Stanley Druckenmiller Criticizes Washington For Spending Like 'Drunken Sailors,' Says Easy Stock Gains Are Gone, Time To 'Really Do Work'

Legendary investor Stanley Druckenmiller, who runs Duquesne Family Office, says the federal government has made spending mistakes that are going to come back to haunt the markets.

What To Know: Wednesday on CNBC's "Squawk Box," Druckenmiller criticized the federal government for spending carelessly. 

"My father told me, 'If you’re in a hole, stop digging, Stan,'" he said.

Before the pandemic, the federal government represented 20% of GDP in spending. Now that number is up to 25%, Druckenmiller said. 

The Biden administration recently asked lawmakers for $106 billion in aid for Ukraine and Israel, which the billionaire investor said he was "happy to see." 

Following the announcement, Druckenmiller said he was eager to see where the cuts were going to come from. Instead of providing an offset for the increased spending, the White House asked for close to $56 billion in emergency spending to provide natural disaster relief and improve funding for child care.

"I have kids, I have grandkids. Child care is not emergency spending. It's a priority that maybe should be on the table ... but we are spending like drunken sailors," he said. 

The federal government's fiscal year ended in September with a deficit of nearly $1.7 trillion, up approximately 23.2% from fiscal 2022, according to CNBC. The increased spending in fiscal 2023 brought the total U.S. national debt to nearly $34 trillion. 

Check This Out: Fed Meeting Preview: Bank Of America Expects One More Interest Rate Hike, And Here's When It's Going To Happen

Why It Matters: Druckenmiller said very challenging times for markets are upon us, given the aforementioned spending problems, the geopolitical landscape and historically high multiples. 

Equities are trading around 20 times earnings. Before quantitative easing, 15 times earnings was typical. When Druckenmiller got into the business, multiples were around eight times, which was like "going into a candy box," he said. 

Still, there is room for stock pickers to be rewarded, he said. 

"I don't think it's unreasonable to think that we're not going to continue to sell at 20 times earnings over a long period of time ... but look, I think there are going to be great companies and great stocks, a lot to do, a stock pickers' market ... it's just not going to be like surfing with a hurricane behind your back, you're going to have to really do work," Druckenmiller said.

Read Next: Will Treasury's Upcoming Monster Borrowing Plans Outshine Fed's Interest Rate Call?

SPY Price Action: The SPDR S&P 500 SPY has been trending lower over the last few months, but it was up 0.41% at $419.93 at the time of publication, according to Benzinga Pro.

Photo via Shutterstock.