By Tom Bradley

A big thank you to my friend Richard Rooney at Burgundy Asset Management who pointed me to this quote from Charlie Munger (pictured), vice-chairman of Berkshire Hathaway and Warren Buffett’s life-long investment partner.

In the quote from March 25th of this year (we found it in Forbes magazine), Charlie captures the essence of the economic experiment that we’re all taking part in. He talks about near-zero interest rates and finishes with a jolting comment: “Anybody who is intelligent and who is not confused doesn’t understand the situation very well.”

“This has basically never happened before in my whole life. I can remember 1½ percent rates. It certainly surprised all the economists. It surprised the people who created the life insurance industry in Japan, who basically all went broke because they guaranteed to pay a 3% interest rate. I think everybody’s been surprised by it, including all the people who are in the economics profession who kind of pretend they knew it all along. But I think practically everybody was flabbergasted. I was flabbergasted when they went low; when they went negative in Europe – I’m really flabbergasted. How many in this room would have predicted negative interest rates in Europe? Raise your hands. [No hands go up]. That’s exactly the way I feel. How can I be an expert in something I never even thought about that seems so unlikely? It’s new territory...

“I think something so strange and so important is likely to have consequences. I think it’s highly likely that the people who confidently think they know the consequences – none of whom predicted this – now they know what’s going to happen next? Again, the witch doctors. You ask me what’s going to happen? Hell, I don’t know what’s going to happen. I regard it all as very weird. If interest rates go to zero and all the governments in the world print money like crazy and prices go down – of course I’m confused. Anybody who is intelligent who is not confused doesn’t understand the situation very well. If you find it puzzling, your brain is working correctly.”