That’s because bonds are as sound as a dollar – and we view the long-term outlook for dollars as dismal. We believe substantial inflation lies ahead, although we have no idea what the average rate will turn out to be. Furthermore, we think there is a small, but not insignificant, chance of runaway inflation. Such a possibility may seem absurd, considering the rate to which inflation has dropped. But we believe that present fiscal policy – featuring a huge deficit – is both extremely dangerous and difficult to reverse. (So far, most politicians in both parties have followed Charlie Brown’s advice: “No problem is so big that it can’t be run away from.”) Without a reversal, high rates of inflation may be delayed (perhaps for a long time), but will not be avoided. If high rates materialize, they bring with them the potential for a runaway upward spiral.
~ Warren Buffett, 1984
The faith that foreigners are placing in us may be misfounded. When the claim checks outstanding grow sufficiently numerous and when the issuing party can unilaterally determine their purchasing power, the pressure on the issuer to dilute their value by inflating the currency becomes almost irresistible. For the debtor government, the weapon of inflation is the economic equivalent of the “H” bomb, and that is why very few countries have been allowed to swamp the world with debt denominated in their own currency. Our past, relatively good record for fiscal integrity has let us break this rule, but the generosity accorded us is likely to intensify, rather than relieve, the eventual pressure on us to inflate. If we do succumb to that pressure, it won’t be just the foreign holders of our claim checks who will suffer. It will be all of us as well.
~ Warren Buffett, 1987
Grouch: The deficits of 1984 and 1987 look like rounding errors for today's deficits. All taxpayers and those who live off of the largess of the government should encourage him to voluntarily write larger checks to the US Treasury. But an even better idea is that perhaps we should establish a national lottery to have the nation's billionaires make charitable donations to fund the government for 5 - 10 minutes at a clip....... then when there are no more billionaires, we can move on to the millionaires and then when there are no more millionaires then the average Joe can start picking up the bill to fund the government at 5 - 10 seconds a clip. Wouldn't that be true social justice? Wouldn't that gradually reduce the smoke-screens politicians use to hide their incompetence and callousness in abusing American citizens through foolish and frivolous overspending.