Post #4480 by mungofitch on the Berkshire Hathaway board

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤

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Also, with short term rate at 5% comparing to 0.1% only two years ago, the $150b cash has added almost $7b annual income, more than compensating the drag in BNSF and utility business.

Unfortunately that $7bn in income is a bit of a mirage. Real interest rates haven't risen.
If inflation rises from 2% to 6% and the interest rates you're earning rise from 1% to 5%, you're no better off pre-tax, and actually worse off after tax.
Phrased another way, the cash pile suddenly started losing serious value to inflation and the extra interest we earned was merely an incomplete compensation for that.

We might be in a few-month stretch that real rates are actually higher than they were or will be, but in general it hasn't been the case and is likely to remain not the case.

Jim

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