2011: Does Buffett worry about the debt ceiling?

BECKY QUICK: This question comes from Eric Wiseman (PH) who asks, “Are you worried about Congress playing politics with the raising of the debt ceiling? What would this do to Berkshire Hathaway stock and to the overall economy?”

WARREN BUFFETT: You mean if they didn’t raise it?

BECKY QUICK: If they didn’t raise it, right.

WARREN BUFFETT: Yeah, well. It would probably be the most asinine, you know, act that Congress has ever performed.

One time in Indiana back in the 1890s, I think they passed a bill — I know it was introduced — you can look it up on a search engine. They passed a bill to change the value of pi, the mathematical term pi, to an even 3 — (laughter) — because they said it would be easier for the school children to work with.

Well, that’s the only bill I can think of that would give competition to a refusal to raise the debt ceiling.

I mean, it’s extraordinary. I mean, it really is extraordinary that with our deficit running, you know, well over $100 billion a month, and all kinds of items that can’t be changed — I mean, there’s — having a debt ceiling to start with is a mistake.

I mean, it doesn’t — the United States of 2011 has a different debt capacity than the United States of 1911, and we’re always — it’s going to be a growing country, and we’re going to have a growing debt capacity.

That doesn’t mean I think it’s a great idea at all to have debt growing, as a percentage of GDP.

But this — the debt ceiling’s on — so that these games get played and all the time that gets wasted and everything, and, you know, the amount of — number of — silly statements that you hear. It just seems such a waste of time for a country that’s got a lot of things to do.

But in the end, they won’t, in my view — there’s no chance that they don’t increase the debt ceiling and I would love to see them — well, I’d love to see them eliminate the idea, because it results in these periodic kind of stalemate operations where everybody uses it for posturing purposes and everything of the sort.

The United States is not going to have a debt crisis of any kind as long as we keep issuing our notes in our own currency. You know, the difference between being able to borrow in your own currency and having to borrow in another currency is night and day.

The only thing we have to worry about is the printing press and inflation. And if you’re a member of the euro, European Monetary Union, you have to worry about — you can’t print money. You can go and get your co-members to try and help you out.

But giving up the right to issue debt in your own currency is a huge step. And the United States has not done it. I don’t know whether we’ve ever issued U.S. bonds in any other currency but we certainly haven’t made a habit of it.

And the Japanese, incidentally, which have a very ratio of debt-to-GDP, also have consistently borrowed in their own currency.

And believe me, when it’s time to pay somebody back, and you have a choice of paying — and you’re forced to pay somebody else’s currency versus paying in your own — it’s entirely a different proposition.

As a matter of fact, Charlie and I, we were trying to buy that bank back in —

CHARLIE MUNGER: Chicago.

WARREN BUFFETT: Yeah, in Chicago in the late 1960s, and this was a time of really tight money.

And tight money was different then than tight money is today. I mean, tight money meant no money.

And somebody — we wanted to buy this bank, and they wanted — the only place we could find some money, I think, was in Kuwait in dinars, wasn’t it?

CHARLIE MUNGER: Kuwaiti dinars. (Laughter)

WARREN BUFFETT: And I thought to myself, and Charlie concurred, who the hell knew what they were going to say the value of the dinar was when we went to pay it back. It was not something over which we had a lot of control. So we decided not to borrow the money in dinars even though I kind of wish we’d bought the bank.

Charlie, do you have anything to say on that?

CHARLIE MUNGER: No. (Laughter)

I do think — I do think — you know, I remember an era when we had a bipartisan foreign policy and all that, and I liked that era. And that was the Marshall Plan, and a lot of wonderful constructive things were done, and they were generous things.

Now, it seems to me that both parties are trying to compete to see who can be the most stupid — (laughter) — and they keep topping one another. (Laughter and applause)

WARREN BUFFETT: You can tell Charlie is a fellow who has always filed an accurate income tax form. (Laughter)

He’s not worried.