12 Dec 2023 12:51 am
"Let the masses eat cake." Buffet laughed. "**** 'em."
Warren Buffet Selling $28.7 Billion in Stock Rings Alarm Bells Over Economy (msn.com)
Warren Buffett's firm Berkshire Hathaway sold $28.7 billion of stock in the first three quarters of 2023 in a move that some economists have interpreted as ringing alarm bells for the American economy. As Buffett is considered one of the greatest investors of all time, as well as one of America's richest men, his moves are closely observed and analyzed.For Steve H. Hanke, a professor of applied economics at Johns Hopkins University who served on President Ronald Reagan's Council of Economic Advisers, Buffett's and Berkshire Hathaway's "recent lightening up on stocks and accumulation of a pile of cash—$157 billion—is consistent with the fact that stocks are relatively pricey right now."But it's also, crucially, a sign "that a recession is right around the corner," Hanke told Newsweek."The money supply of the United States, broadly measured [M2], started contracting in July 2022, and has been falling like a stone," Hanke said. "Since last year, the U.S. money supply has contracted by 3.3 percent."According to Hanke, there have been only four periods in U.S. history—in 1920-21, 1929-33, 1937-38 and 1948-49—in which the money supply has had significant contractions.
"Each of those four episodes was followed by a serious recession," he said. "The current monetary contraction is clearly going to lead to precisely what monetary contractions always lead to: a recession."With the expectation of a recession, Hanke said, Buffett's recent moves "are classic Buffett."