WSJ this morning has a front page article by WSJ reporter Monica Langley describing the development of their relationship. The Volcker connection should calm markets a bit if there is an Obama Administration, since he seems to be taking advice from Volcker and Warren Buffett. Volcker is even more respected on the Street than Buffett.
Volcker, however, as I pointed out recently, despite his image as an inflation slayer, is an inflationist and interventionist. Buffett is pretty much out of the same mold. He has supported the recent moves by Treasury Secretary Paulson and Fed Chairman Bernanke. Curiously, while supporting Treasury and Fed moves, Buffett in his recent WSJ piece even pointed out the inflationary ramifications of the policy:
Today people who hold cash equivalents feel comfortable. They shouldn’t. They
have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
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