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


Video Link: https://youtu.be/IpT3PohdIF8


In this episode, Charlie Munger was asked what does he think of the combinations of quantitative easing and large fiscal deficit, and where are they going to lead us?


In this episode, you’ll learn:

  • Charlie Munger's view on quantitative easing and large fiscal deficit.

  • How the world has changed?

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[Transcript]

(Source: https://youtu.be/WaDU1J91hY8)

INTERVIEWER 00:00

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?


CHARLIE MUNGER 00:17

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.


INTERVIEWER 00:56

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 –


CHARLIE MUNGER 01:06

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


INTERVIEWER 01:12

I will let you choose the adjective, Charlie.


CHARLIE MUNGER 01:15

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%?


INTERVIEWER 01:41

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.


CHARLIE MUNGER 02:09

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.

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