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You mentioned we're in a big bubble. Can you elaborate on that and how is this likely to play out? When you print money on the scale that modern nations are printing it, Japan, the United States, Europe, etc., we're getting into new territory in terms of size. There's never been anything quite like what we're doing now.
And we do know from what's happened in other nations, if you try and print too much money, it eventually causes terrible trouble. And we are closer to terrible trouble than we've been in the past, but it may still be a long way off. I certainly hope so. When Vulker after the 70s took the prime rate to 20% and the government was paying 15% on its government bonds, that was a horrible recession.
Lasted a long time, caused a lot of agony. I certainly hope we're not going there again. I think the conditions that allowed Vulkar to do that without an interference from the politicians were very unusual and I think in 2020 hindsight it was a good thing that he did it. I would not predict that our modern politicians will be as willing to permit a new vulker to get that tough with the economy and bring on that kind of a recession.
So I think the new troubles are likely to be different from the old troubles. You may wish you had a vulker style recession instead of what you're going to get. The troubles that come to us could be worse than what Vulgar was dealing with and harder to fix. Think of all the Latin American countries that print too much money.
They get strong men and so forth. That's what Plato said happened in the early Greek city-state democracies. One person, one vote, a lot of egality, and you get demagogues, and the demagogues lather up the population, and pretty soon you don't have your democracy anymore. I don't think that was a crazy idea on Plato's part.
But I think that accurately described what happened in Greece way back then and it's happened again and again and again again in Latin America. We don't want to go there. At least I don't. We've done something pretty extreme and we don't know how bad the troubles will be and whether we're going to be like Japan or something a lot worse.
And what makes life interesting is we don't know how it's going to work out. I think we do know we're flirting with serious trouble. I think we also know that some of our earlier fears were overblown. Japan is still existing as a civilized nation in spite of unbelievable excess by all former standards in terms of money printing.
Think of how seductive it is. You have a bunch of interest bearing debts and you pay them off with checking accounts which you're no longer paying interest. Think of how seductive that is for a bunch of legislators. You get rid of the interest payments and you just the money supply goes up. It seems like heaven.
And of course, when things get that seductive, they're likely to be overused. If you stop and think about it, my way in life was not predicting little short-term differences between the Russell index and the standard and pores index. I don't have any opinion about which index is better at any given time.
I never even think about it. I'm always just looking for something that's good enough to put munger money in. And I figure that I want to swim as well as I can against the tides. I'm not trying to predict the tides. If you're going to invest in stocks for the long term or real estate, of course, there going to be periods when there's a lot of agony and other periods when there's a boom.
And I think you just have to learn to live through them. And as Kipling said, treat those two impostors just the same. You have to deal with daylight and night. Does that bother you very much? No. Sometimes it's night and sometimes it's daylight. Sometimes it's a boom, sometimes it's a bust. I believe in doing as well as you can and keep going as long as they let you.
What impact has passive investing had on stock valuations. Oh, huge. That's another thing that's coming. We have a new bunch of emperors and they're the people who vote the shares in the index funds. Maybe we can make Larry Frink and the people at Vanguard Pope. All of a sudden, we've had this enormous transfer of voting power to these passive index funds that is going to change the world.
And I don't know what the consequences are going to be, but I predict it will not be good. We have a hugely strong economy and a hugely strong technical civilization. And that's not going away. And the knowledge and so forth and you can't believe what a modern factory looks like when you fill it with robots.
And that's coming more and more and more. And it's coming to China too for that matter. And so those trends are inevitable. And I think it does create adjustment problems. If you have a fine unionized job and they replace you with a robot, you've got a difficult problem. If you got a company like Kodak and they invent something new that obsolates your product, you have a problem, too.
And you solve that by dying. A lot of people don't like that solution because all those problems are real. And because it's so tempting to get rid of your debt by just giving a guy a non-interest bearing checking account where you used to have to pay him interest every month, not only do we have a serious problem, but the solution to it that is the easiest for the politicians and for the Federal Reserve too for that matter is just to print more money and solve the temporary problems that way.
And that of course is going to have some long-term dangers. And we know what happened in Germany when the Weimar Republic just kept printing money. The whole thing blew up and that was a contributor to the rise of Hitler. So all this stuff is dangerous and serious and we don't want to have a bunch of politicians just doing whatever is easy on the theory that it didn't hurt us last time so we can double it and do it one more time and then we double it again and so forth.
We know what happens on that everlasting doubling doubling doubling. You will have a very different government if you keep doing that enough. You're flirting with danger somewhere unless there's some discipline in the process. But I don't regard Japan as in some terrible danger. Having they they've done a huge amount of this and gotten by with it.
I don't think we'll be as good at handling our problems as Japan is. If taxes were not an issue, what are your thoughts on going to cash today and waiting for better opportunities to deploy that cash over the next 12 months? Is it a sensible idea in your mind? In my whole adult life, I've never hoarded cash waiting for better conditions.
I've just invested in the best thing I could find and I don't think I'm going to change now. And the Daily Journal's used up its cash. Now, Bergkshire has excess cash, quite a bit of excess cash, but it's not doing that because he thinks it knows how to time investments. He just can't find anything it can stand by.
So, we don't have a solution to your problem. We're just coping with it as I've described. Given the valuation and and market correction in early 2020, why is Berkshire not picking up or adding any new companies to its profile? Of course, kudos to the team and picking up Apple shares a couple of years back.
That's paying off for sure. The reason we're not buying this, we can't buy anything at prices we're willing to pay. It's just that simple. Other people are bidding the price up. And a lot of the buying is not by people who really plan to own them. A lot of it is feed driven buying. Private equity buys things so they can have more fees by having more things under management.
Of course, it's a lot easier to buy something you use somebody else's money. We're using our own money. At least that's the way we think of it. I've always believed that nothing was worth an infinite price. Even an admirable place like Costco could get to a price where you would say that's too high.
But I would argue that if I were investing money for some sovereign wealth fund or some pension fund and a 30, 40, 50y year time horizon, I would buy Costco at the current price. I think it's that strong an enterprise and that admirable a place. By the way, it's not a tragedy that Berkshire has some surplus money they're not investing.
We look more responsible with the extra wealth and we are more responsible with the extra wealth. the shareholders who are worried about the future because it looks complicated and difficult and they're hazard. I want to say to them what my old torch professor said to me, Charlie, he'd say, "Charlie, tell me what your problem is and I'll try and make it more difficult for you." And he did me a favor by treating me that way.
And I'm just repeating his favor to you. When you're thinking the thoughts you're doing, at least you're thinking in the right direction.
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