1994: Is Buffett influencing the Fed?
AUDIENCE MEMBER: I am Peg Gallagher from Omaha.
Mr. Buffett, are you interested in influencing Mr. Greenspan at the Fed to stop raising interest rates?
WARREN BUFFETT: Well, I wouldn’t have any influence with him. He was on the board of Cap Cities some years ago and I know him a bit. But I don’t think anyone would have any influence with Mr. Greenspan on that point.
But, I generally think that his actions have been quite sound during his period as Fed chief.
I mean, it’s part of the job of the Fed, as Mr. Martin said many years ago, was to take away the punchbowl at the party, occasionally. And that’s a very difficult, difficult policy to quantify working with markets day-by-day.
And, of course, it’s always been the job of the Fed, basically, to lean against the wind. Which, of course, means if the wind changes, you fall flat on your face. But that’s another question.
But the — I don’t — I think what he has done is probably been somewhat appropriate. I think he’s probably been surprised, a little bit, as to what has happened with long-term rates as he’s nudged up short-term rates.
I think he was hoping that — this is just a guess on my part — that action, sort of early in the cycle on the short-term rate front, would — might make people feel more confident about the longer-term rates and therefore that the yield curve would flatten some. I don’t know that. And, he may have been a little surprised on that.
But it’s not an easy job he has. So, I would not second guess him myself.
Charlie, how do you feel about him?
CHARLIE MUNGER: Fine. (Laughter)
WARREN BUFFETT: Greenspan is safe. (Laughter)