I think Warren Buffet is up to something.  I think it may be a scene out of "Atlas Shrugged" if you look at it a certain way.  For those of you who have not read the second best-selling book of all time - after the Bible - it is the story of socialist policies becoming so heinous that the capitalists essentially go on strike while inflation and corruption run rampant.  In the end, the government begs the protagonist, John Galt, to come back and act as virtual dictator and savior - which he declines.  He demands a free economy or no economy and would not cooperate with the government.

So do I see Warren Buffet as John Galt?  No, not at all, though I am sure that there is at least one John Galt out there.  I see Buffet as an opportunist who clearly sees what is happening and is shamelessly and cleverly positioning himself to emerge richer than ever.  It came to me when it was announced today that Berkshire Hathaway, Buffet's company, is issuing $8 billion dollars in debt to buy Burlington Northern.  This is so much debt that Standard and Poors downgraded Berkshire from AAA to AA+ as a result of the debt ratio to asset.  I think Warren Buffet is laughing!

Here is the thought process I see going on: The government is going to cause a huge inflation at some point just down the road, resulting from all the “funny money” that is being simultaneously printed and injected into the economy. Here is what Buffet figures: Take the money now, regardless of the effect of the downgrade in his credit rating, to buy a company that will retain value even in a recession or depression; like, I don’t know, a railroad perhaps.  After all, stuff still has to move from one place to another - and that means rail.

Then when inflation kicks in and devalues the currency he will use cheap inflated dollars to pay off the debt and essentially buy the railroad at a steep discount.  Simply put: remember when a million dollars sounded like a lot and now billion is starting to sound like a million and we are glibly throwing about talk of trillions?  That is inflation my friends and Buffet, cagy as ever, is counting on it to make his debt trivial.  He is going to be right.  What a great gamble!

So what does this mean to you?  Operate like Buffet.  Use your debt and delay paying it off until after inflation (I mean the low interest kind like mortgages and cars as opposed to sky high credit card interest) kicks in.  Then, retire it with cheap dollars.  And if you can, borrow even more at low interest rates and invest it in things that hold up and do the same thing.  This is a once in a lifetime opportunity....if you can see it!