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Warren Buffett has an interesting answer on dealing with inflation: "Nevertheless, I worry about inflation always because it is such an easy solution to things
by wallflower 16y ago
Warren Buffett has an interesting answer on dealing with inflation:
"Nevertheless, I worry about inflation always because it is such an easy solution to things in the short term. The ultimate defense against inflation is your own talent, your own earning power. I mean, the best doctor in town, the best lawyer in town, the best musician, the best anything, whatever it may be, they will always command their share of resources of their society whether the currency is dollars or shekels or shark-sheet.
"Next to your own talent the best thing to own is a business with talent. I mean, if you own Coca Cola, it will always be able to command, whatever the currency, a certain portion of people’s earnings or hourly earnings. So I always emphasize to students, develop your own talents, no one can take them away from you, no one can even tax you until you start bringing money in from them. And inflation can’t take your own talent away from you."
"If you know how to perform brain surgery, people are going to find you and they are going to figure out some way to give you whatever chicken they are producing and whatever the case may be. If you look at investments, the one thing you don’t want to have is investments that are tied to a currency unit as opposed to a producing business.
- mark_l_watson 16y agoI agree: that was the best part of the article for me. I wrote about this (Nourish and manage your career, not your job) a few weeks ago. A lifetime investment in your own education and training is an investment that will likely pay good dividends and lead to a more satisfying life beyond just money.
- maayank 16y agoBut isn't that obvious? Isn't that basic supply-demand? (All but the 'don't invest in currency-unit tied business' advice)
- mkr-hn 16y agoEconomics are boring. An influential billionaire telling people to go out and make something might make a difference. It's why quotes are frequently misattributed. Who would care if Bill in cube B12 said the same thing?
- barrkel 16y agoEconomics isn't boring at all; it's the study of choice, incentives, and why people do the things they do. It's applied psychology in the large. Learning even a little bit about economics teaches you why so much of the world is the way it is.
- deleted 16y ago[deleted]
- orijing 16y agoThat's great about income preservation, but what about wealth preservation? No matter how strongly your income growth keeps up (or exceeds) inflation, inflation still naturally diminishes the value of your money (and on the flip side, reduce the debt load). No talent can protect you from the wealth-distributional effects of inflation unless every penny of your value is in TIPS or something.
- ams6110 16y agoI think he addresses that in the second point: Next to your own talent the best thing to own is a business with talent. I mean, if you own Coca Cola, it will always be able to command, whatever the currency, a certain portion of people’s earnings or hourly earnings.
- endian 16y ago> That's great about income preservation, but what about wealth preservation? See http://en.wikipedia.org/wiki/Bitcoin http://en.wikipedia.org/wiki/Bitcoin
- toephu 16y agounless that currency unit is RMB.