Warren Buffett's networth in other commodities

Ok, so some people are convinced that gold is in a bubble and therefore it is not a good measure of inflation/depreciation of currencies/networth, etc. 

Fair enough. I've compiled (it sure takes quite some time to do this) WB's networth in other commodities. The chart shows his purchasing power over the past 12 years. The number of tons of rice, barrels of oil, pounds of beef, pounds of sugar, and troy ounce of silver (I included silver just for kicks) he can buy. Again, we see that his networth has been greatly diminished in the past 12 years since the start of the commodities bull-run in 2000.

Note: This is not an attempt to bash WB. Just want to show the fact that inflation is rampant, and is going to get worse. Even a legend like him finds it hard to keep up with inflation. So, stocks generally is not a place to hide from inflation to the average investors.

P.S. maybe to make things simpler, I should just compare his networth against a commodities index.

Check out my other post on Warren Buffett's wealth in terms of gold:

http://silvernjin.blogspot.sg/2012/10/warren-buffet-wrong-on-gold-wiped-by_16.html

Warren Buffett - Wrong on Gold, Wiped by Inflation

Are the rich really getting richer, or are they being wiped out by inflation too?

I estimate the wealth of one of the most well-know figures in the investment world: 

Warren Buffett. You will see that although his wealth in terms of dollars have increased/remained constant in the past 12 yrs, the wealth in terms of gold has really been decimated. Wonder why he hates gold and still publicly bashes gold.

Year | Worth in Dollars | Worth in Gold
2000, $26b, 92m oz
2001, $32b, 119m oz
2002, $35b, 113m oz
2003, $31b, 84m oz
2004, $43b, 105m oz
2005, $44b, 99m oz
2006, $42b, 67m oz
2007, $52b, 74m oz
2008, $62b, 73m oz
2009, $37b, 38m oz
2010, $47b, 35m oz
2011, $50b, 32m oz
2012, $44b, 26m oz

If one can beat his stock-picking skills in the past 12 years, and accumulate wealth 400% faster than him (to equal gold's rise), by all means go ahead. But for most of us who can't, gold is protection. It will be even more interesting to see his wealth priced in silver.

Check out my other post on Warren Buffett's wealth in terms of other commodities:
http://silvernjin.blogspot.sg/2012/10/blog-post.html

Bailouts

What most analysts miss about bailouts. 
Bailouts:

1. Necessitate inflation and steal wealth, due to money-printing. Everyone loses purchasing power.
2. Divert resources from the more productive parts of the economy into the unproductive parts.

3. Destroy jobs that would have been created in the more productive parts of the economy, had resources not been diverted to prop up unproductive jobs.
4. Prevent prudent businesses from gaining market shares. Instead, they are taxed so that the bailed-out companies maintain their positions in the market.
5. Deny prudent businesses the chance to snap up failed companies' assets, so that the economy can restart on a sounder footing.
6. Stifle competitive growth in the bailed-out sector.
7. Force taxpayers to buy up failed companies' assets at greatly inflated prices.
8. Allow government to grow bigger, imposing more rules and regulations.

Bailouts = bad economics + bad morality

Excellent 30-mins lecture! Answering the Same Old Arguments Against Sound Money | Thomas E. Woods, Jr.

Ballooning Debt Obligations

I've compiled the debt obligations for the US in the past 14 years using 'official' numbers (off-balance-sheet figures are far worse). The spreadsheet shows, at the end of each year, the debt outstanding for the following year. Debt obligations due in 2013 is not fully compiled yet. Only debt accumulated up till Aug 2012 is shown.

Notable World "reserve" currencies:

Currencies that circulate outside its issuer's borders:

5th century BC: Athenian drachma (silver)
1st century BC - 4th century AD: Roman aureus and denarius (gold and silver)
4th - 12th century: Byzantium solidus (gold)

13th - 15th Century: Florence fiorino (gold)
17th - 18th Century: Netherlands gulden (gold)
18th - 19th Century: Spanish peso de a ocho (silver)
19th - 20th Century: British pounds (gold to fiat)
20th - 21st (highly likely) Century: US dollar (gold to fiat)
21st - ?? Century: Chinese RMB?? (fiat to gold/silver ???) --(or some form of a world currency, eg. IMF's SDR)

Modern PhD vs ancient Kings

Think modern central bankers and economists and PhDs are better managers of our money than their counterparts who lived 2000 yrs ago? Think again. I have compiled a few examples. It's difficult to get data from ancient times but what I got so far is striking. 

(rough estimates of currency value vs real goods):
US Fed -> 1913-2011 (abt 100 yrs). The USD has lost over 95% of its value 
Singapore MAS -> 1970-2011 (abt 40 yrs). The SGD has lost over 90% of its value 

UK BOE - 1900-2011 (abt 100 yrs). The GBP has lost over 98% of its value
Swiss SNB - 1945-2011 (abt 60 yrs). The Swiss franc has lost over 65% of its value

Info on ancient price systems are hard to find, but here're 2 of them:

Roman Republic - 3rd century BC-1st century BC (over 200 yrs). The Silver Denarius maintained 100% of its value.
Byzantine Empire - AD 498 - AD 1030 (over 500 years!). The Gold Solidus maintained 100% of its value.

Of course, eventually, these currencies also failed, for the same reasons as all currencies after that: Debasement.

In our modern world, it's called Money-printing (or more euphemistically - "Quantitative Easing", "Operation Twist", "Lowering the interest rate", "Currency devaluation to help exports", etc). Why debase money? Politicians over-promised and overspent (along with other reasons due to the intricacies of the modern monetary system).