Warren Buffett: The Debt Itself Isn’t the Problem. THIS Is. | Berkshire 2024

[Transcript]

BECKY QUICK: Randy Jeffs from Irvine, California. “The March 25, 2024 Wall Street Journal reported that the Treasury market is about sixfold larger than before the 2008-2009 crisis. “Do you think that at some point in time the world market will no longer be able to absorb all of the U.S. debt being offered?”

WARREN BUFFETT: Well, I would say — and the answer is, of course, I don't know. But the — my best speculation is that U.S. debt will be acceptable, but — for a very long time, because there's not much alternative — but it won't be the quantity — you know, any — you know, the national debt was nothing to speak of like, you know, for a long, long time. And then — It won't be the quantity. It'll 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.

And you get a lot of people who will give you a lot of speeches on that, but that really is the answer. And [Former Federal Reserve Chair] Paul Volcker worried about that back in 19 — you know — well, before 1980. But — but he had threats on his life, and I happened to have a little contact with him at that time. And he was an amazing, amazing fellow that, in effect, decided that he had to act or the whole — really the financial system would fall apart in some way that he couldn't predict. And he did it, and, you know, had people threatening his life and do all kinds of things. But he was the man for that crisis.

But it wasn't the quantity of U.S. debt that was being offered that threatened the system then. It was the fact that inflation and the future value of the dollar, you know, the cash is trash type thinking that turn — and, you know — that was setting up something that could really affect the future of the world, in terms of its economic system. And Paul Volcker took it on. And he was gutty as could be. And if you haven’t read a book or two about him — or the one he last wrote — you'd be able to take a look at it.

But it is — I don't worry about the quantity. I worry about the fiscal deficit. You know, if it — but I'm not a worrier, just generally. I mean, I think about it, and — but I don't sit and get up — work myself into a stew about it in the least. But I can't help thinking about it.

And that's — We've got a — we’ve got a great attention — it's interesting — I think it maybe enters into this in the — focusing — that focuses on the Fed. And they, you know, they just love it, because things are always happening and economists are always saying what's going to happen with the Fed and everything else. But the fiscal deficit is what should be focused on.

And [Federal Reserve Chair] Jay Powell is a — not only a great human being, but he's a very, very wise man. But he doesn't control fiscal policy, and every and now then he sends out a kind of a disguised plea for, (laughs) please — please pay attention to this, because that's what the trouble will be, if we have it.

Source: https://buffett.cnbc.com/2024-berkshire-hathaway-annual-meeting/

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