Warren Buffett: Federal Debt Levels "Ominous" for Inflation

While expressing his strong support for past governmental actions to stem the U.S. financial crisis, renowned investor Warren Buffett recently sounded strong warnings about the mushrooming federal debt and its long-term potential damage on the purchasing power of the U.S. dollar.  In an August 19 editorial in The New York Times, Buffett expressed his deep concerns that the side effects of enormous "dosages" of monetary medicine may be "as ominous as that posed by the financial crisis itself."  

Slowing down the government's dollar printing presses will require "extraordinary political will," according to Buffett.  Legislators, highly reluctant to raise taxes or cut spending when hoping to get re-elected, will be tempted to opt for higher rates of inflation.  Unchecked growth in government indebtedness would cause the purchasing power of the U.S. dollar to melt.  Concludes Buffett: "The dollar's destiny lies with Congress."

Please click here for Warren Buffett's editorial.  

Scott Middleton