President Joe Biden has drawn flak from voters for his economic policy, aka Bidenomics, and on Wednesday, Stanley Druckenmiller, Duquesne Family Office chairman and CEO, took a swipe at the president in an interview on Tuesday.
What Happened: Weighing in on Bidenomics, Druckenmiller said, “If I was a professor, I would give him an ‘F,'” The administration misdiagnosed COVID-19 and thought the economy was going into a depression, the billionaire and former hedge fund manager said. The Federal Reserve also proceeded with the same false notion, he added.
The Fed eventually pivoted, with a “better late than never” thinking, and the treasuries still act as if the economy was in a depression, the investor said.
Unlike during the Great Depression, the balance sheets are healthy and there are a lot of innovative ideas the private sector can take advantage of, said Druckenmiller, naming AI and blockchain. “All government needed to do is to get out of their way and let them innovate,” he said.
Instead, the government chose to spend lavishly and the resultant interest rates on the debt that has been created are going to crowd out some of the innovation that otherwise would have taken root, the billionaire said.
Druckenmiller noted that the U.S. is currently running a 7% budget deficit and full employment. “There is defense spending, data center spending, and green-energy spending.”
“So, this spending is going to take place; you are going to build the capital stock,” he said.
“How do you build the capital stock when government is intruding with regulations and all these spending,” Druckenmiller said, adding that it was sad because “we are looking at one of the most exciting periods in terms of potential productivity-enhancing investments.
The billionaire also slammed the Biden administration for its student loan forgiveness and blamed the government for acting with the election in mind.
See Also: Best Depression Stocks
Ackman, Musk React: Reposting a video clip, hedge-fund manager Bill Ackman said, “Stan is spot on.” Musk concurred with him and said, “Stan is wise indeed.”
“That's important for young people because they're not in the housing market,” said Desmond Lachman, a senior fellow at the American Enterprise Institute, a conservative think tank, Hill reported.
“They're not sitting on a house that has got a paid-off mortgage fate, they are the ones who are going to have to go out and borrow money now at a very high, very high-interest rate.”
Projections released by the Congressional Budget Office in February showed that the federal budget deficit will likely grow from $1.6 trillion in fiscal year 2024 to $2.6 trillion in 2034. As a percentage of the nation's GDP, the deficit is expected to rise from 5.6% in 2024 to 6.1% in 2026. Debt held by the public will likely increase from 99% of GDP in 2024 to 116% in 2034, the CBO said.
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