“It's a problem when politicians are screaming about it. That makes it a problem,” Munger said to Yahoo Finance Editor-in-Chief Andy Serwer. “If it weren't for that, this one would go away by itself.”
In his first interview since Berkshire Hathaway’s Annual Shareholders Meeting, Munger acknowledged that the problem of inequality today is a byproduct of an economic recovery that was sparked by aggressive monetary policy, which included the Federal Reserve buying trillions of dollars worth of bonds. This is what ended the Financial Crisis.
“It was risky, but it worked,” Munger said. “We never printed money so much and spent it so fast and bought back so much debt, public and private. So this is total terra incognita in economics, and nobody knew for sure how it was going to work.”
Calling this policy “the only weapon” they had to save the economy, Munger argues that the heightened level of urgency justified the risk and all of the outcomes.
“We were in desperate trouble,” he said. “We were on the eve of a great recession that could have been a Great Depression, and then followed by the rise of people like Adolf Hitler, and so on, and so on. So we faced a real catastrophe.”
Unfortunately, the loose monetary policy forced interest rates lower, pushing up the prices of stocks, which are held more by the rich than the poor.
“Nobody was trying to make the rich richer,” he said. “It just was an accidental byproduct of a correct governmental decision made on a bipartisan basis.”
“Since it was a weird byproduct that occurred in a weird time, it will go away by itself in due course.”
Munger made the remarks to Editor-in-Chief Andy Serwer in a conversation that will air on May 9, 2019 on Yahoo Finance in an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.
Sam Ro is managing editor at Yahoo Finance. Follow him on Twitter: @SamRo