When Buffett, who says "never go against America," rarely warns: "Fiscal stupidity" will destroy currency
In his latest annual letter to shareholders, Buffett suspended his usual optimism and patriotic rhetoric, instead warning that the U.S. faces the risk of "fiscal folly," stating that "if fiscal folly prevails, the value of paper currency will evaporate," and noted that the U.S. has "been on the brink of collapse in its history, and fixed coupon bonds cannot prevent currency from spiraling out of control."
Yesterday, Warren Buffett, in his latest annual letter to shareholders, paused his usual optimistic tone and patriotic rhetoric, instead warning that the American journey is not always beautiful, and cautioned that "frauds and salespeople" will "exploit those who mistakenly trust them." Buffett wrote:
“ If 'fiscal foolishness' prevails, the value of paper currency will evaporate... In some countries, this reckless behavior has become a habit, and in the brief history of our country, the U.S. has also come close to this edge, where fixed coupon bonds cannot prevent currency from spiraling out of control.”
This aligns with the views of the new bond king Jeffrey Gundlach and Bridgewater founder Ray Dalio.
Wallstreetcn previously mentioned, on February 11, Gundlach warned:
The current rise in U.S. interest rates, overvalued market, and massive government debt could trigger a major crisis.
Dalio also addressed Trump, stating:
“If we don't cut debt soon, the U.S. economy is going to have a heart attack.”
Yesterday, Berkshire Hathaway released its fourth-quarter financial report, with insurance profits soaring, driving operating profits up 71%. While continuing to reduce stock holdings, cash reserves reached a record $334.2 billion, nearly double that of the same period last year, accounting for 53% of the company's net assets. A year ago, Berkshire's funds in stocks were almost twice that of U.S. Treasuries.
Additionally, Buffett indicated that he may "gradually" increase his stake in Japan's five major trading companies.