Buffet railroad purchase a bet against dollar, says IMF economist

Simon Johnson, former chief economist for International Monetary Fund and current Ronald A. Kurtz Professor of Entrepreneurship at the Sloan School of Management at MIT, said Buffet's recent purchase of Burlington North Santa Fe is mostly betting on emerging markets, not the recovery of U.S. markets, as many have suggested.

Thus, as Johnson states, "it is a polite way of betting against the dollar or, even more politely, on an appreciation of the renminbi."

Johnson said:

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.

Read the entire blog posting at Baseline Scenario.