Prem Watsa's 2015 letter to shareholders [H/T ValueWalk] (LINK)
Chuck Feeney, Bill Gates' and Warren Buffett’s hero, honored by Ireland Fund [H/T Linc] (LINK)
Related book: Berkshire Beyond Buffett: The Enduring Value of ValuesJack Bogle on the Masters in Business podcast (LINK)
The Incredible Rise and Final Hours of Fracking King Aubrey McClendon (LINK)
Sergio Marchionne Has Seen the Auto Industry’s Future: He’s Not Interested [H/T @GSpier] (LINK)
The Economist: Greece’s biggest banks may appear to be out of danger, but they are not (LINK)
The Second Smartphone Revolution (LINK)
Marissa Mayer on Charlie Rose (video) (LINK)
The Epic Story of Dropbox’s Exodus From the Amazon Cloud Empire (LINK)
Hussman Weekly Market Comment: Bearishness Is Strictly For Informed Optimists (LINK)
Beyond those general rules of thumb, what drives inflation? While many economists seem satisfied with having memorized a line from Milton Friedman about inflation being “always and everywhere a monetary phenomenon,” economic models of inflation turn out to be nearly useless for any practical purpose. It’s not difficult to explain inflation, using inflation itself as the main explanatory variable, and information on the output gap is also useful even if unemployment is not. But it’s very difficult to explain most episodes of inflation using monetary variables.
Yes, hyperinflation is always associated with monetary expansion, but monetary expansion isn’t actually enough. Examine major hyperinflations, and you’ll always find a government that has racked up huge external obligations to other countries, and has lost fiscal control by running massive deficits - effectively printing money to fund them. Hyperinflation involves a loss of both fiscal and monetary control, often coupled with a supply shock of some sort, and revulsion toward holding money itself because the willingness of the next person to accept it comes into question.
The long-term value of paper money relies on the confidence that someone else in the future will accept it in exchange for value, and ultimately, that’s a matter of varying confidence in the ability of the government to meet its long-term obligations. Early U.S. money such as confederate currency went to zero because that confidence was absent. Greenbacks held their value because of the expectation (validated in 1879) that convertibility with gold would ultimately be honored. Gold convertibility isn’t necessary, nor are balanced budgets required in the short-run, but confidence in long-run fiscal discipline is essential.
Where the Soldiers Are Scarier Than the Crocodiles (LINK)