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Collection: Charlie Munger - #110 'Quantitative Easing and Large Fiscal Deficit'



So Schuler Coolen bachelor’s degree 1995, is going to ask about political economy. Two different questions. What do you think of the combinations of quantitative easing and large fiscal deficit, and where are they going to lead us?


Well, there I’ve got a very simple answer and that is it’s one of the most interesting questions anybody could ask. We’re in very uncharted waters. Nobody has gotten by with the kind of money printing we’re doing now for a very extended period without some trouble. I think we’re very near the edge of playing with fire.


It is remarkable how much we’ve expanded the money supply, how low interest rates are, and how little initial response there has been on –


Remarkable’s not too strong a word. Astounding would be more like it.


I will let you choose the adjective, Charlie.


It’s unbelievably extreme. Some European government borrowed money reasonably for some tiny little fraction of 1% for a hundred years. Now that is weird. What kind of a lunatic would loan money to a European government for a hundred years at less than 1%?


Can I ask you a question that sort of falls out of this but from a different perspective? Which is for a long time, a lot of the policymaking in the world was because capital is scarce. For a long time, the world economies were poor.

And since World War II, we’ve been creating wealth at a very, very high rate. Have the rules changed to some extent? Because in some sense, the developed economies are just very wealthy.


Well, of course it’s changed to some extent because of developing economies are very wealthy. It’s changed enormously.

In my lifetime, advanced civilization has gotten ahead faster than any century that existed before and nothing else was even close. It’s utterly without precedent in real terms. It’s unbelievable. I watched the whole thing practically because I’ve lived so long and it’s been absolutely astounding.

I can remember having a five course filet mignon dinner in Omaha for 60 cents when I was a little boy. The world has really changed.



[YAPSS Takeaway]

We are living in an interesting time, let's see how it will turn out.

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