Weekend Economists Go Eat Worms March 27-29, 2015

[Demeter]

18. Munger Says Prepare for Harder World as Buying Power Slides

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...

AT THE AGE OF 91, WITH BILLIONS IN THE BANK, ALL MUNGER HAS TO ADJUST TO IS THE LOSS OF EVERYTHING IN HIS LIFE, INCLUDING THE LIFE...