Deflation? Buffett Isn't Betting on It

As more economists begin to jump on the deflation bandwagon, one of the world's most prominent investors is betting on inflation. Berkshire Hathaway's Warren Buffet thinks prices will rise -- not fall -- at least in the long-term. Alex Dumortier from The Motley Fool reports:

In the second quarter, Buffett continued to rebalance Berkshire's $34.5 billion fixed-income portfolio toward shorter maturity bonds, which bonds are less sensitive to increasing interest rates. When interest rates go up, which, barring a Japanese "lost decade" scenario, will eventually happen, bond values go down -- but the shorter maturity bonds go down less.

In this case, Buffett isn't ignoring the possibility of short-term deflation, but he must not be counting on a long-term deflation problem like what occurred in Japan.

Read the full story at The Motley Fool.