WHEN: Today, Tuesday, November 15, 2022
WHERE: CNBC's "Squawk Box"
Following are excerpts from the unofficial transcript of a CNBC exclusive interview with Berkshire Hathaway Vice Chair Charlie Munger on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) today, Tuesday, November 15. The full interview will be available on CNBC's "Squawk Pod" and following are links to video on CNBC.com: https://www.cnbc.com/video/2022/11/15/charlie-munger-weighs-in-on-crypto-collapse-we-do-not-need-currency-for-kidnappers.html and https://www.cnbc.com/video/2022/11/15/charlie-munger-what-tesla-has-done-in-the-car-industry-is-a-minor-miracle.html.
All references must be sourced to CNBC.
MUNGER ON CRYPTO AND FTX
BECKY QUICK: Berkshire Hathaway Vice Chair Charlie Munger has used a lot of words to describe cryptocurrency. He's called it, "disgusting," "stupid and evil," "rat poison." He has even compared it to venereal disease. I spoke to the 98-year-old Munger over Zoom about Bitcoin and crypto after the collapse of the exchange FTX. He didn't hold back on Sam Bankman-Fried or those who worked with FTX, investors, venture firms like Sequoia and others.
CHARLIE MUNGER: It pains me that my own country, I see people that were once were regarded as very reputable people helping these things exist growing their and so forth. This is a very very bad thing. The country did not need a currency that's good for kidnappers and so on.
QUICK: What do you think happened? Because there are a lot of big names, a lot of people and firms—
MUNGER: Well that's what, that's what depresses me. There are people think they gotta be on every deal that's hot and they don't care whether it's child prostitution or Bitcoin. If it's hot, they want to be on it. I think that's totally crazy. Reputation is very helpful in financial life and to destroy your reputation by associating with scum balls and scum ball promotions, it's a huge mistake.
QUICK: Do you think those companies did any due diligence or what happened?
MUNGER: I think they actually mean well, though, that you're seeing a lot of delusion. It's partly fraud and partly delusion. That's a bad combination. I don't like either fraud or delusion and the delusion maybe more extreme than the fraud.
QUICK: Delusion how so?
MUNGER: Well, nobody's going to be on a new thing that every 12-year-old kid can be a billionaire or something. He just calls it Munger coin starts trading it or something. It's, it's crazy it's demented.
MUNGER ON BLOCKCHAIN
QUICK: Munger of course is not quick to accept the value of the new technology like the blockchain over the potential danger of a speculative risky or even as he calls it demented venture like cryptocurrency.
MUNGER: Look, you got a good idea. It's much easier to push that to wretched excess. That's why good ideas carried to wretched excess become bad ideas. And once you get that concept in your mind, of course, there's always gonna be some good idea. Nobody's gonna say I got some -- I want to sell you, blockchain, blockchain is a new good thing that's come up like fairy dust.
QUICK: You do have a way of putting it very precisely, Charlie.
MUNGER ON ROLE OF REGULATORS
QUICK: I asked Munger what role regulators had to play in the catastrophe and the impact that FTX's crisis will have on their ability to try and navigate difficult situations.
MUNGER: Well, I think the authorities have been confused by the whole damn thing. A bunch of elderly people that have done things a certain way for a long time now have to deal with a standard like a mosquito catcher. They know how to smack mosquitoes. They just can't handle gnats.
QUICK: They slip through the net?
MUNGER: Regulators, the regulators have behaved just, it's just insane to me. None of this stuff should have ever been allowed.
QUICK: What do you think the holdup is because when I look at it, it seems like it's a big turf war, turf battle between the SEC and the CFTC.
MUNGER: Because it doesn't fit into existing, of course it's hard. Of course, it's hard for the regulators to do for, to deal with a new, a new activity. The whole internet was new and so this whole business is new. But the danger flags are wagging so clearly. The guy says I'm gonna sell you plenty of nothing and nothing is plenty for you. It isn't, how can you hear that and not think this is a big joke. But people think this is a real asset. It's not a real asset.
