By Shamim Adam (Bloomberg)

The U.S. must address the massive amounts of “monetary medicine” that have been pumped into the financial system and now pose threats to the world’s largest economy and its currency, billionaire Warren Buffett said.

“Enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects,” Mr. Buffett, 78, said. “For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.”

The “greenback emissions” will swell the deficit to 13% of gross domestic product this fiscal year, while net debt will increase to 56% of GDP, Mr. Buffett said.

“Once recovery is gained … Congress must end the rise in the debt-to-GDP ratio and keep our growth in obligations in line with our growth in resources,” Mr. Buffett said. “With government expenditures now running 185% of receipts, truly major changes in both taxes and outlays will be required. A revived economy can’t come close to bridging that sort of gap.”.

“Unchecked greenback emissions will certainly cause the purchasing power of currency to melt,” Mr. Buffett said. “The dollar’s destiny lies with Congress.” [source]

JL comment: Mr. Buffett’s statements that “truly major changes in both taxes and outlays will be required” and that “the dollar’s destiny lies with Congress” offer a chilling picture of the dollar’s future.