TSI Opinion: Warren Buffett–The Apple who fell far from the Golden Tree

“[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” – Warren Buffett (Chairman and CEO of Berkshire Hathaway)

“But, unless you are willing to surrender your children and your country to galloping inflation, war and slavery, then this cause demands your support. For if human liberty is to survive in America, we must win the battle to restore honest money.” – Howard Buffett (US Congressman from Nebraska and father of Warren Buffett)

The big news this week in the realm of precious metals, came from a surprise investment of multibillionaire Warren Buffett, whose company, Berkshire Hathaway, revealed a substantive investment in mining giant Barrick Gold Corp. (NYSE:GOLD). Buffett, historically, has been known to poo poo gold on many occasions, as the quote above obviously demonstrates. And so his move into Barrick, which was quite a big one we might add, at over half a billion dollars invested in 21 million shares, represents a watershed moment in the paper fiat dollar paradigm which Buffett has for so long been a cheerleader.

While this news has been trending in the media, what has been omitted is that his support for the paper fiat dollar is a stark contrast to another Buffett, and that is his father Howard, the former Congressman from Nebraska. Howard Buffett, unlike his son, believed that freedom rested on the use of sound money which could not be created out of thin air. He believed so fervently, that he wrote an article entitled, “Human Freedom Rests on Gold Redeemable Money,” which appeared in The Commercial and Financial Chronicle in 1948. The elder Buffett, argued that “In a free country the monetary unit rests upon a fixed foundation of gold or gold and silver independent of the ruling politicians.” In other words, if he were alive today, he would probably not be surprised at rapidly declining liberties of the American people.

Indeed, he even warned that this “…printing press paper money — technically known as fiat money because its value is arbitrarily fixed by rulers or statute,” would be detrimental to the nation, and that “…under such conditions the individual citizen is deprived of freedom of movement. He is prevented from laying away purchasing power for the future. He becomes dependent upon the goodwill of the politicians for his daily bread. Unless he lives on land that will sustain him, freedom for him does not exist.”

For Howard Buffett, the nature of money was obviously no small matter, and having studied fiat money in the past, he understood that “paper systems end in collapse.” That wasn’t hyperbole, as he reaffirmed that, “So far as I can discover, paper money systems have always wound up with collapse and economic chaos.” Buffett points out specific examples of how fiat monetary collapse from his own era produced some of the most bloody dictatorships in world history: “Monetary chaos was followed in Germany by Hitler; in Russia by all-out Bolshevism; and in other nations by more or less tyranny. It can take a nation to communism without external influences.“

One would think that having even a remote understanding of the past would prevent even the most self interested politicians from attempting such a venture, yet Buffett conceded that “…politicians of both parties will oppose the restoration of gold, although they may outwardly seemingly favor it. Also those elements here and abroad who are getting rich from the continued American inflation will oppose a return to sound money.” Despite the inevitable resistance to sound money, Buffett contended that “There is no more important challenge facing us than this issue — the restoration of your freedom to secure gold in exchange for the fruits of your labors.” Ultimately, if the elder Buffett were still around today, he would probably be forced to agree with the German philosopher Georg Wilhelm Friedrich Hegel, that “the only thing we learn from history, is that we never learn anything from history.”

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