MUNGER ON CENTRAL BANKS AND ELON MUSK
QUICK: As you probably know, Berkshire Hathaway Vice Chair Charlie Munger is not one to mince words. He's been a longtime crypto skeptic dismissing rat poison like Bitcoin in favor of the dollar and other world currencies, even as central banks around the world balance record high inflation with rising interest rates.
MUNGER: I basically like the existence of the Fed. I think in a world of fiat currencies, we need wise central banks and we if you look at Japan today, you would find that a central bank has made our central bank a little mouse that hardly tries to do anything. So we've learned that central banks can be really important. You can push them to great excess if you have to and you're in enough trouble. So by and large, I like central bankers and by and large I hate Bitcoin promoters.
QUICK: When you say that we look like a mouse compared to Japan's central bank is that a good thing? I mean, look what's happened to Japan.
MUNGER: We haven't had to try it. But we get the kind of trouble Japan was in, of course we'll do the same damn thing.
QUICK: I also got the chance to ask Mr. Munger about Elon Musk over the weekend there was a Twitter account that tweets out quotes supposedly from Elon Musk. This one said, "I was at a lunch with Munger in 2009 where he told the whole table all the ways Tesla would fail. Made me quite sad, but I told him I agreed with all those reasons and that we would probably die. But it was worth trying anyway." Now Elon Musk himself replied back to that and said, "True, that did happen." I asked Charlie Munger about it. He doesn't recall that lunch. It was a long time ago. 2009 probably made a bigger impression on Elon Musk than it did on Charlie Munger. However, when you talk to him about it, he doesn't remember giving the diagnosis he still had some kind things to say about Elon Musk.
MUNGER: I was certainly surprised that Tesla, Tesla did as well as it did, but I do not equate Tesla with Bitcoin.
MUNGER: Tesla has, has made some real contributions to this civilization. Elon Musk has done some good things that other people couldn't do.
QUICK: In fact, about Musk's work at Tesla, Munger was very complimentary.
MUNGER: We haven't had a successful new auto company in a long, long time, but Tesla has done in the car business is a minor miracle.
MUNGER ON SPECULATIVE ASSETS AND CHINA
QUICK: Now Munger says he is a believer in some innovation. He became a regular user of Zoom during the pandemic. He's not against new technology, but he says he is against highly charged risky speculation that he thinks is rampant in the world of cryptocurrency. Calls it dangerous.
MUNGER: I like the speculative assets of the best of the venture capitalists where they give us a new company like Zoom or a new company like Stripe or something. And so I like the new companies they create and I, I, I'm glad we have new things being invented. So I'm not against everything that's new. I'm just, ahead of everything new that is kinda magic and delusion. It's kind of a chain letter, delusion carrying it along. Of course I don't like it. These things do enormous damage when these things rise and fall. We're not even, these things, these big collapses they can pay for big recessions and depressions.
QUICK: Do you think that's the case with this? Is this the beginning of a larger unraveling?
MUNGER: That's another subject. A very famous man once said that a great civilization has a lot of ruin in it, and it took a long time to ruin it. Rome took a long time to decline, from its peak to its bottom and that will be true with other civilizations that have come along later. But these people are promoting things like -- they're promoting the decline of civilization.
QUICK: Now, this was a conversation that took place yesterday morning I also asked Munger about China and President Biden's meeting with Xi Jinping. Munger, as you probably know, has been a longtime proponent of a strong economic relationship between the United States and China.
MUNGER: Well, it's very interesting to have Biden meeting with the leader of China. That hasn't happened in a long time. That's a very good, constructive thing, how could that not be a good idea for China and a good idea of the United States. I think what we we too have already created, we actually helped China by being so friendly to their imports. We help them take but I would say over a billion people out of poverty and to a pretty advanced state of civilization. Why would we stop?
QUICK: I guess the only argument people would give back is because China has said that they want to run things, that they're going to take control, that they want to take over Taiwan again.
MUNGER: All we've done is take the envy other people who are doing well. Why do we need to be motivated by envy? There's always gonna be somebody that's getting rich faster than you are, particularly if they start poor. And so why should a great civilization like ours care if a new civilization rises. We should make a friend out of the new civilization and keep trying to have win win transactions. It's so simple.