Warren Buffett on 2 protections against inflation (not gold!) (2009)

Warren Buffett explains his two strategies to protect investors against inflation (and its not gold!). Inflation is very real... the price of real estate, hamburgers, and especially university tuition have been on a consistent rise every year. The saying is that $1 today is NOT the same as $1 tomorrow. We need to ensure that the money we have continues to be worth what it is in the future. Michael Burry (Christian Bail in the Big Short) indicates on his twitter than we may be entering into an era of high rates of inflation (as of 2021).

Economists believe that very high rates of inflation, also known as hyperinflation, are harmful and are caused by excessive growth of the money supply. Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services or changes in available supplies such as during scarcities.[9] However, the consensus view is that a long sustained period of inflation is caused by the money supply growing faster than the rate of economic growth.

Inflation affects economies in various positive and negative ways. The negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effects include reducing unemployment due to nominal wage rigidity, allowing the central bank greater freedom in carrying out monetary policy, encouraging loans and investment instead of money hoarding, and avoiding the inefficiencies associated with deflation.

Today, most economists favour a low and steady rate of inflation. Low (as opposed to zero or negative) inflation reduces the severity of economic recessions by enabling the labour market to adjust more quickly in a downturn and reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements

Buffett Books:
Intelligent Investor: https://amzn.to/3cY7rTP
Warren Buffett: 43 Lessons for Business & Life: https://amzn.to/3lMvjOf
The Essays of Warren Buffett: Lessons for Corporate America: https://amzn.to/3ccnIFy
The Snowball: Warren Buffett and the Business of Life: https://amzn.to/3vROoTM
The Warren Buffett Way: https://amzn.to/2NITWii
Buffett: The Making of an American Capitalist: https://amzn.to/31b3FkM
Security Analysis: 6th Edition, Foreword by Warren Buffett: https://amzn.to/3cbcbq7
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