Buffett Foresees Dollar's Long-Term Decline, Seeks Acquisitions Overseas

The dollar's value is likely to decline over the next 10 years, according to Warren Buffett, chairman of Berkshire Hathaway (BRK.A). Sean Pasternak and Doug Alexander reported in Bloomberg that Buffett, speaking in Toronto to promote Berkshire's Business Wire news unit's expansion into Canada, blamed the declining value of the U.S. dollar on the current account deficit, with the U.S. trade imbalance playing the major role:

``If something is unsustainable, it's going to have consequences; so far the consequences have been a general decline in the dollar against major currencies,'' Buffett said. ``If we continue the same policies, we're going to get the same results in the next five or 10 years.''

Buffett has said he was looking for acquisitions outside the U.S., in part to hedge against long-term declines in the dollar. The company made its first non-U.S. acquisition in 2006, when it paid $4 billion for 80 percent of Israel-based Iscar Metalworking Cos., a family-owned maker of industrial tools.

Comments

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We can expect a vicious level of stagflation that will become an enduring feature of our economic landscape. And the United States will be forced into a high degree of economic isolation, operate under a command economy and perhaps into an increasingly totalitarian mold. Buffett is wrong. Eventually there will be a flight from the dollar precipitating hyperinflation.