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Warren Buffett on Declining Fiat Currencies
By admin | October 24, 2008
Keeping your assets in fiat currencies must be about the worst thing to do. Not only can these assets be seized by mere accusation (don’t believe it can’t happen to you – it happened to Iceland!) , but even more worryingly they can and will be devalued indefinitely until they are worth nothing.
Warren Buffett wrote recently in the New York Times:
Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Buffett’s conclusion is that you should buy American equities. I don’t disagree with that if you feel comfortable with it – there are always good investors – but I would say it’s not something the average individual investor should do at the moment.
I’ll be writing a lot more in coming weeks on this subject at www.QWealthReport.com
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December 5th, 2008 at 8:43 pm
[...] What is the solution? Keeping cash positions is certainly not a good way to preserve your wealth. Maintaining your assets in fiat currencies (like the dollar and the euro) must be about the worst possible thing to do. Not only can these assets be seized by mere accusation (don’t believe it can’t happen to you – it happened to Iceland!) , but even more worryingly they can and will be devalued indefinitely until they are worth nothing. That is precisely what is happening, as the Oracle of Omaha Warren Buffett points out. [...]