Nebraska billionaire investor Warren Buffett believes the U.S. economy is improving. However, he says the financial price of the federal stimulus package and other big spending bills are looming as a new threat.
Buffett, chairman of Berkshire Hathaway Inc. (NYSE:BRK), wrote a guest op-ed for The New York Times in Wednesday’s edition titled “The Greenback Effect.” It says that while mistakes were made in attempts to end the recession and restart the lagging economy, a meltdown of our economy was avoided by a “gusher of federal money.”
“The United States economy is now out of the emergency room and appears to be on a slow path to recovery,” Buffett wrote. “But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects.
“For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.”
He says the country’s “net debt” — that which is publicly held — is mushrooming. While much of the driving force behind the economic-recovery plans lies with President Obama’s executive branch, the U.S. Treasury Department and the Federal Reserve, Buffett says the ultimate solution to the debt problem lies with the U.S. Congress.
“Our immediate problem is to get our country back on its feet and flourishing — ‘whatever it takes’ still makes sense,” Buffett wrote. “Once recovery is gained, however, Congress must end the rise in the debt-to-GDP ratio and keep our growth in obligations in line with our growth in resources.”
In July, Buffett told cable TV network CNBC that it’s a good time to invest in stocks, even with the Dow Jones Industrial Average having recovered to rise beyond 9,000. In that interview, he said investors shouldn’t wait until businesses turn around before investing in stocks again.
“If you wait until you see the robin, spring will already be over,” he said at the time.
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