Taps Coogan – February 17th, 2022

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Charlie Munger, renowned investor and Vice Chairman of Berkshire Hathaway, recently spoke with Yahoo Finance to warn that, after nuclear war, inflation caused by currency debasement is probably the biggest long term threat to democratic civilization.

 

Some excerpts from Charlie Munger:

“Inflation is a very serious subject. You can argue it’s how democracies die. When democracy dies in Latin America, inflation is a big part of it. So, it’s a big danger. Once you’ve got a populous that learns it can vote itself money, if you overdue it too much you ruin your civilization… It’s a big long range danger. If you look at the Roman Republic, even after they went to an Empire with an absolute ruler, they inflated the currency steadily for hundreds of years and eventually the whole dam empire collapsed. So, it’s the biggest long run danger we have, probably apart from nuclear war.”

In the full interview, which can be seen here but isn’t available for embedding, he notes:

“I think the safe assumption for the investor is that over the next 100 years the currency is going to zero. That’s my working hypothesis…”

For the record, the dollar has already lost 97% of its purchasing power over the 109 years since the Federal Reserve Act of 1913 was implemented. In the 100 years prior to the establishment of the Fed, the dollar gained roughly 50% purchasing power.

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