Warren said it best at the Financial Crisis Inquiry Commission in 2010.
Mr. Buffett: I mean, we don’t have a whole list of approved short‑term investments around here, you know. We’ve got Treasury bills, basically. And the Treasury is going to print money, if necessary. And that is AAA, I’m willing to go on record on that.
Mr. Seefer: You’re giving that rating yourself.
Mr. Buffett: But nobody else is AAA, in my mind, you know. And if we’re really going to protect ourselves ‑‑ if we’re not going to ‑‑ we need to have real money. Now, I let the smaller operations, just for matters of convenience, do other things. But in terms of the vast chunk of what we have around here, it’s treasuries, and it will stay that way. Because I don’t know what could happen tomorrow. I don’t know if there’s ‑‑ you know, pick any kind of a hugely disruptive ‑‑ that’s what you have to worry about, is the discontinuities. And there will be one someday. They closed the stock change in 1914, you know, for many months. They closed it for a few days after 9/11. But who knows what happens tomorrow?
I think what he's getting at is a 100% guaranteed use of the money. If credit markets freeze up he'll still be able to get at Treasuries. It's context. He knows they are negative yielding in a real sense but what's the alternative?
Warren said it best at the Financial Crisis Inquiry Commission in 2010.
Mr. Buffett: I mean, we don’t have a whole list of approved short‑term investments around here, you know. We’ve got Treasury bills, basically. And the Treasury is going to print money, if necessary. And that is AAA, I’m willing to go on record on that.
Mr. Seefer: You’re giving that rating yourself.
Mr. Buffett: But nobody else is AAA, in my mind, you know. And if we’re really going to protect ourselves ‑‑ if we’re not going to ‑‑ we need to have real money. Now, I let the smaller operations, just for matters of convenience, do other things. But in terms of the vast chunk of what we have around here, it’s treasuries, and it will stay that way. Because I don’t know what could happen tomorrow. I don’t know if there’s ‑‑ you know, pick any kind of a hugely disruptive ‑‑ that’s what you have to worry about, is the discontinuities. And there will be one someday. They closed the stock change in 1914, you know, for many months. They closed it for a few days after 9/11. But who knows what happens tomorrow?
It's interesting he considers assets with a negative real return - Treasuries - as "real money"
I think what he's getting at is a 100% guaranteed use of the money. If credit markets freeze up he'll still be able to get at Treasuries. It's context. He knows they are negative yielding in a real sense but what's the alternative?