WARREN BUFFETT: Yeah, we
had a significant short position some years ago. Last year we had
a small short position in two currencies,
and we made about a hundred million dollars in them, but
we
have not been really active in the foreign exchange market.
We think
— shouldn’t speak for Charlie here on this —
but I think that
there’s no question that the purchasing power of the U.S. dollar will decline
over time. The only question is at what rate.
But I also think that the purchasing power of
most currencies around the world
— almost most currencies around the world — will decline.
And, of course,
a short position is just a bet on which one declines at the faster rate,
and I don’t have a strong conviction on that.
I’ve got some mild feelings about it but not enough to
where I want to back it up with a lot of money.
We do own
some businesses — I mean, l take Coca-Cola.
Coca-Cola
— I don’t have the exact figures — but my guess is that
80 percent or thereabouts of the earnings will be non-dollar.
And we’ve got exposure in various other ways.
But
we are not — we’re unlikely to make another big currency bet,
although I —
you know,
I do think that the purchasing power of the U.S. dollar is destined to
decrease. And
I have fears,
but I’ve long had some unwarranted fears,
of it declining at a rapid rate.
Now,
Charlie has pointed out to me
that
the dollar of 1930, when I was born,
is worth 6 cents now.
You know,
16-to-1 in terms of depreciation.
And as he points out, we’ve both done pretty well.
So inflation has not destroyed us.
If somebody had said to me in 1930,
In addition to this Great Depression you’re facing,
and a World War where it looks like we’re even losing for a little while,
and all these terrible things,
on top of that that dollar that, you know,
your grandfather is going to hand you when you’re born,
is only going to be worth six cents in purchasing power,
that might have been discouraging.
But overall,
we’ve still done pretty well.
So, I hate inflation,
but we’ve adapted pretty well to it
over the years, and we have not had the
total runaway-type inflation that
that really can be upsetting to a society, yet,
but I think it’s something you always have to guard against.
Charlie?
CHARLIE MUNGER: No, but
God knows where the world is headed.
I just think that one way or another, the world muddles through.
Take a really god-awful culture, which is Greece, modern Greece.
I don’t mean there’s anything wrong with the Greeks, but
— in their family life —
but the way they manage their money and pay their taxes.
The main industry in Greece — or one of the main industries — is tourist attractions,
and they closed right — most of the time — during the tourist season.
It’s a pretty dysfunctional government.
(Laughter)
And, of course, people don’t want to pay any taxes or do much work,
and yet there it is. It’s —
the people of Greece are surviving.
WARREN BUFFETT: It’s lasted a long time.
CHARLIE MUNGER: Yeah, yeah.
Adam Smith said it very well. He said,
“A great civilization has a lot of ruin in it.”
It takes a long time,
and there’s a lot left after you’ve been through a good deal of ruin.
In fact, it’s an easier game than the ordinary process of living and then dying.
WARREN BUFFETT: Well, I think we’ll see a lot of inflation, but
if I had a choice,
I would rather be born in the United States today
than any other place, any other time in history, so —