You mentioned the word a big bubble. Charlie munger Can you elaborate on that and how is this likely to play out?
You print money on the scale with modern nations or printing it in Japan. United States, Europe, etc. We’re getting into new territory in terms of size. There’s never anything quite like what we’re doing now, and we do know from what’s happened in other nations. If you transfer too much money, it eventually causes terrible trouble, and we’re closer to terrible trouble than we’ve been in the past. May still be a long way off. I certainly hope so. When Volcker, after the 70s, took the prime rate to 20% and the government was paying 15% of these government bonds, that was a horrible recession. Lasted a long time, caught to the bottom agony. I certainly hope we’re not going there again. I think the conditions are the loud Volker do fast without their grandchildren. Politicians were very unusual and I think in 2020 hindsight it was a good thing that he did it.
I would not predict that our modern politicians will be as willing to permit a new Volcker and get that tough with the economy and bring out that kind of recession.
So I think the no troubles are likely to be different from the old troubles you may wish you out of over cell reception, So what you’re gonna get. The troubles that come to us could be worse than what Volcker was dealing with and harder to fix. Think of all Latin American countries that print too much money. They get strong men, and so forth. That’s what Plato said happened in the early Greek city-state democracy. One person, one vote, a lot of egalitarians you get demagogues, and the demagogues lather overpopulation on the tree so you don’t have. I don’t think that was a crazy idea. Plato’s part,
I think that accurately describes what happened. Increase way back then and it’s happened again. Again, again one America.
Charlie Munger latest view on economy
We don’t wanna go there. At least I don’t. We’ve done something pretty extreme and we don’t know how bad the troubles will be here, whether we’re going to be like Japan or something a lot worse. Yeah, what makes the life you under Sting is we don’t know how it’s gonna work out. I think we do know we’re flirting with serious trouble. I think we also know that summer earlier fears were overblown. Japan is still existing as a civilized nation despite unbelievable access while former standards in terms of money printing. Think about subjectivity you have a bunch of inverse-bearing debts, and you pay them off with checking accounts, which you no longer pay interest.
Think of us that donkey. That is for a bunch of legislators.
Get rid of the interest payments, and the money supply goes up. It seems like heaven. And of course, when things get that seductive, they’re likely to be overused. If you start thinking about it, my way in life was not predicting the level of short-term differences between the Russell index and the standard pores, and I don’t have any opinion about which index is better at any given time. Never even think about it. I’m always just looking for something good enough to put monger money in, and I figure that I want to swim as well as I can against the tides.
I’m not trying to predict. Stocks for long-term real estate, of course, they’re going to be periods where there are a lot of agonies. Other periods when there’s a pool and I just have to learn to live through it, skipped. Like said, treat those two impostors just the same. Do you have to deal with daylight tonight as that bothers you very much? No, sometimes it’s night. Sometimes it’s daylight, sometimes there’s a boom, sometimes the bus. I believe in doing as well as you can and keep going as long as they let you.
What impact does passive indent have? Testing had on stock valuations?
Charlie Munger latest view on economy
Huge. That’s another thing that’s coming. We have a new bunch of emperors, and they’re the people who vote for the shares of the index funds. Maybe we can make Larry Fink and the people of Vanguard Pope all of a sudden we’ve had this enormous transfer of voting power to these passive index funds. That is going to change the world. And I don’t know what the consequences are going to be, but I predict it will not be good.We have a hugely strong economy in a hugely strong technical civilization, and that’s not going away. And the knowledge and so word. And you can’t believe what a modern factory looks like when you fill it with robots. And that’s coming more and more and more and it’s coming to China too, for that matter. And so host trends are inevitable and I think it does create adjustment problems. You’ll find a unionized job and they replace it with a robot. You’ve got a difficult problem and you got a company like Kodak and they invent something new that obsolete your product. You do it. You solve that by dying.
A lot of people don’t like that solution. Because all those problems are real and because it’s so tempting to get rid of your debt by just giving a guy a non-interest-bearing checking account where you used to have to pay him interest every month. Not only do we have a serious problem, but the solution to it that is the easiest for the politicians and the Federal Reserve 2 for that matter. It’s just the prep bar money and solves the temporary problems that way. And that of course is gonna have some long-term dangers. And we know what happened in Germany when the Weimar Republic just kept printing money.
The whole thing blew up and that was a contributor to the rise of Hitler. So all this stuff is dangerous and serious. We don’t want to have a bunch of politicians just doing whatever is easy on the theory that hurt us last time. So we can double it and do it one more time and we double it again and so forth. We know what happens on that everlasting doubling, doubling, doubling.
You will have a very different government if you keep doing that enough. You’re flirting with danger somewhere, and less. There’s some discipline in the process, but I don’t regard Japan as in some terrible danger. They gave the I a huge amount of this and got by with it. I don’t think we’ll be as good at handling our problems as Japan is.
If taxes were not an issue, what are your thought are going to cash today and waiting for better opportunities to deploy that cash over the next 12 months? is there a sensible idea in your mind?
My whole adult life I’ve never heard of cash waiting for better conditions. I’ve just invested in the best thing I can find, and I don’t think I’m gonna change now. Stop edge cache. Stop. Berkshire has access to cash quite a bit. It’s not doing that because it thinks it knows how to time investments. He just can’t find anything on standby. So we don’t have a solution to your problem, we’re just coping with it as I’ve described.
