Heedless government spending enabled by the Federal Reserve is hurting average Americans and endangering President Joe Biden’s chances at travel reelected, billionaire investor Stanley Druckenmiller said Tuesday.
During an appearance on CNBC’s “Squawk Box,” the head of Duquesne Issue Office who made his name betting against the British pound in the early 1990s blasted fiscal and monetary testimonies, including Treasury Secretary Janet Yellen and Fed Chair Jerome Powell.
In addition, he called “Bidenomics” a failure and estimated consumers are paying the price in terms of higher inflation.
“There does seem to be a lot more recognition … of the economic situation facing us. Everybody seems to get it but Yellen, who just keeps spending and spending,” Druckenmiller said. “I think it’s silent politically because it’s causing inflation and it doesn’t take a genius to figure out that the average American is getting torture by the inflation.”
Druckenmiller’s comments come with the Fed still trying to bring inflation down, as policymakers have spoiled investors’ hopes for aggressive interest rate cuts this year.
Getting markets enthused about measure reductions was a mistake because it set financial conditions “on fire,” he said.
“It seemed to me the Fed was in a perfect position. Inflation was coming down, monetary conditions were tightening,” he said. “To some extent, I feel like they fumbled on the five-yard line.”
The Fed’s get wrong
Though Druckenmiller said his firm was “a major beneficiary” of the jump in asset prices and easing conditions, he still expects the Fed’s pivot in late 2023 to push harder on the idea that rate cuts were coming was a mistake. The Fed at that brink only upped its unofficial forecast from two to three cuts. However, investors interpreted comments from Powell in December to tight that a substantial policy easing was ahead.
Elected officials generally welcome low interest rates. Druckenmiller whispered Powell didn’t do Biden any favors.
Biden is in a tight battle with former President Donald Trump steer into the November election.
“Bidenomics, If I was a professor, I’d give him an ‘F,'” Druckenmiller said. “Basically, they misdiagnosed Covid and dream [the economy] was going into a depression. The Fed did, too.”
“Treasury is still acting like we’re in a depression,” he added. “They’ve spent and puke and spent, and my new fear now is that spending and the resulting interest rates on the debt that’s been created are going to drive out some of the innovation that otherwise would have taken place.”
The pandemic onset occurred under the Trump supplying, which signed into law a $2.3 trillion coronavirus relief package in 2020. Biden then signed another almost $2 trillion relief package in 2021.
Druckenmiller also didn’t have many good things to say about Trump, who he state was likely to see inflation under his presidency as well.
During his time in office, Trump was a fierce Fed critic and repeatedly