It seems that HB did not share his son’s view in regard to savings. From his 1948 speech, he feared the political consequences if “the frugal savings of the humble people of America” are eroded by inflation. He bemoans: “Some day the people will almost certainly flock to ‘a man on horseback’ (his euphemism for an autocrat) who says he will stop inflation by price-fixing, wage-fixing, and rationing.”
HB intuitively understood that gold is money. But he also insightfully, and profoundly, understood that “there is a connection between human freedom and a gold redeemable Money.”
Observing that “one of the first moves by Lenin, Mussolini and Hitler was to outlaw individual ownership of gold”, while tactfully not mentioning that President Roosevelt did the same thing in 1933, HB goes on to conclude that “you begin to sense that there may be some connection between money, redeemable in gold, and the rare prize known as human liberty.” This connection exists because: “In a free country the monetary unit rests upon a fixed foundation of gold or gold and silver independent of the ruling politicians.”
The experience of recent decades illustrates HB’s insight that currency redeemable in gold has “acted as a silent watchdog to prevent unlimited public spending.” Without this constraint, which exists because gold cannot be conjured up out of nothing, HB notes that throughout history “paper money systems have always wound up with collapse and economic chaos.”
Thereafter, human liberty disappears, just like: “Monetary chaos was followed in Germany by a Hitler; in Russia by all-out Bolshevism; and in other nations by more or less tyranny.” His observation is a chilling prospect, given the downward path of the dollar’s purchasing power and the concomitant erosion of time-honoured rights in modern America.
So my recommendation is to read both Buffetts together. Reading one without the other will not provide the complete picture of what money is, and what money has become. More importantly though, one will only learn from reading the older Buffett why gold is money, and why gold and human liberty are inextricably interlinked.
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