Classics: An Investor's Anthology
Buy this book at Amazon.com or try Amazon.co.uk in England, Amazon.ca in Canada, Amazon.de in Germany, Amazon.fr in France, Amazon.it in Italy, Amazon.es in Spain. ASIN=1556230982, Category: Investment, Language: E, cover: HC, pages: 759, year: 1988.
"At the source, peacetime Inflation is a political problem, not an economic problem.
Human behavior, not monetary behavior, is the key. And when
very human polticians choose between the next election and the next
generation, it's clear what usually happens."
-- quote Warren Buffet, in "How inflation swindles the Equity Investor," p495 (an article reprinted from Fortune, Vol. XCV, No. 5, May 1977, 250-267)
Apart of insights by other great investors, Classics contains several articles by Buffet. This chapter alone is worth the price for the whole book - if you can understand it what he's saying. Take this sentence as an example for his writing style:
- "If zero real investment returns diverted a bit greater portion of the national output from such stockholders
[ed. note: i.e., market economy participants with lopsided payoffs] to equally
worthy and hardworking citizens lacking jackpot-producing talents, it would seem unlikely to pose such an insult to an equitable world as to risk Divine Intervention."
This chapter details the short explanation in the book The Warren Buffett Way by Robert G. Hagstrom, why corporations can no longer be profitable if at average tax rate and with historically average earnings (12% on equity), the inflation rate goes above 7%, which by the way is the historical average inflation rate in the U.S..
Buffet explained why inflation is a tax, - in fact it is the most disastrous tax; see also "What Has Government Done to Our Money?" by Murray N. Rothbard