Warren Buffett, the chairman and CEO of Berkshire Hathaway, discussed a range of subjects during his company’s annual meeting on Sunday. Among the topics he addressed were the U.S. debt level, the role of the U.S. dollar as the global reserve currency, and the substantial cash reserves held by his company.
Buffett was questioned about his thoughts on the possibility that the global market may reach a point where it can no longer accommodate all the U.S. debt being issued. This query arose in light of recent data indicating that the Treasury market has expanded more than 60% to $27 trillion since the end of 2019, a figure that is “roughly sixfold larger than before the 2008-09 financial crisis,” according to a March report by the Wall Street Journal. The Berkshire boss replied:
My best speculation is that U.S. debt will be acceptable for a very long time because there’s not much alternative.
“It won’t be the quantity of the national debt … It will be whether in any way inflation would get let loose in a way that really threatened the whole world economic situation. And there really isn’t any alternative to the dollar as a reserve currency,” the 93-year-old executive added.
Buffett also recognized Federal Reserve Chairman Jerome Powell’s efforts regarding the U.S. economy. “Jay Powell is not only a great human being but he’s a very wise man,” the Berkshire CEO emphasized. However, he highlighted that the Fed chairman “doesn’t control fiscal policy.” Nonetheless, he stressed: “Every now and then, he [Powell] sends out a disguised plea: ‘Please pay attention to this because that’s where the trouble will be if we have it.'”
Berkshire currently holds a cash reserve of $188 billion. When questioned about the possibility of utilizing some of these funds for projects, Buffett answered: “I don’t think anybody sitting at this table has any idea of how to use it effectively. And therefore, we don’t use it … We only swing at pitches we like.”
Regarding his company’s cash position, Buffett shared:
I think when I look at the alternative of what’s available, the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive.
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