Buffett recently described US Treasuries as a bubble - and not just that, he said it was arguably bigger than the prior housing and dot.com bubbles that preceeded it. I examined his comments from the latest shareholder report, and would like to present a calm, factual, logically reasoned explanation of why he is totally wrong - not only that, why he is making extremely basic noob errors of macroeconomic analysis. Note that this is not a market prediction, or a personal opinion - everything I will say in this post is demonstrable fact, derived from commonly accepted or provable data, and drawing only those conclusions which, using rigorous logic, necessarily derive from that data and from accepted theories of what that data means and what can be extrapolated from it. I also happen to think Buffett is wrong from a personal/trader perspective, but that is not germane to this post. The primary subject under consideration here is whether US Treasuries are in a historic bubble, comparable or greater than the dot.com and housing bubbles that preceeded it. I will argue, and prove indisputably, that under no circumstances could a rational person consider them to be a historic bubble at current price levels (3% yield on the 10 year). All the data shows is that, at worst, they are a bit pricey - and one can make a plausible argument that they are fair value, and maybe even a little cheap (if the economy gets really bad in the next 5-10 years). However, I am not in this post trying to say they are cheap or fair value. I'm simply trying to prove that they are NOT, under any possible view, a historic bubble comparable to dot.com, housing, Japan 1989, gold 1980, 1929 and so on. Another secondary goal is to demonstrate that Buffett either lacks sound macroeconomic analytical and/or forecasting skills, or has for some reason not exercised them in this case (which implies that one should not rely on his views in future). Buffett is a shibboleth at present and I will argue that the world's collective opinion of Buffett's analytical skills (in the macro area only) is arguably a far greater "bubble" and collective delusion then the price of US Treasuries. This second claim is far more controversial, and sure to annoy a lot of people, so I would prefer if discussion is confined mainly to the topic at hand - are US bonds in a historic bubble. Bashing Buffett merely amuses me in passing (I generally rate him highly), solely because so many people admire him brainlessly, like sheep. I will continue in the next post.