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Tickers in this Article: NYSE:BRK.A, NYSE:BRK.B, XOM, BNI, TCK
Investors are usually treated to the words of wisdom from Warren Buffett twice a year - in February when he dispenses the Berkshire Hathaway (NYSE: BRK.A, BRK.B) annual letter to shareholders and in May when he hosts the Berkshire annual meeting. Occasionally, Mr. Buffett will share his thoughts outside of these two events. Such an occasion occurred on August 19 when Mr. Buffett penned an op-ed piece in the New York Times.

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Medicine Has Its Side Effects
Mr. Buffett's main point - and one that he alluded to in this year's annual letter - is that while the Federal Reserve is acting decisively to steer our economy from a depression, the solution required "enormous dosages of monetary medicine" and "before long, we will need to deal with their side effects."

In other words, the Fed did what it had to do: print more money to keep the wheels of our economic system from coming unglued. Unfortunately, we now have to deal with the consequences. And as our economy continues to take more and more of this medicine, the threat of those side effects turning into a serious problem becomes greater and greater.

The Hidden Tax
The ultimate consequence of running a non-stop printing press is wild and uncontrollable inflation, which would cripple the value of the dollar and likely do serious damage to the dollar's reputation as the reserve currency of choice. (For further reading, check out Coping With Inflation Risk.)

If this occurs, money that folks have saved in bank accounts that they feel is safe from capital loss will face an unpleasant reality. Inflation, when running unchecked, is the worst tax that can be levied on citizens because it's hidden from plain view.

As investors, commodity businesses will pass on the effects of inflations with increased prices. Resource rich companies like Canada's Teck Resources (NYSE:TCK) will possess a degree of pricing power. Exxon Mobil (NYSE:XOM) gives investors a strong play on oil with deep international exposure. So goes the price of oil, so goes the stock price of Exxon Mobil. Its current 2.5% dividend is decent and at 10 times depressed earnings, shares are cheap relative to the market.

Transporters of commodities, namely the railroads that can do it cheaper, should be fine. I'd follow Buffett on this one and look at Burlington Northern (NYSE: BNI), one of Berkshire's largest positions and one stock Buffett avoided trimming from this past quarter.

The Bottom Line
It's not a matter of 'if', but 'when' the consequences of our monetary expansion will come back to bite us. If left unchecked, the purchasing power of the dollar will crumble. If this happens, folks feeling comfortable holding cash will be in for a rude awakening. (For related reading, check out All About Inflation.)

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