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Munger Says Prepare For Harder World As Buying Power Slides

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http://www.bloomberg.com/news/articles/2015-03-25/munger-says-prepare-for-harder-world-as-purchasing-power-slides

Charles Munger, who became a billionaire while helping Warren Buffett build Berkshire Hathaway Inc., predicted it’s going to get tougher for consumers to maintain their standard of living in coming decades.

“We should all be prepared for adjusting to a world that is harder,” Munger, 91, said Wednesday at an event in Los Angeles, in response to a question about the increase in the size of the Federal Reserve’s balance sheet since the 2008 financial crisis. “You can count on the purchasing power of money to go down over time. And you can almost count that you’ll have more trouble in the next 50 years than the last.”

The cost of living in the U.S. excluding food and fuel rose more than forecast in February, climbing 1.7 percent from a year earlier. The Fed’s preferred measure of inflation expectations - - the five-year, five-year forward break-even rate -- now projects consumer prices will increase at a 1.91 percent rate starting in 2020. That’s up from 1.75 percent on Jan. 30.

Munger spoke at the annual meeting for Daily Journal Corp., a Los Angeles-based newspaper publisher where he serves as chairman. After inflation, investors in common stocks averaged “unbelievably good” returns over the last five decades, he said.

Best Times

“Somebody my age has lived through the best and easiest period that ever happened in the history of the world -- the lowest death rates, the highest investment production, biggest increases in most people’s standards of living,” Munger said. “If you’re unhappy with what you’ve had over the last 50 years, you have an unfortunate misappraisal of life.”

Recalling an era when people paid 5 cents for a cup of coffee and new automobiles cost $600, he said the declining value of money in past decades didn’t turn out to be as severe as he had anticipated.

Of course people his age had it easy, they left the interest and debt bill for us to sort out! How nice of them.

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Of course people his age had it easy, they left the interest and debt bill for us to sort out! How nice of them.

Doesn't alter the fact that he is right though. ;)

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But why?

Is he saying in the next 50 years we will all get worse at our jobs, the machines will get more inefficient and the bankers will forget how to rip people off?

I don't believe it!

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“We should all be prepared for adjusting to a world that is harder,” Munger, 91, said Wednesday at an event in Los Angeles,

"We".

How hard can it be for a billionaire.

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I'm baffled by his prediction too - unless he is expecting eco-services failure and even more corporate capture that we have right now.

Surely he's alluding to the inflationary consequences of having to monetise umpteen $trillions of unserviceable debt?

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I'd imagine it's pretty hard for any 91 year old to prepare for the next 50 years.

That'll apply to everyone through the ages irrespective of the size of the Federal Reserve's balance sheet.

Edited by billybong

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And yet global living standards are probably better now than any time in human history.

Of course. According to McKinsey an additional $57 trillion of debt was created globally in the years 2008-14. Of 50 countries surveyed only 5 had paid down any pre-GFC debt: Argentina, Romania, Egypt, Israel and Saudi Arabia.

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But why?

Is he saying in the next 50 years we will all get worse at our jobs, the machines will get more inefficient and the bankers will forget how to rip people off?

I don't believe it!

The only solution is to kill all politicians. Of that im sure.

Just look at how theyre now pimping 'micro homes'

We should have a shrinking population in this country, more land per person and 3000sq ft mansions each.

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Surely he's alluding to the inflationary consequences of having to monetise umpteen $trillions of unserviceable debt?

exactly. he knows what's coming. they have 2 choices, let the debt default ot monetise it. He knows its the latter. The former will kill the banking system and we cannot have that.

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Surely he's alluding to the inflationary consequences of having to monetise umpteen $trillions of unserviceable debt?

exactly. he knows what's coming. they have 2 choices, let the debt default ot monetise it. He knows its the latter. The former will kill the banking system and we cannot have that.

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Noahs Castle, No man is an Island, except for survival in the meantime.

