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Charlie munger's grave prediction recession 2023 Charlie Munger the enigmatic American billionaire investor businessman former real estate attorney and vice chairman of Berkshire Hathaway the conglomerate controlled by a Warren Buffett rarely gives interviews but when he does it's always fascinating to get his insight into the current state of the economy and Munger stated if you thought the last recession was bad then buckle up because things are going to get much worse hello and welcome to finances so make sure to leave a like subscribe and comment below if you enjoyed watching and turn on the notification Bell to keep posted now let's start when Charlie Munger speaks people listen as the vice chairman of Berkshire Hathaway and the business partner of renowned investor Warren Buffett Charlie has a billion dollar net worth and isn't hesitant to express his thoughts this together with the fact that Monger seldom does interviews makes everything you are going to witness a rare treat Charlie gave his opinion an Insight on a wide range of topics including the possibility of a future recession the U.S federal reserve Tesla and Bitcoin Charlie Munger stated I basically like the existence of the FED in an interview with very quick on CNBC he further said I think in a world of Fiat currencies we need wise central banks and if you look at Japan today you would find that a central bank has made our Central Bank a little mouse that hardly tries to do anything so we've learned that central banks can be really important you can push them to Great access if you have to and you're in enough trouble so by and large I like Central bankers and by and large I hate Bitcoin promoters quick then asked when you say that we look like a mouse compared to Japan's Central Bank is that a good thing look what's happened to Japan Munger responded we haven't had to try it but we get the k kind of trouble Japan was in of course will do the same damn thing quick then asked a follow-up question do you worry about the FED creating a recession by slamming on the brakes too hard I think the FED is willing to have a little recession in order not to have out of control inflation Monker said over the past several years the Federal Reserve of the United States has garnered a great deal of media and public attention unfortunately this is not good publicity as many Americans now hold the FED responsible for the highest inflation rate in 40 years and the weakening economy for those who don't know the FED regulates financial markets controls the money supply and sets interest rates early in 2020 the FED took absolutely unprecedented steps after millions of jobs were lost overnight and businesses collapsed the Federal Reserve dropped interest rates to near zero to keep the economy from collapsing the FED lowered interest rate making it less expensive for companies and people to borrow money which they subsequently spend and help stimulate the economy together with large-scale government stimulus initiatives this helped sustain economic growth and prevent a collapse that could have otherwise occurred Charlie acknowledged the need for this course of action during the interview the FED May however have failed by taking too long to raise interest rates to more normal levels even though the economy was tremendously healthy in 2020 and 2021 the FED held interest rates at zero the stock market was in full party mode between 2020 and 2021 the value of stocks was soaring and the headlines centered upon backs and meme stocks furthermore day trading had regained popularity and stocks with little sales and no Prospect of profitability for selling for outrageous amounts due to their lack of involvement Warren Buffett and Charlie Munger were referred to as outdated right now well American's top concern is inflation which is at its highest level in decades the FED is currently making up for the Lost Time by quickly increasing interest rates in order to curb inflation higher interest rates raise the cost of borrowing money increasing the total cost of large purchase consumers often make with credit such as houses cars furniture and electronics for companies this means acquiring less new equipment and supplies and delaying upgrades if interest rates are increased less demand will be placed on the economy which should ease price inflation the effort to limit inflation has won significant disadvantage the FED is striking a balance meanwhile they want to ensure that the economy is slowed down sufficiently to bring inflation to a more normal level but they also don't want to risk sending the economy into a severe recession by hiking interest rates too soon or dramatically the FED is publicly said it would pay take all necessary measures to control inflation Jerome Powell the chairman of the Federal Reserve is comparable to a pilot attempting to land a huge airplane on a small Runway during severe storms from this there are two possible consequences the first being the soft Landing when a central bank raises interest rates just enough to prevent an economy from collapsing and suffering severe inflation while also averting a disastrous recession it aims for a soft Landing another consequence is a hard Landing when the Federal Reserve board takes this kind of action it causes a severe economic downturn instead of bringing inflation under control a hard Landing would have enduring consequences people would be unemployed businesses would shut down and the value of a household's assets including its real estate and stock Holdings would decrease skyrocketing inflation has put the Federal Reserve Board in chairman Jerome Powell in an comfortable position or they either take drastic action or risk losing credibility in his interview Charlie Munger also expressed his hatred for Bitcoin where he was blunt as usual it pains me that my own country I see people that were ones were regarded as very reputable people helping these things exist growing there and so forth this is a very bad thing the country did not need a currency that's good for kidnappers and so on I think they actually mean well though that you're seeing a lot of delusion it's partly fraud and partly delusion that's a bad combination each year the farm will produce crops for you which you may sell and turn into income you will have the asset and a large sum of money at the end of every year in this example the farm stocks are another example when you purchase stock in a company you're actually buying a small stake in the company's ownership ideally that company will produce the cash flow to which you are entitled as a business owner the cash flow that an asset generates during its lifespan determines its value whether it be a productive asset or any other type of asset non-productive acids are acids you can only profit from by selling them to someone else ideally for more money these include silver and gold the ounce of gold you purchase will not generate any income for you and the market value of that asset will determine your fate the only thing you can hope for is that as time passes the value of that item will arise this is why Warren Buffett believes that given enough time productive assets will almost certainly provide greater yields than non-productive ones Bitcoin is considered a non-productive asset Charlie munger's claims that Bitcoin is worthless Garner a lot of media attention for him Bitcoin is worthless since it doesn't benefit its owner how do you evaluate an asset that doesn't earn any money when an asset's worth is the amount of money it will make during its lifespan that's all for this video If you enjoyed it please like subscribe and hit the notification Bell to stay up to date on our videos and make sure to leave your thoughts in the comment section below this is finance sense helping you keep up with stay safe and keep learning until next time
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