Warren Buffett

Warren Buffett

Warren Buffett, the Omaha billionaire investor who has the ear of President Barack Obama, said the U.S. economy is improving, but that the financial price of the stimulus and other big spending bills are looming as a new threat.

Buffett, chairman of Berkshire Hathaway Inc. (NYSE: BRK), wrote a guest op-ed for the New York Times in Wednesday’s issue titled “The Greenback Effect” and said that while mistakes were made in the attempts to end the recession and restart the lagging economy, a meltdown of our economy was avoided by a “gusher of federal money.”

“The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects,” Buffett wrote in the op-ed. “For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.”

He said that the country’s “net debt” – that which is publicly held – is mushrooming and that it is growing at one percentage point per month. And while much of the driving force behind the economic recovery plans lies with the executive branch in the form of Obama, the U.S. Treasury Department and the Federal Reserve, Buffett said the ultimate solution to the debt problem lies with Congress.

“Our immediate problem is to get our country back on its feet and flourishing — ‘whatever it takes’ still makes sense,” Buffett wrote. “Once recovery is gained, however, Congress must end the rise in the debt-to-G.D.P. ratio and keep our growth in obligations in line with our growth in resources.”

In July, Buffett told cable TV network CNBC that it’s a good time to invest in stocks, even with the Dow having recovered to back over 9,000. He said in that interview that investors shouldn’t wait until businesses turn around before investing in stocks again.

“If you wait until you see the robin, spring will already be over,” he said then.

Dayton Business Journal