The rail road buy of Burlington Northern Santa Fe Railroad by Warren Buffet Berthsire Hathway is not what it seems like. Ted on this site very recently hit out at Warren Buffet and how he is not what he seems like. He was particularly harsh as he wrote “Blood sucking vampire…”. Now where did I hear that statement before? Oh yes! Analysts describing Goldman Sachs. Wait a minute though….Warren is already a preferred shareholder at Goldman Sachs. Isnt it? Am sure Ted did not exaggerate when he called Mr Buffet for what he was. You can read his article here: Mr Buffet: Let us take that mask off

Coming back to the rail road buy. It has been described as a great future of America. It has been described as the “All in wager” in the process Buffet goes and plants another great investing term creating a record of sorts.

What Buffet has actually done is that he has planted himself as middleman for the great commodity boom that lies ahead of us. It is not a great future for america but he has just signed its death warrant. Once again!!!!

The money supply in the US has increased 10 folds. Inflation has just romped into the positive territory. Make no mistake inflation will explode in this country. There is very little chance that US can raise rates even in the wake of inflation which means only one thing…all commodities in this country will go through the roof.
There’s no question Buffett knows how to invest in the face of inflation, during the Great Inflation of the 1970s his Berkshire Hathaway returned OVER 600%.

Buffett confirmed buying Burlington was an inflation-hedge, “I’d be more worried holding cash… The one thing about those unprecedented after effects is they’re going to be very bad for cash. I would much rather own working assets that have cash in a period that could become inflationary down the road.”

As the global financial system continues pulling away from the dollar as its reserve currency (for instance, global oil trade is shifting into non-dollar currencies) commodities will continue to boom.

Burlington’s profits have been on the RISE because of the commodity boom caused by the falling dollar – which is down 45% in value over the last 6 years.

…Buffet just positioned himself as Toll Collector
on the commodity super-highway…

Railroads are among the few business which can preserve its purchasing power right through an inflation. Railraods are responsible for transporting more than 50% of America coal used in electricity generation. Burlington is the biggest coal transporter in the U.S, coal produces a quarter of all electricity in the United States and accounts for a full 50% of Burlington’s cargo. It is also the preferred mode of transport for spices, food, cord, wheat, poultry ….

Am sure you get the picture: Warren Buffet has just placed himself as the toll collector for the rising commodity boom and he will not only make profits out of it but also be protecting his capital in period where dollar will lose almost all its purchasing power. As a billionaire, this is great deal. The rich in the camp will be raising their hats off to the master showman.

But if you are an average american, be very careful….this bet should scare you. He already owns 11 coal generating power plants and now he will be acting as the middleman who can decide what you pay for your food and electricity. He has come between you and the government you elected.
And knowing Warren Buffet, Americans can be very very afraid of whats coming next. Remember Warren buffet was the man who was invested into Moody which rubber stamped all those well protected mortgage securities. He is also the man who invested into all falling banks which later received American Tax payers money. And now he invests into a railroad business. So where do you think the next stimulus will be going? Let me make prophetic statement here: It will be going to RAILROADS. Who will it be benefiting? None other than Warren Buffet. He will squeeze every penny out the Burlington and make sure the American pay for their daily bread to the fullest extent. He will squeeze the last drop.

So it is defintely a bet on american economy but is it bet for a better one? I doubt it.