE5443G620090505
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