Stanley Druckenmiller: Why we're spending like we're still in the great depression is beyond me

Let me ask you how this plays into it’s another I think issue of being, you know things are going well and then we totally overspent in terms of fiscally as well in Bidnomics. Bidnomics. If I was a professor, I’d give them an F Basically, they misdiagnosed COVID and thought it was we were going into a depression. the Fed did too. I worried about it too. In early days, the Fed eventually pivoted. Better late than never. Treasury. Treasury is still acting like we’re in a depression. It’s interesting because I’ve studied the Great Depression and you had a private sector crippled with debt with basically no new ideas. So interventionist policies were called for and were effective. The private sector could not be more different today than it was in the Great Depression. Their balance sheets are fine, they’re healthy. And have you ever seen more innovative ideas that the private sector could take advantage of? Now you’ve got blockchain, you got AI, you got the whole thing. All government needed to do was get out of their way and let and let them innovate. Instead they’ve spent and spent and spent and my new fear now is that spending and the and the resulting interest rates on the on the debt that’s been created are going to crowd out some of the innovation that otherwise would have, would have taken place. We’ve got a 7% budget deficit at full employment. It’s just, it’s unheard of. And this is when you’ve got grid grid spending, you have, I’m sorry, you got defense spending, you have data center spending and then of course you have green. So this spending is going to take place. You’re going to build the capital stock. How do you build the capital stock when government is intruding with regulations and all this spending? And it’s just sad because I think we’re looking at one of the most exciting periods in terms of potential productivity and enhancing investments ever. And why we’re spending like we’re still in the Great Depression is beyond me. And they haven’t stopped. As you know, they’re trying to circumvent the Supreme Court to give money to kids who had the opportunity to go to college who haven’t repaid their loans. You know, Harlem Children’s Zone, our motto was always get them into college so they have a shot. These are kids that went into college and we’re talking about spending hundreds of billions of dollars to put in their pockets. I assume it’s, I assume it’s because of the election. I even they’re now floating ideas for Fannie and Freddie to change the rules. So you can refinance. You can take out a second lien mortgage and you get to keep the raid on the first mortgage at whatever you did during COVID. There’s there’s one spending program or another. We don’t need spending right now. We just need the government to get out of the way and let the private sector do its thing. How much of the inflationary pressures that we see are because of fiscal spending versus the Fed? I mean it’s kind of hard to break it down but which would you think is the bigger problem? I’d say it’s definitely the fiscal, but the feds been the great enabler and the latest thing is we’re going to apparently while we’ve already started, we’re going to shrink QT from 60 billion to 25 billion and we’re going to land apparently at 7 trillion somehow because of the plumbing all of a sudden we need a $7 trillion balance sheet just to function. If you remember in Bernanke speech when we started QE, he said don’t worry, this is temporary, the balance sheet will be back to eight, 800 billion. This, this is never going to grow again. So that is, I’d say it’s it’s mainly the Treasury because we just don’t have room for all this. And it could get worse because we need to build the capital stock, but the Fed needs to stop helping them out. And I understand Chair Powell’s statement that he wants to stay in his lane, well, he didn’t stay in his lane during COVID, and I don’t blame him. He was encouraging fiscal spending and that was totally appropriate. But now all of a sudden, oh, that’s we don’t comment on fiscal policy. Well, you’ve you commented on it when you wanted them to be more stimulative. You know, somebody’s got to say something. It is interesting since since my last interview here in October, there do seem to be a lot more recognition by various people. I see on your shows and elsewhere of the fiscal situation facing us. Everybody seems to get it but Yellen who just keeps spending and spending. And again, I think it’s done politically because it’s causing inflation and it doesn’t take a genius to figure out as the the average American is getting hurt by the inflation.