Warren Buffett shrugs off de-dollarization fears but warns excessive government spending may have serious fallout

• Warren Buffett isn't worried about the US dollar losing its status as the world's reserve currency.
• However, the famed investor warned excessive government spending could have painful fallout.

The US dollar isn't at risk of losing its status as the world's reserve currency, but the American government's aggressive spending could have devastating consequences, Warren Buffett has warned.

"We are the reserve currency, I see no option for any other currency to be the reserve currency," the famed investor and Berkshire Hathaway CEO said during his company's annual meeting on Saturday.

Buffett sounded unconcerned about the risk of "de-dollarization," or other countries relying less on US dollars. However, the billionaire executive cautioned the US government against eroding the dollar's value by spending too much and fueling inflation.

"We should be very careful," Buffett said. "It's very hard to see how you recover once you let the genie out of the bottle and people lose faith in the currency," he continued.

Buffett underscored that people need to trust their savings will retain most of their purchasing power over time, or they'll shy away from keeping their money in the bank or building a pension.

It's "madness to just keep printing money," Buffett said. The investor's business partner, Charlie Munger, added that the US shouldn't risk a dangerous outcome by spending too much.

The COVID-19 pandemic sparked widespread lockdowns, closures, and supply-chain disruptions in 2020 and 2021. The US government rushed to shore up the economy by mailing out stimulus checks to households and providing financial aid to businesses.

The resulting demand, coupled with supply shocks — including Russia's invasion of Ukraine — drove inflation to a 40-year high of 9.1% last summer. In response, the Federal Reserve has hiked interest rates from nearly zero to upwards of 5% in the past 14 months alone.

The surge in rates has squeezed consumers and businesses, stoked concerns of further bank failures and a credit crunch, and fanned fears of a recession later this year.