Simon Johnson argues that Buffett’s big investment in railroads is a polite way to bet against the dollar:
When China finally gives way to market pressure and appreciates 20–30 percent, their commodity purchases will go through the roof. You can add more land, improve yields, or change the crop mix of choice (as relative prices move), but it all has to run through Mr. Buffett’s railroad.Of course, Buffett is nicely hedged against dollar inflation — this would likely feed into higher inflation around the world, and commodities will also become more appealing.
And Mr. Buffett is really betting against the more technology intensive, labor intensive, and industrial based part of our economy. If that were to do well, the dollar would strengthen and resources would be pulled out of the commodity sector — the more “modern” part of our production is not now commodity-intensive.
[...]
By betting on commodities, Mr. Buffett is essentially taking an “oligarch-proof” stance. Powerful groups may rise to greater power around the world, fighting for control of raw materials and driving up their prices further. As long as there is growth somewhere in emerging markets, on some basis, Mr. Buffett will do fine.
(Hat tip to Tyler Cowen.)