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Expand chart
Data: Factset: Chart: Lazaro Gamio/Axios

Warren Buffett's annual letter to shareholders is out, which is always most interesting when the Oracle of Omaha admits to past mistakes.

Why it matters: Buffett has a lesson, in his letter, for "those who regularly preach doom because of government budget deficits". He admits that he was one of those individuals himself, but he's not any more.

  • Buffett divides America's history into three 77-year periods. The last period happens to coincide with his investing career, which started in 1942 with $114.75 of savings. Buffett was fortunate to begin investing at such an auspicious time, which shortly predated a stunning wartime run-up in America's debt-to-GDP ratio. (In 1942 it was 48%; by 1946 it was 119%.)
  • America did well in its first century and a half. Then, over the course of Buffett's third 77-year period, we contrived to increase our national debt by about 40,000%. "Suppose you had foreseen this increase and panicked at the prospect of runaway deficits and a worthless currency," writes Buffett. "To protect yourself, you might have eschewed stocks and opted instead to buy 3 1⁄4 ounces of gold with your $114.75."
  • Buffett, of course, became the world's richest man by investing that $114.75 extremely well. But even if you simply invested it in the broad stock market, it would have turned into $606,811. Had you invested it in gold, by contrast, your small lump of metal would now be worth just $4,200.

The bottom line: There is no evidence from 240 years of American history that the level of the national debt has ever really mattered. The U.S. prints its own currency, and can borrow as much as it likes, increasingly from domestic investors. Per Buffett, deficit hawks have preached doom for decades. They have never been proven correct.

Go deeper: National debt surpasses $22 trillion

Go deeper

Updated 37 mins ago - Politics & Policy

Inauguration Day dashboard

Screenshot: Fox News

President Trump has delivered a farewell speech and departed Washington for the last time on Air Force One, kicking off the day that will culminate with President-elect Joe Biden taking office.

What's next: The inaugural celebration for young Americans is being livestreamed, starting at 10am.

Updated 53 mins ago - Politics & Policy

Trump departs on final Air Force One flight

President Trump and his family took off on Air Force One at 9 a.m. on Wednesday morning for the final time en route to Florida.

The big picture: Trump's final hours as president were punctuated by his decisions to snub his successor's inauguration and grant pardons to many of his allies who have been swept up in corruption scandals.

Dion Rabouin, author of Markets
2 hours ago - Economy & Business

Janet Yellen said all the right things to reassure the markets

Illustration: Aïda Amer/Axios

Treasury Secretary nominee and former Fed chair Janet Yellen's confirmation hearing before the Senate Finance Committee on Tuesday showed markets just what they can expect from the administration of President-elect Joe Biden: more of what they got under President Trump — at least for now.

What it means: Investors and big companies reaped the benefits of ultralow U.S. interest rates and low taxes for most of Trump's term as well as significant increases in government spending, even before the coronavirus pandemic.