Buffett on FBN: Markets Will Move Higher Over Time

Warren Buffett has mixed feelings about fiscal and monetary policy coming out of Washington, D.C.

In a wide-ranging interview with FOX Business’ Liz Claman, the billionaire chief executive of Berkshire Hathaway expressed dismay at Congress’ failure to stop the sequester, the mandated budget cuts that took effect in March.

Buffett said the cuts were designed by Congress two years ago as “something so dumb it could never happen. Then of course it happened,” said Buffett.

“This was done with a meat axe,” he added. “It was done in an intentionally stupid way and then they let it happen.”

Buffett, affectionately called the Oracle of Omaha because of his deep roots in that Midwestern city, was interviewed by Claman at Berkshire Hathaway’s annual shareholder meeting in Omaha.

Meanwhile, Buffett had nothing but praise for monetary policy initiated by the Federal Reserve since the start of the financial crisis in 2008-2009. Historically low interest rates, set at a range of 0%-0.25% in December 2008, have benefited the U.S. economy, as well as Berkshire Hathaway, according to Buffett.

The low interest rates have hurt savers, Buffett conceded, but the rates have to go back up at some point.

“There’s no question that our business and the U.S. is better off due to the policies of (Fed Chairman) Ben Bernanke. But (low interest rates) won’t last forever and its going to be a very interesting when the first sign comes” that interest rates will be moving higher again.

Stock markets have flourished over the past few years as the Fed has kept interest rates low and pumped money into the economy through massive bond buying purchases. Many analysts believe the markets will take a big hit when the Fed finally reins in its easy money policies.

Buffett said those policies could one day lead to inflation, and that he’s predicted as much for a long time, but that he’s been wrong. Rather than pushing inflation higher, the Fed’s policies have recently led to lower inflation, also a concern.

Buffett advised President Obama to keep Bernanke at the helm of the Fed for another four-year term. Bernanke’s term, his second, ends on January 31, 2014.

“If I were the president I’d have him (Bernanke) keep the baton,” he said.

Buffett said he expects markets will continue to move higher over time because, historically, they always have.

During the interview, Buffett was joined by former Microsoft (NASDAQ: MSFT) CEO Bill Gates, Berkshire Hathaway’s Vice-Chairman Charlie Munger, and Berkshire’s newest board member, money manager Meryl Witmer.

Buffett said Berkshire’s board is “100% in agreement” on the company’s succession, but he declined to elaborate.

Asked why Gates sits on the board of Berkshire Hathaway but Buffett does not sit on the board of Microsoft, Buffett responded, laughing, “The answer is I’m not qualified.”

The 89-year-old Munger said he would not be joining Buffett, his long-time business partner, on Twitter, the social media messaging board. The 82-year-old Buffett began tweeting last week.