Belgium (CoinChapter.com) — Warren Buffett is known for having some intriguing takes on the current financial market. During last week’s Berkshire annual videoconference, some exciting opinions became apparent. While Buffett isn’t a fan of Bitcoin, the leading cryptocurrency remains a safe bet against rampant inflation.
Warren Buffett On The Current Inflation
During the Berkshire annual videoconference, Warren Buffet didn’t take long to offer a destructive outlook on the US economy. Although the economy appears to rebound suddenly, Buffett remains concerned about the current inflation rates. He even claims there is “substantial inflation”, resulting in prices being driven higher and affecting consumers negatively.
Everyone will have noticed how products and services have become more expensive over the past year. Some of it can be attributed to COVID-19 wrecking global havoc, but that is never the entire story. The ongoing stimulus packages and quantitative easing by central banks have laid the foundation for rampant inflation over the past few years. All of these facets are now coming together in a dangerous spiral.
Buffett also points out – and rightfully so – how the US economy may be beyond the point of no return. Surging prices can and will likely remain in place for the foreseeable future. Even if President Biden and the Fed claim the opposite, it will prove incredibly difficult to turn the ship around. More importantly, the US economy affects the rest of the world. That means higher prices and inflation will become an increasingly global problem.
Charlie Munger Dismisses Bitcoin
During the annual video conference, Charlie Munger – vice-chairman and friend of Warren Buffett – dismissed the notion of Bitcoin being a viable alternative. He confirms how he “hates the success of Bitcoin” and considers it “a currency useful to kidnappers and extortionists”. None of these comments are new nor surprising, as Buffett himself is not a fan of cryptocurrency in the slightest.
However, one has to put Munger’s comment in the right context. While he may say the development of cryptocurrencies is “contrary to civilization’s interests, ” he does not offer a better alternative. In fact, he offers no solution to the current broken economic system that is subject to rising inflation, higher prices, and fewer people being able to make ends meet.
Despite the volatility of Bitcoin and other crypto assets, they remain the strongest market performers available today. Bitcoin has topped $60,000 for the first time before facing a pullback, whereas Ethereum has begun trading above $3,100. Both assets note a strong price increase over the past year, providing an effective hedge against the current inflation. Other investment vehicles or even fiat currencies are no longer a viable hedge against inflation today.
Rising prices are not something consumers can control, unfortunately. However, they can control their financial wealth and future. Doing so will involve looking beyond the traditional options and taking a risk. However, it is better to risk searching for potential profit rather than sit by idly and see one’s purchasing power disappear.
The current financial outlook for the US – and by extension, the rest of the world – is fairly bleak. Inflation is a huge problem, as are rising prices for goods and services. Additionally, there are low to negative interest rates to consider. Keeping money in a bank account is no longer a viable option. Putting one’s finances to use, however, is not as straightforward either.
While Warren Buffett and Charlie Munger may not like Bitcoin and other crypto assets, they remain a viable way of countering the current inflation rates and rising prices. Despite the learning curve associated with cryptocurrency, it remains the most feasible and approachable option for anyone looking to retake control over their financial future.
Statistics by Statista, header image courtesy of Pixabay