We talked earlier this week about Warren Buffett, and also about the possibility of inflation returning. Then lo and behold, what should show up in yesterday's New York Times but an op-ed by Warren Buffett warning about the return of inflation. Like a lot of people, Buffett is worried about the enormous deficits the federal government is running, and lays out the scenario for various ways of financing that debt.
Buffett makes it clear that his concerns are still some years in the future, and that there's time to avert the kind of monetary policy that can bring about crushing inflation. But he's doubtful that Congress will do the right thing: "Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election," Buffett writes. "To avoid this fate, they can opt for high rates of inflation."
"Our immediate problem is to get our country back on its feet and flourishing - 'whatever it takes' still makes sense," he writes. "Once recovery is gained, however, Congress must end the rise in the debt-to-GDP ratio and keep our growth in obligations in line with our growth in resources."
One of Buffett's most famous lines is "Someone's sitting in the shade today because someone planted a tree a long time ago." It's good to have people looking out for our long-term future - someday soon, we will be into a full recovery, and it's important to not forget about other problems that may arise down the road.
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