Ben Sheperd had a interview with Chuch Akre lately and the transcript is posted on www.nasdaq.com.
Here is an excerpt in which Akre assess the macro factors:
Ben Shepherd: Almost a quarter of your fund's assets are allocated to cash. Why do you maintain such a high cash allocation?Read the full text.
Chuck Akre: In a recent Wall Street Journal op-ed, Charles Koch [chairman of Koch Industries and a prominent conservative] spoke about the problems facing our country, noting the amount of debt the federal government holds both on and off the balance sheet. He observed that the Social Security, Medicare and Medicaid systems are unfunded liabilities of over $100 trillion. Decades ago, former Congressman Everett Dirksen (R-Ill.) said, "A billion here, a billion there, pretty soon, you're talking real money." Decades later Koch said, each man, woman and child in this country owes $300,000 on that debt.
There's an unsustainable amount of debt piled on this country. The US needs to quit kicking the can down the road and begin to deal with this problem. The best solution is for the US to grow out of its debt, but an unemployment rate of 9 percent or higher makes that scenario unlikely. Consumer spending accounts for 70 percent of US gross domestic product. Elevated unemployment and decreased borrowing capacity through home equity lines and credit cards should cap economic growth for the foreseeable future.
The consumer is further constrained by a need to save for retirement. The assets households had set aside suffered steep losses in 2008 and 2009. Consumers also need to pay down personal debt, which has only declined by about 5 percent over the past few years. The consumer's ability to spend has been greatly reduced. Don't expect the US economy to grow its way out of debt.
The most likely solution to our expanding debt is to devalue the US dollar. This will make the dollars that the US repays to its creditors worth far less than when they were borrowed. A 1970s-style inflation and interest rate spiral is possible. The odds of that outcome are better than even, though I'm not an economist and I don't focus exclusively on this issue. Personally, I don't expect a massive run-up in inflation.