Warren Buffett: Inflation Is Rife Throughout America, Do This Now!

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Warren Buffett has sent a warning out to all investors on inflation. Let's go over what he had to say...

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Every year Warren Buffett makes an appearance and holds his annual shareholder meeting. He talks about anything investing, the most interesting things that have happened over the past year and what may be to come. Now what stood out to me in this shareholder meeting was when he started talking about inflation.

He said “we’re seeing very substantial inflation, it’s very interesting. We’re raising prices, people are raising prices to us!” “The economy is red hot” “everybody’s got more cash in their pockets!".

And what do you think happens when everyone’s got more cash in their pockets and the economy’s firing. It means people are using their excess cash to buy things, which is pushing prices higher and higher. This is well known in economics, higher demand, same supply, equals an increase in price.

And Buffett’s seeing this with the businesses that he owns and runs. And by the way he owns a lot of businesses throughout America. He said in the meeting “take homebuilding, we’ve got 9 home builders, in addition to our manufactured housing which is the largest in the country, so we really do a lot of housing! The costs are just up, up, up!”

Then he talks about his furniture stores and the prices there. He said “every week I call Blumpkin (that’s the manager of his company Nebraska furniture mart), & we go over day by day what happened at 3 different stores, In Chicago, In Kansas city, in Dallas, & it just won’t stop. People have money in their pocket & they pay higher prices”… End quote.

You and I both know where so much of this money is coming from. It’s coming for free in the mail through stimulus checks. So far $867 billion dollars has been spent by the government on giving out these checks. Now where do you think this money goes. Well it goes into a range of different places.

Some people put it in the stock market. Does it surprise you that the stock market is up 80%, since they enacted their first stimulus package issued in early 2020. Some people used it for real estate and real estate deposits. We’ve seen these prices go up as well.

Some people used it for groceries. We’ve seen the price of food increase in 2020 & 2021 as well. It’s hovering around that 3 – 4% inflation rate. Gasoline prices increased along with the stimulus checks. They recovered from a big oil crisis and shot up in 2020 & 2021.

All of this is inflation. The increase in the prices of goods & services. Whether that’s food, gas, cars, or even when you’re buying shares from the stock market, we’ve seen higher prices in all of these areas… People are getting more free money from the government and it’s pushing prices higher.

But it’s not only the people who are getting this money, it’s also the businesses.
We saw the fed aid $2.3 trillion dollars worth of loans to small and medium sized businesses. We saw 10’s of billions of dollars been given directly to certain businesses with no clause in having to pay it back.

And this money has helped companies carry on with their business, and keep their supply chains running. But what’s resulted is supply costs have gone up. The businesses don’t bear the brunt of these costs themselves, they move them on to the prices of the products that they sell. This is another reason why we’re seeing inflation in so many different key areas. Supply chain costs.

As Buffett said “corporate prices go up in a month or two, our costs are going up, supply chains are all screwed up, it’s almost a buying frenzy”. “everybody’s got more cash in their pockets!”

And this cash that is getting put into the economy is forcing prices higher. We can see this with transportation, the CPI has gone from 194 to 215 in a year. Same with import prices. That’s gone from 118 to 129.7. Export prices have increased by even more. 118 to 133.

It’s no wonder when you look at the consumer price index as a whole it’s increased by so much since the pandemic. The CPI is our main way of seeing what’s happening with inflation, and prices are continuously going up, post pandemic.

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