QUESTION Mr. Armstrong, Your advice is opposite Warren Buffett told shareholders in May 2025.
“We wouldn’t want to be owning anything that we thought was in a currency that was really going to hell, and that’s the big thing we worry about with the United States currency,”
Would you comment on that?
Jeb
ANSWER: Look, I do not like to criticize other analysts. Warren is a domestic player. He viewed the world through the old-world view that was taught in school about Random Walks, Quantity of Money, and Keynesian Economics. All of those theories have crumbled into dust. By that comment referencing the dollar, it is kind of out of date since there is no other currency that is the alternative.
The backing of the dollar has NEVER been gold or some commodity. That is the concept from the old days of a barter economy – I’ll give you a chicken for potatoes. The real Wealth of a Nation is its people. It is the productivity, not how much it has in commodities. If that were true, the Russia should be the financial capital since they are the richest nation on earth with an estimated $75 trillion in natural resources. Further proof is that the two defeated countries were Japan and Germany. But their people were exceptionally industrious. They rose to the leading economy in their respective regions WITHOUT gold reserves.
What makes the United States the financial capital and the largest economy is (1) the freedom our ou people to invent things, (2) the anti-Marxist philosophy of a free market. We have the largest CONSUMER-BASED economy to which everyone else needs to sell their products from Asia and Europe.
This why when Bretton Woods collapsed, they swore the dollar would collapse. It rose in value. That is when they had to explain why they were wrong. They came up the notion that the dollar was then backed by oil. But oil was at best 6% of the world commerce. Germany and Japan had to prise their products in dollars to sell to the American consumer. It is the PEOPLE who are the backing of a currency – not a commodity. Look at South America. They cannot get off the ground because people like Lulu are closet communists and are still fighting class-warfare. That is what China and Russia learned – the idea of socialism and Marxism hands more power to government and now some bureaucrat will tell you when to plant a crop.
The real value of the stock market declined into 1977 from the 1929 high all because of socialism. Big Government was to control society, eliminate recessions and depressions, and that is still where we are today caught in this Marxist CONFIDENCE game. It was Milton Friedman who in 1970 stood up and said that the “Social Responsibility of Business is to Increase its Profits.” The academics came up with Stakeholder Economics during the Great Depression in 1932. That was NOT an original idea of Klaus Schwab. The academics turned companies into welfare organizations and you see that the book value of companies collapsed and bottomed finally in 1977 after 48 years. The WEALTH OF A NATION is not its commodities, but the productivity of its people.