Given the valuation and market correction in early 2020, why is Berkshire not picking up or adding any new companies to its profile? Of course, kudos to the team and picking up. Apple shares a couple of years back. That’s paying off for sure.
The region where I’m buying this? We can’t buy anything at the prices we’re willing to pay. It’s just that simple. Other people are betting on the praise, and a lot of the buying is not by people who plan to. Loving his fee driven by private equity buys things so they can have more fees by having more things under management. Of course, it’s a lot easier by something you use somebody else’s money. We’re using our own money, or at least that’s what we think of it. I’ve always believed that nothing was worth an infinite price. Boys like Costco could get to a price where you say this, but I would argue that if I were investing money or some sovereign wealth fund or some pension fund and at 3040 fifty year time all rise and I would like last go at the current price.
I think it’s that strong in enterprise and that admirable. Boys, by the way, it’s not a tragedy that Berkshire has some surplus money.
They’re not investing. We look more responsible with the extra wealth and we are more responsible with the extra wealth.The shareholders who are worried about the future because it looks complicated and their hazard, I want to say to them with my courts, progressive said to me, Charlie, take Charlie, tell me what your problem is and I’ll try and make it more difficult for you. And he did pay a favor by treating me that way. I’m just repeating his favor to you. When you’re thinking the thoughts, or at least you’re thinking in the right direction, you’re worried about the right things.
All you people are worried about the inflation of the future, the Republic. Inflation is a very serious subject. You can argue it’s the way democracies die, but democracy dies in Latin America. Inflation is a big part of it, so it’s a huge danger. Once you got a populist vote itself, money, you’re doing too much.
You ruined your civilization a lot. But of course, 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. Eventually, the whole damn Roman Empire collapsed. So it’s the biggest long runs danger we have. Probably apart from Clearwater, I think the same exemption for the investors is that over the next. In 100 years the currency is going to zero.
That’s my working emphasis. It was very dangerous when I brought in Hitler because was the combination of the way Mark flexion where they utterly destroyed the savings of middle-class Germany, followed by the Great Depression. It was a 12-punch and Hitler came in crazy gal Gog with 40% of the votes. Pretty soon we had a dictator help enter World War, so the history is not pleasant. And Germany was a very advanced and civilized nation. The Germany that Hitler took over.
I always say that the Interstate thing about that was little Albert Einstein. A little Jewish boy got his entire primary education. the insistence? Catholic Church in Germany, is a very civilized nation. So if you could let your nation deteriorate too much, what you get as a Hitler, we proved it. Of course, you know modern democracy in the age of kings, you’re going to get big government reaction, the reaction this time. Much bigger than it’s ever been before. And they asked the United States.
They just threw money at the problem and they were probably right in fear of what was going to happen and the equating liberal throwing money at it. But they probably overdid it. They threw so much money so fast that it’s hard for the restaurants to get people to do the work. But I don’t create how is it.
Charlie Munger latest view on economy
It’s hard to make these decisions under pressure.
Well, you have to be optimistic about the competency of our technical civilization. But there again, sentence anything. If you take the last 100 years, 1922 to 2022, most of my burner came in, and that 100 years and then the previous hundred years, that got another big. And before that, things are pretty much the same.
For the previous thousands of years, life was pretty brutal and short.
What have you no credit press, no air conditioning, no modern medicine? No, I don’t think we’re going to get things that were in politics the real human needs. Think of what it meant to get. The steam engine, the steamship, the railroad, a little bit of row in farming, and a little bit of Roman plumbing. That’s what you got the 100 years to the end is 1922.
The next 100 years gave us. Why did distributed electricity, modern medicine, the automobile, and the airplane? Records always the air conditioning LSL and sync with a blessing. It was if you wanted three children, you had to have sex Cos three died in infancy. That was our ancestors. Think of the agony you watching after children, but it’s amazing how much achievement they spent in these last 200 years and most of it. I last hundred years out of trouble with this is that the basic needs are pretty well filled. The United States.
The principal problem with other poor people, they’re too fast.
That is a very different place. So what happened past they were on the edge of starving and what happens is it’s really interesting. So all this enormous increase in living standards and freedom, diminishment, racial inequities, and all of the huge progress that it’s come people are less happy about the state of affairs than they were when things were way tougher. And that has a very simple explanation. The world is not driven by greed. It’s driven by envy and the fact that everybody is five times better off than they used to be.
They take it for granted all they think about it somebody else has, adding more now when it’s not fair that he should have it, they don’t.
That’s the reason that God came out and told closest he put envy your neighbor’s wife or even his donkey. Even the old shows around row within three, so it’s built into the nature of things. It’s weird for somebody my age because I was in the middle of the Great Depression the hardship was unbelievable.
I would save her walking around Omaha in the evening that I have in my old neighborhood in Los Angeles after all these great wells and so forth. So as I have no way to do anything about it I can’t change the fact that a lot of people are very unhappy and feel very abused after everything had proved by about 600% because there’s still somebody else who has more.
Think of the pretentious expenditures of the rich or the hell needs a real Rolex watch. They get hugged for it. No hurry, yeah. Everybody wants to have a pretentious expenditure, and that helps drive demand in our modern capitalist society. My advice to young people is don’t go there. The hell with the pretentious expenditure. I don’t think there’s much happiness in it. Buddy, it does drive a simulation we have. Help drives the dissatisfaction.