Munger says prepare for harder world as buying power slides

theedgemarkets ^ | March 26, 2015 : 4:47 PM MYT

[ckilmer]

Munger says prepare for harder world as buying power slides

 

 

| March 26, 2015 : 4:47 PM MYT   

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(Mar 26): Charles Munger, who became a billionaire while helping Warren Buffett build Berkshire Hathaway Inc., predicted it’s going to get tougher for consumers to maintain their standard of living in coming decades.

“We should all be prepared for adjusting to a world that is harder,” Munger, 91, said Wednesday at an event in Los Angeles, in response to a question about the increase in the size of the Federal Reserve’s balance sheet since the 2008 financial crisis. “You can count on the purchasing power of money to go down over time. And you can almost count that you’ll have more trouble in the next 50 years than the last.”

The cost of living in the U.S. excluding food and fuel rose more than forecast in February, climbing 1.7 percent from a year earlier. The Fed’s preferred measure of inflation expectations - - the five-year, five-year forward break-even rate -- now projects consumer prices will increase at a 1.91 percent rate starting in 2020. That’s up from 1.75 percent on Jan. 30.

Munger spoke at the annual meeting for Daily Journal Corp., a Los Angeles-based newspaper publisher where he serves as chairman. After inflation, investors in common stocks averaged “unbelievably good” returns over the last five decades, he said.

Best Times

“Somebody my age has lived through the best and easiest period that ever happened in the history of the world -- the lowest death rates, the highest investment production, biggest increases in most people’s standards of living,” Munger said. “If you’re unhappy with what you’ve had over the last 50 years, you have an unfortunate misappraisal of life.”

Recalling an era when people paid 5 cents for a cup of coffee and new automobiles cost $600, he said the declining value of money in past decades didn’t turn out to be as severe as he had anticipated.

The comments echo remarks that Buffett made last month in his annual letter to Berkshire shareholders. He pointed out how investors in stocks had far outperformed those who stuck with currency-related investments like Treasuries over the last 50 years. A similar outcome is likely to be repeated in the next century, Buffett wrote.

 

[ckilmer]

imho this is where the gold bugs are right. while the economy is getting stronger, americans are getting poorer.

This can be reversed if energy and water prices are chopped down. This will happen. Wise leadership figures out the direction the technology and "leads" people in the direction the technology is going anyway.

[BenLurkin]

The Lear jet leftists expect to form the core of the global Green Inner Party. There they will continue to enjoy the finest foods and most advanced gadgets the world has to offer — while deciding your fate for you.

If you work very hard and show them your unwavering loyalty you may be permitted to join the global Green Outer Party. You will be allowed occasional servings of meat - and air conditioning on a rationed basis.

The rest of us will eat insects and swelter — for the good of the planet.

[stars & stripes forever]

[The rest of us will eat insects and swelter — for the good of the planet.]

Do you mean like “Fat Guys in the Woods” on the Weather Channel?

[RJS1950]

Munger is a compatriot of that other fascist oligarch democrat scumbag, Warren Buffett.

They could well find themselves facing torches and pitchforks as the peasants disconnect them from their wealth and presumed power.

They are a major part of the destruction of the nation, the Constitution, and the economy that made them rich. The railroad barons of old were nowhere near the malevolent traitors the current crop of shitbags are. F**k them all.

[topspinr]

Warren Buffet The bottom feeder of the deepest order.

[RJS1950]

Yeah, but he’s become fat and powerful supporting the democrat bottom feeders. He’s one of them, he’s no patriot, he is another democrat traitor to the Constitution.

FAD!

[Georgia Girl 2]

One thing you can be sure of Warren Buffet cares nothing for you or what happens to you.

[JOAT]

Of course the 91 year old is right.

It's patently obvious that by printing mountains of 'money' backed by the 'promise' of the Fed that it is worth something, each individual 'dollar' is worth less than it was the month before.

You can't inject 85 BILLION a month for years and not degrade the currency.

Kick the can down the road and in no time the 'dollar' is worth half of what it was 5 years before.

It happens JUST slowly enough people don't scream for relief.

Get off your duffs and leave the cities folks, this ain't gonna end well.

[Moonman62]

imho this is where the gold bugs are right. while the economy is getting stronger, americans are getting poorer.

...

Conservatives are right. The federal government needs to be slimmed down, needs to stop devaluating the currency, and needs to stop hindering productivity.

[ckilmer]

I do think that electric cars will in 5-10 years start to take a serious bit out of the demand for oil. That bite will only get bigger. The price of oil will collapse. The dems will get credit for this.

The dems do have a major energy policy in clean energy.

The pubbies need to be even more comprehensive to stay in the game. but not with clean energy.

Its got to be cheap energy and water. Much cheaper than what the dems are aiming at—which is just parity. Because dirt cheap energy and water is what solves the problem that Munger talks about.

[Georgia Girl 2]

I don’t know. Do you want an electric car? I sure as heckola don’t. :-)

[ckilmer]

I don’t know. Do you want an electric car? I sure as heckola don’t. :-)
................
No. Not yet. The Tesla’s are too pricy for me and the volts just aren’t good enough.

But its easy to see that the prices are falling on these vehicles while their performances are rising.

Its only a matter of time —say four years—before their price/performance reaches that of internal combustion engine based cars. That will in turn set off the most beautiful competition in the history of the world to the benefit of car buying public. There’s one more player I’m also convinced will be in the game. That’s the fuel cell cars. They’re not as far along in the USA. But they’re getting a lot of traction and investment in Japan. Fuel cell cars have great engineers in both Germany and Japan behind them with deep pockets. They’re going to be in the mix.

The result will be that starting in about 5 years gasoline prices will start to go down. It will be inexorable and terrible for oil companies but fabulous for energy consumers.

The down side is that the left will get the credit for this move... in energy and money will flow from mid continent to the coasts.

The answer for the pubbies is that they need to do something even more dramatic. Green energy is just looking for price parity with cheapest coal/natural gas. Pubbies need to announce that they’re going to kill the cost of electricity and water. So as to make it cheap enough to farm the deserts and pull water out of the ocean for California.

That will do it. That’s the sort of pubbie technological vision that is in tune with times and trumps the dem green energy vision.

[1010RD]

The key to innovation is the keep the government out, but success breeds envy and envy is the mother’s milk of politics.

See Smaug and the Dwarves for another example.