Buffet warns of side effects of big ticket spending

The financial price of the stimulus and other big spending bills are looming over the US economy as a new threat, Warren Buffett, chairman of Berkshire Hathaway Inc, said yesterday.

In a guest op-ed in Wednesday's New York Times titled 'The Greenback Effect' the billionaire investor said that while mistakes were made in the attempts to end the recession and restart the lagging economy, a meltdown of our economy was avoided by a "gusher of federal money."

"The United States economy is now out of the emergency room and appears to be on a slow path to recovery," Buffett wrote in the op-ed.

Buffett writes that "enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. 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 country's "net debt" - that which is publicly held - is mushrooming and that it is growing at one percentage point per month. And while much of the driving force behind the economic recovery plans lies with the executive branch in the form of Obama, the US Treasury Department and the Federal Reserve Buffett said the ultimate solution to the debt problem lies with Congress.

"Our immediate problem is to get our country back on its feet and flourishing - 'whatever it takes' still makes sense," Buffett wrote.