Economics professor Steve Hanke: "Buffett has prepared a record amount for acquisitions, when the US economy will enter the crisis"

Warren Buffett has prepared a record amount of money to make purchases at bargain prices when the United States economy will enter the crisis, believes the famous economist Steve Hanke, who is also a professor of applied economics at Johns Hopkins University, writes Business Insider.

Berkshire Hathaway, Buffett's investment company, had a record $157 billion in cash, Treasury bills and other liquid assets at the end of September - nearly $50 billion more than twelve months ago. The increase comes in part because Buffett and his team made $5 billion in net stock sales in the last half year, and in the past four quarters net stock sales totaled $44 billion, according to the source.

"It's classic for Buffett. He likes to fish in murky waters," Hanke said in an interview with Markets Insider. "As the Federal Reserve has caused the money supply to experience a decline not seen since 1933, Buffett correctly anticipates that turbulent times for the economy are ahead."

Hanke was an adviser to US President Ronald Reagan and president of Toronto Trust Argentina in 1995, when the fund had the best performance in the world, according to Business Insider.

"The Berkshire boss will put his dry powder to work profitably once the economy collapses," Hanke said. "Don't forget that Buffett has made good money over the years by lending and bailing out troubled institutions."

According to the said source, in just eighteen months, during the financial crisis (n.a. of 2007-2008), Buffett placed $21 billion in five deals, concluding lucrative deals with Goldman Sachs, General Electric, Mars, Dow Chemical and Swiss Re. Last quarter, Berkshire earned more than $4 billion in interest, dividends and investment income, a 70 percent increase over last year's third quarter. A key driver of the gains was the Fed's benchmark interest rate hike from near zero to above 5 percent, which supported Berkshire's gains in its Treasury holdings.

Hanke says Buffett is now very well placed to buy stocks and businesses at discounted prices and borrow money at attractive rates if the economy turns sour, with solid returns at zero risk thanks to higher bond yields.

But other market commentators believe Buffett's attitude is a warning sign for investors. "I think he sees problems for next year. It means he's cautious and not seeing deals," Portfolio Wealth Advisors head Lee Munson said recently, according to Business Insider.