THE THREAT OF INFLATION 61which means Inflation King. When the dust settled and
Germany returned to a new gold-backed currency, Stinnes was
one of the richest men in the world, while the German middle
classes were destroyed.
Interestingly, you see Warren Buffett using the same tech-
niques today. It appears that Buffett has studied Stinnes carefully
and is preparing for the same calamity that Stinnes saw —
hyperinflation.
Buffett recently purchased major transportation assets in
the form of the Burlington Northern Santa Fe Railroad. This
railroad consists of hard assets in the form of rights of way,
adjacent mining rights, rail and rolling stock. The railroad
makes money moving hard assets such as ore and grains.
Buffett next purchased huge oil and natural gas assets in
Canada in the form of Suncor (SU:NYSE). Buffett can now
move his Suncor oil on his Burlington Northern railroad in
exactly the same way that Stinnes moved his coal on his own
ships in 1923. Buffett is also a major holder in Exxon Mobil,
the largest energy company in the world.
For decades, Buffett owned one of the most powerful news-
papers in the U.S.: The Washington Post. He sold that stake
recently to Jeff Bezos of Amazon, but still retains communica-
tions assets. He’s also purchased large offshore assets in China
and elsewhere that produce nondollar profits that can be re-
tained offshore tax-free.
A huge part of Buffett’s portfolio is in financial stocks —
particularly in banks and insurance companies — that are
highly leveraged borrowers. Like Stinnes in the 1920s, Buffett
can profit when the liabilities of these financial giants are
wiped out by inflation, while they nimbly redeploy assets to
hedge their own exposures.
In short, Buffett is borrowing from the Stinnes playbook.
He’s using leverage to diversify into hard assets in energy, trans-
portation and foreign currencies. He’s using his communications