EC The More Easily Understandable Dollar Process

Warren Buffett is a complicated guy. He’s made out to be like your grandfather, the kind old guy who gives you simple and effective investment advice to help you make your way in this complex world. His idea for never investing in a business you don’t understand is good advice. It’s just that he doesn’t actually practice it.

Any substantial review of Wall Street history shows Warren Buffett at the center of a whole lot of complex issues. Not only was he piling $5 billion into Goldman Sachs, of all names, the week after Lehman failed (with Goldman at the same time petitioning the Federal Reserve to become a “bank”), it was Buffett who fifteen years before showed up at the center of one of the more noteworthy (and misunderstood) events of modern monetary evolution.

I wrote a few years ago:

I have no particular issue with Buffett making those investments, only the pretense of intentional mysticism that surrounds them. The reason the criticism of crony-capitalism sticks is because this was not Buffet’s first intervention to “save” a famed institution on Wall Street. If Buffet’s convention is to stick with “things you know” then he has been right there through the whole of the full-scale wholesale/eurodollar revolution.

Buffett’s track record in buying stocks and firms is unmatched and unassailable. The man knows his stuff. It’s the myth and legend that is more than a little overdone, and therefore unhelpful.

In March 2011, the head of Berkshire Hathaway told an audience in New Delhi, India, that he would avoid at all costs all longer-dated bonds. The issue, in his view, was inflation, or, more specifically, the destruction of the US dollar that so much money printing (QE) was at some point going to unleash.

I would recommend against buying long-term fixed-dollar investments. If you ask me if the U.S. dollar is going to hold its purchasing power fully at the level of 2011, 5 years, 10 years or 20 years from now, I would tell you it will not.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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