Monday afternoon Warren Buffett said on CNBC that the economy has “fallen off a cliff” but would eventually recover, and more importantly that people have “really changed their behavior,” referring to the increased savings and re-prioritization of spending seen as the financial crisis we’re still seeing to this day takes grab of the “real world.”

The billionaire says he expects inflation during the recovery to be more severe than the inflation seen in the 1970s, as the economy falls in to what he referred to as the “close to worse-case scenario,” with consumer confidence at a significant low.

He also said that partisan believes between the Democrats and Republicans should be skipped in favor of unified cooperation to restore confidence in the financial industry, citing Barack Obama’s leadership as a godsend of sorts, though he did not make any real policy suggestions.

“People can’t be worried about banks, and a lot of them are.”

Warren Buffett earlier this week reported the largest losses ever for his investment and insurance holding company, Berkshire Hathaway, the brainchild of his intense investment expertise and history. In the investor report, he spoke of how he himself was caught up in rising oil prices, and did not predict the collapse, nor the collapse of the housing market — arguably a significant first for the investor.

“We want to err on the side next time of not allowing big institutions to get as unchecked on leverage as we have allowed them to do,” said Buffett.

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