Elite Investor Stanley Druckenmiller Slams Janet Yellen For Failing To Lock In Cheap Debt: 'Worst Mistake In Treasury History'

Renowned investor Stanley Druckenmiller has strongly criticized Treasury Secretary Janet Yellen for what he calls the “worst mistake in the history of the Treasury,” leading the U.S. towards a potential debt crisis.

Druckenmiller, a billionaire investor and head of the Duquesne Family Office, made these comments at a recent Robin Hood Foundation event, Business Insider reported. He expressed his belief that Yellen should have issued more long-dated government bonds before the Federal Reserve started to increase interest rates last year.

“When rates were practically zero, every Tom, Dick, Harry, and Mary in the United States refinanced their mortgage. Unfortunately, we had one entity that did not, and that was the U.S. Treasury,” Druckenmiller said. 

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Druckenmiller continued to criticize Yellen for issuing short-term debt rather than locking in lower rates for long-term debt. 

“Janet Yellen — I guess because political myopia, whatever — was issuing two years at 15 basis points when she could have issued 10 years at 70 basis points or 30 years at 180 basis points,” he explained.

He remarked, “Honestly, I think the math has gone crazy.”

The investor warned that this misstep has further deteriorated America’s financial situation. He estimated that by 2033, the government’s annual interest expense could reach 4.5% of the GDP, and by 2043, it could rise to 7%, equivalent to 144% of today’s annual discretionary spending.

Druckenmiller’s criticism of Yellen comes amid a backdrop of rising inflation, driven by pent-up demand, fiscal and monetary stimulus, and pandemic-related shortages. The Federal Reserve has increased rates to over 5% from nearly zero in an attempt to curb inflation.

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