Warren Buffett Says Capitalism’s “Natural Juices” Bringing Back The US Economy

Billionaire CEO and chairman of Berkshire Hathaway, Warren Buffett, tells the world investors that they need to bet on the “natural juices” of capitalism in the United States even though the country’s lawmakers are currently struggling to narrow the budget deficit.

During 2012, Buffett’s entire compensation declined by 14% during the year to $423,923. Berkshire Hathaway spent less money on his security during this time, but his overall salary remained the same at $100,000.

During an interview that Warren Buffett conducted with Business Wire’s CEO – a subsidiary of Berkshire Hathaway that also distributes press releases – he mentions that people have a tendency to “focus too much on what the government’s done, and to give them either credit or blame. The real credit belongs to our system.”

Throughout many of his 82 years, Warren Buffett uses his annual letter to shareholders, as well as his public appearances to make note of the prospects for the largest economy in the world, the US, which is also the place where the majority of Berkshire Hathaway’s businesses are based. He even called for a major tax increase to the wealthiest individuals in the US as a way to reduce the budget deficits and hold back cuts, but Republicans believe that this will actually hurt economic growth.

In a recent video interview posted online between Cathy Baron Tamraz and Warren Buffett, he mentions that the US economy “is coming back because of the natural juices of capitalism and not because of the government. We have a wonderful system that eventually is self cleansing and always moves forward.”

During the last three months of 2012, US gross domestic product actually slowed to a 0.1% annual pace. At the time, defense spending plunged the largest since the era of the Vietnam War. Congress put forth a mandate to cut $1.2 trillion in spending across the board. This is going to start in 2013 and it’s spread out over a nine-year period, in an effort created in 2011 to increase the US debt limit.

The reductions are almost going to be evenly split between non-defense spending and defense spending, and they are intended to be so difficult that lawmakers couldn’t possibly let them occur. President Barack Obama and the Democrats have wholeheartedly disagreed with the Republicans as to whether or not a new plan should include new tax revenue.

The Gas Pedal

Warren Buffett is the second richest person in the United States of America, and during his March 1 letter, he mentions that Berkshire Hathaway plans to keep its “foot on the floor” in regards to spending capital as he fully takes advantage of other opportunities presented in the United States of America. Berkshire Hathaway, based out of Omaha, Nebraska, has spent $9.8 billion in 2012 on equipment and plants in order to bolster its energy businesses and railroads. Buffett also wrote that they will most likely even exceed that amount during 2013.

“Opportunities abound in America,” said Buffett.

Warren Buffett built Berkshire Hathaway over 50 years ago through incredible stock picks and business takeovers worth over $250 billion. Some of its operating units produce car insurance, cover natural disasters, sell newspapers, make paint, sell chocolate, diamonds and furniture.

Berkshire Hathaway’s stock is up roughly 14% this year, and during the past quarter it has earned more than 40 fold. The current value of the stock at the time of this writing is $153,312 per share.

“Right Soil”

In the same Warren Buffett interview with Tamraz, he mentions that history shows us the true potential of the United States economy, and he cites issues like the two World Wars, the Civil War and the Great Depression.

“We went from a wooded land to an incredible, absolute abundance of riches” because the United States has had a system that can “unleash human potential,” said Buffett. “Never bet against what humans can accomplish if they’re operating in the right soil. And we have the right soil.”

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