Warren Buffett says recession doneAnd his debt concerns for US can only mean a big upward pressure on gold price. When you figure that only 5 billion ounces of gold have ever been found and/or milled in history that's only $5 trillion dollars at $1000 per ounce. When measured alongside the US deficits and debt that seems to me to be a big indicator that gold has to go up in price. Even if all the gold in the world went to value of US debt it would close to triple from today's prices. Jusy mho.
"WASHINGTON (Reuters) –Billionaire investor Warren Buffettsaid the U.S. economy has avoided a meltdown and appears on a slow pathto recovery, but Congress must now deal with enormous amounts of debtthat threaten to erode U.S. purchasing power.
In an opinion column published on Wednesday by the New York Times, Buffett wrote that he "resoundingly applauds" actions by the Federal Reserve and the Bush and Obama administrations to pump trillions of dollars into the financial system.
But the "gusher of federal money" has run up a high level of debt that could fuel inflation, he said.
"The United States economy is now out of the emergency room and appears to be on a slow path to recovery," Buffett wrote.
"But enormous dosages of monetary medicine continue to be administeredand, before long, we will need to deal with their side effects. Fornow, most of those effects are invisible and could indeed remain latentfor a long time. Still, their threat may be as ominous as that posed bythe financial crisis itself."
Buffett, who runs insurance and investment company Berkshire Hathaway Inc, likened the economic threat of "greenback emissions" to the environmental threat of greenhouse gas emissions, leaving the United States with a deficit of $1.8 trillion or 13 percent of gross domestic product this year.
In July, the government posted a $180.68 billion monthly budget deficit, a record for July, marking only the third time in the past 30 years that the government ran a deficit for 11 months in a row.
Buffett said a revived economy will not be able to generate enoughrevenues to bridge the gap between outlays and receipts, so changes intaxes and spending will be required.
Politicians will not likely have the will to raise taxes or slowspending, so they may opt to quietly let inflation increase, a movethat will "confiscate" wealth and allow the United States to evolveinto a "banana republic economy", he said.
"Our immediate problem is to get our country back on its feet andflourishing -- 'whatever it takes' still makes sense," Buffet said inthe paper.
But once recovery is gained, Congress must end the rise in thedebt-to-GDP ratio and keep its growth in obligations in line with itsgrowth in resources, he wrote.
"Unchecked carbon emissionswill likely cause icebergs to melt. Unchecked greenback emissions willcertainly cause the purchasing power of currency to melt. The dollar'sdestiny lies with Congress," he said.
Last month, in a newspaper column of his own, Federal Reserve chairman Ben Bernanke,said the huge amounts of money the U.S. central bank has pumped intothe economy will not undercut its ability to push borrowing costshigher when the time is ripe.
Stressing that the weak U.S. economy will likely warrant exceptionally easy monetary policies for a long time to come, Bernanke outlined in a Wall Street Journal opinion article how the Fed could raise interest rates even with cash flooding the financial system.
"At some point, however, as economic recovery takes hold, we will needto tighten monetary policy to prevent the emergence of an inflationproblem down the road," Bernanke wrote.
The outline of the Fed's "exit strategy" from the extraordinarymonetary policy easing it has undertaken in the past two years to dealwith the global financial crisis was the subject of testimony to Congress by Bernanke in his twice-a-year economic report on July 21."