While browsing the web, I was doing my usual round of picking up investment related stories. I stumbled upon the Berkshire Hathaway site. Anyone who isn't immediately thrown off by the almost lifeless simplicity of this site, would know that this site is a treasure chest of incredible amount of wisdom.
There is an article posted on the web site that I seem to have missed previously. I would like to highlight the following: a Fortune article from Buffett regarding the U.S. Trade Deficit. This article is a must read for anyone interested in macroeconomics, business and investing. In fact, if you have any relation to U.S., then you may find this article interesting.
Buffett describes a story of two islands called Squanderville and Thriftville. As you may have guessed from the names, the people in Squanderville prefer to squander their earnings (food, in this simple scenario) and live beyond their means. People of Thriftville, on the other hand, live well within their means, and do not mind having a surplus of food production. They eventually start trading; and in a matter of years, people of Squanderville realize that they could just offer Squanderbonds to the nation of Thriftville in exchange for food -- and Squandervillites never have to toil in the fields again. The story goes an and morphs into something very intersting.
Buffett, in his usual charming way, completes this story and talks about a way to fix the alarming U.S. trade deficit problem. He describes something called Import Certificates (ICs) that are issued to U.S. exporters.
Complete article: http://www.berkshirehathaway.com/letters/growing.pdf
