Your thoughts on inflation? BRK Annual Meeting 2004, 2005, 2009

The best thing to combat the threat of inflation is to have a lot of earnings power of your own. If you’re the only surgeon in town, you’ll be OK [because you can simply raise your prices to keep up with inflation and people will pay it]. Charlie and I think it’s best to own fine businesses that can price in inflationary terms and don’t require big capital investments. See’s Candies can handle an inflationary world and maintain value.

Unfortunately, most businesses will not come out well in real terms. Earnings might be up, but the business will be compelled to invest more and more dollars into the business to stay in place. The worst businesses compel you to put more and more in, without any rise in profits.

[Charlie Munger: There won’t be an automatic correlation between interest rates and inflation – there will be weird things.]

The easiest thing to do [inflate] is the likeliest. The best protection from inflation is your own earning power. The second best is owning a wonderful business, such as Coke, that doesn’t require capital. With Coke, you’ll get your share of national earnings.

If you have competitive advantage, and make 10% of sales, and sales go up 10% due to inflation, you will tend to make a little more money. Whether we will earn less or more, my answer is probably earn a little more – Charlie Munger

Inflation is a far more devastating tax than anything that has been enacted by our legislature. The inflation tax has a fantastic ability to simply consume capital – Warren Buffett

A little inflation won’t ruin the lives of any of us. The trick is to avoid galloping inflation – Charlie Munger


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