So in a world of decreasing availability of spending power or energy availability per person, OR money to buy that energy, we need to start planning now. If we could create an island away from the coming fallout, that would mean becoming more self sufficient, and stock piling the things we need in the coming years, just in case the availability of those items, or the means to purchase those items falls.

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^Just as exactly the people at the top have been doing.

As inequality soars, the nervous super rich are already planning their escapes
Hedge fund managers are preparing getaways by buying airstrips and farms in remote areas, former hedge fund partner tells Davos during session on inequality

http://www.theguardian.com/public-leaders-network/2015/jan/23/nervous-super-rich-planning-escapes-davos-2015

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pizza.png

So the top are preparing - but what about the rest of us. Are we "feeling" that something is ahead? I'll just chuck in this anecdotal. I was walking along Shirely high street yesterday, and suddenly I heard raised voices, even shouting. So I turned around and took a look. There was a young man dressed in some sort of superhero costume without a cape, and he was holding a placard, advertising their pizza shop (it is a global chain). I think it was £6.99 for a large pizza. Now the type of people who walk around Shirely, would probably find £7 a difficult amount to procure.

Anyway, 3 men, probably in their 40s or 50s came up to this uncaped crusader of baked tomato and cheese wholeness, and repeatedly asked him "How much are you being paid?". Initially he refused to say, but I think in the end he revealed it, and the men walked off (in the other direction of the pizza store). We don't get to see many people like sign holders in Shirely, maybe in the big town centre or London, but I think a few people did think it was unusual. What ever he was being paid, was probably, very small - perhaps the men thought, being a young healthy man he could be doing so much more, than holding a sign. Has corporate capture denied us opportunity?

Edited by 200p

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pizza.png

So the top are preparing - but what about the rest of us. Are we "feeling" that something is ahead? I'll just chuck in this anecdotal. I was walking along Shirely high street yesterday, and suddenly I heard raised voices, even shouting. So I turned around and took a look. There was a young man dressed in some sort of superhero costume without a cape, and he was holding a placard, advertising their pizza shop (it is a global chain). I think it was £6.99 for a large pizza. Now the type of people who walk around Shirely, would probably find £7 a difficult amount to procure.

Anyway, 3 men, probably in their 40s or 50s came up to this uncaped crusader of baked tomato and cheese wholeness, and repeatedly asked him "How much are you being paid?". Initially he refused to say, but I think in the end he revealed it, and the men walked off (in the other direction of the pizza store). We don't get to see many people like sign holders in Shirely, maybe in the big town centre or London, but I think a few people did think it was unusual. What ever he was being paid, was probably, very small - perhaps the men thought, being a young healthy man he could be doing so much more, than holding a sign. Has corporate capture denied us opportunity?

I remember seeing guys working as a sandwich board man on the High Steet of Guildford in supposedly prosperous Surrey during the height of the early 1980s recession. I remember thinking it possibly being one of the most demeaning things I had ever seen. At least when begging you are normally working for yourself not physically labelled as some corporate slave.

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All he is saying is what has happened in the last 30 years is going to continue as globalisation gets even more rampant.

Now wonder the LIBLABCON along with the MSM are so eager for us to stay in the EU.

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Mr-Wimpy-225x300.jpg

Seems strange really. The world seems to be getting more competitive so it's harder to make money. But surely more competitive should make things cheaper and everybody better off. If not what is the point?

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Of course buying power will slide if people have less to spend without the ability to borrow....this is only a result of the rebalancing of global economies ... competition, opening up of trade barriers and greater global inequality but a more evenly spread one.....vast amounts of fiat money tied up in frozen assets, trickle up to the top with nowhere to go.

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And yet global living standards are probably better now than any time in human history.

Agree with this. It's an important point though. On the whole it's probably getting better but there is still a very wide variance in wealth and earnings between us in the 'entitled' UK and those in the 'developing' countries who are eager to take our jobs. If a balance is to be achieved which is what globalisation is forcing we have to get 'poorer' for others to get 'wealthier' and given the size of the gap we need to get a lot poorer. It's going to be an interesting future...

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Misallocation of capital away from sustained growth and instead towards golf courses for boomers

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