Friday, September 20, 2013

Warren Buffett: "If the Fed Deleverages in Any Big Way, That Will Be a New Experiment"; "We Don't Know How This Game Plays Out" (Interview Video)

Warren Buffett was interviewed by Bank of America CEO Brian Moynihan at Georgetown University today. Watch the full interview below. He starts talking about the economy and Federal Reserve at 14:05. First, here are a few important things Warren Buffett said during the interview:

  • "Inequality is getting wider."
  • "You will have periodic recessions and you will have an occasional panic."
  • "When there's a panic, the only thing that will stop it basically is when somebody who has the ability and the will says "I'm going to do whatever it takes." And basically that's what Bernanke and Paulson and finally Congress, in kind of a reluctant way, said to the American public."
  • "It's very hard to write regulations that will keep the people from acting foolishly, particularly when acting foolishly has been proven very profitable over the preceding few years. It's just the way it works. The humans, they all think they are Cinderella at the ball. And they think as the night goes along, the music gets better and the drinks flow and everything, they all think they're going to leave at two minutes to twelve. And of course there are no clocks on the wall and they are still dancing. So, it will happen again. But buy when that happens. I'll be buying."
  • "We don't know how this game plays out. And just the announcement a few months ago that tapering was going to occur, that had some significant market reaction, probably 100 basis points or so on the 10 year. And what will happen if they actually try to deleverage the Fed. What has happened is the American public deleveraged and the government leveraged up through the Fed.) If the Fed deleverages in any big way, that will be a new experiment."
  • "The Fed is the greatest hedge fund in history."
  • "The Fed is the fourth largest contributor to the United States government's revenues that there is now. And it is under no pressure, none whatsoever, to have to deleverage."


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