Warren Buffett loves fiat money


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I watched portions of the Berkshire Hathaway annual shareholder meeting last Saturday on CNBC.  A summary of CEO Warren Buffett’s remarks can be found here,

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Buffett answered questions about Berkshire, the economy, the banking system, and other topics. 

He always has been a long-term bull on the US economy. At the 2020 Berkshire meeting, for example, he said, “I was convinced of this in World War II. I was convinced of it during the Cuban Missile Crisis, 9/11, the financial crisis — that nothing can basically stop America,” he said, adding, “We faced tougher problems, and the American miracle, the American magic, has always prevailed, and it will do so again.”

I agree. America’s entrepreneurs know how to deliver the goods and services the public wants.  Despite war, inflation, bubbles, banking failures, taxes, regulations, etc., the American economy is incredibly resilient.  That’s because we still have enough economic freedom for entrepreneurs to satisfy consumer needs.  Unfortunately, the Biden administration is reducing our economic freedoms and thus the next few years will not be as prosperous as they could—or should–be.

Regarding the dollar, the CNBC article above stated, “Buffett also doesn’t expect the U.S. dollar to be dethroned as the world’s reserve currency anytime soon.” 

“We are the reserve currency, I see no option for any other currency to be the reserve currency,” he said.

Buffett should know better.  His father, a three-term libertarian Republican congressman and a gold standard advocate, obviously did not have his monetary views rub off on a young Warren.  In fact, Buffett has criticized the gold over the years as a monetary standard.  Why?  Under a gold standard, asset prices would not increase markedly as they would under a fiat money system. Buffett apparently realizes why a gold standard would dampen asset prices.  He should read Rothbard’s monograph on money to appreciate how fiat money harms low and middle income families. 

However, Buffett understands that printing money can lead to dire economic consequences.   “Nobody knows how far you can go with a paper currency before it gets out of control, and particularly if you’re the world’s reserve currency,” Buffett said. “You don’t want to try and pick out the point where it does become a problem because then it’s all over.” 

Warren, paper currency is the problem!

In the meantime, central banks are buying gold adding to their reserves.  What do they know about the future of the US dollar?  Watch what individuals—especially policymakers–do!

One of my favorite stock market charts was constructed by Tom Bowley who blogs at  The chart reveals that the stock market has long-term bull and bear secular cycles and short-term bull and bear cyclical cycles.  According to Bowley chart, the stock market is in a secular bull phase that should continue for several more years. 

Buffett became a money manager in 1956 when he was in his mid 20s.  Since then, the stock market has skyrocketed.  Some (most? virtually all?) of the stock market price gains have occurred because the Federal Reserve has created trillions of dollars, lifting all asset prices, such as real estate, artwork, etc.  Holding for the long term has paid off for Buffett and his shareholders who invested in Berkshire when he became the CEO in 1965 and throughout the 1970s and 1980s.  Berkshire has just kept pace with the S&P 500 index in the past decade, unlike earlier periods when Berkshire averaged 20% per year returns for several decades.

The M2 money supply rose from $290 billion in 1959 to just over $21 trillion earlier this year.  This enormous increase in the supply of dollars works its way through the economy raising virtually all prices.  This is one of the reasons Buffett loves the Federal Reserve and easy money.  He knows over the long-term stock prices will tend to increase faster than the cost of living.  That’s why bear markets do not bother Buffett.  The Fed will inflate the supply of money when a recession is underway to “stimulate” the economy.   

The economy does not need to be stimulated.  It needs freedom for entrepreneurs to do their magic. 

When it comes to the recent banking failures, Buffett did not acknowledge the inherent flaw in banking policy, borrowing short and lending long.  This was one of the themes in my Financial History of the US course.  Students learned about banking by reading Rothbard’s The Mystery of Banking—one of the most important books on the topic.   I urge you to read this wonderful book that should be read by policymakers and economists.  It is a classic. 

Buffett also stated Berkshire’s managers have been surprised by the economy’s relative weakness.  My December 2021 forecast was right on target.  See the link below.

My latest piece on the economy was published in Fortune,  This is an update of my 2021 forecast, 

Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His new book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle.  Sabrin’s autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022.

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What do you think?

Written by CONK!


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