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- Bloomberg Live · 7 Jun 2023 Druckenmiller says US debt is 31 trillion officially but 200 trillion when including promised entitlement payments.
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Themes 5 themes
last 90 days
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bonds
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ai writing
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education
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markets
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writing
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Minutes 19 quotes
everything on record, newest first
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Druckenmiller says US debt is 31 trillion officially but 200 trillion when including promised entitlement payments.
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“But if you did your accounting like any corporation and you assume those payments are going be made, yeah, the present value is probably around $200,000,000,000,000.”
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Druckenmiller states closing the fiscal gap requires raising all taxes 40 percent or cutting all spending 36 percent forever.
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“To actually pay for the entitlements we promised in the future, you'd have to raise all taxes 40% today forever or cut all spending 36 today forever.”
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Druckenmiller expects 800 billion in treasury issuance by year-end as liquidity conditions reverse from earlier stimulus.
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“So you're going to probably about 800,000,000,000 in treasuries issued between now and year end. The Fed will be continuing on with QT.”
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Druckenmiller argues AI secular moves last years not months, expecting NVIDIA ownership for two to three years minimum.
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“If this is a secular move, if this thing is real, you just don't have ten month moves. That's not how it works. Even the .com bubble lasted two, two and a half years.”
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Druckenmiller says AI is making top coders seven to eight times more productive than five months ago.
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“it's already making the top coders seven to eight times, seven to eight times more productive than they were five months ago.”
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Druckenmiller strongly assumes a recession will occur in 2023, though timing is uncertain.
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“I assume, and I pretty strongly assume we're gonna have a recession sometime in '23. I just don't know whether it's gonna be in the early part or the later part.”
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Druckenmiller notes many good companies have been derated 70% without fundamental changes.
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“A lot of very good companies have been de rated 70% without a whole lot of change in fundamentals.”
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Druckenmiller cites $30 trillion in global QE and $18 trillion negative-yielding debt before 8% inflation.
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“I think globally we had 30,000,000,000,000 of QE. Even as late as, I think a year ago, was 18,000,000,000,000 of debt that was still negative yielding when the world was about to experience 8% inflation.”
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Druckenmiller notes the US is running a trillion dollar deficit at full employment alongside negative real rates globally.
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“We're running a trillion dollar deficit at full employment. Apparently, we're gonna have some sort of green stimulus in Europe, and we have negative real rates everywhere and negative absolute rates a lot of places.”
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Druckenmiller estimates EVs add 0.5% annual copper demand while supply outlook remains challenged, particularly from Chile.
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“We think that EVs probably add point half a percent a year in demand and the supply outlook's challenged, it become more challenged if the Chile situation doesn't clear up, but that's not why we own it.”
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Druckenmiller says current Fed funds rate of 1.5% is absurd given economic conditions; appropriate level would be 3.5%.
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“If I came down from Mars and you showed me the the broad landscape and asked me where Fed funds would be, probably would guess three and a half, somewhere in there.”
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Druckenmiller blames the financial crisis on easy money bubbles and questions current low interest rate policy.
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“I will go to my grave believing that that financial crisis happened because of bubbles created by easy money. And I just don't understand why we need interest rates where they are now.”
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Bloomberg Television, 6 January 2020
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“Let's just take poverty in The United States. It was 26% a few decades ago. It was 16% in the financial crisis, and it's 13% now. It's at an all time low.”
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Druckenmiller is long equities and commodities, short bonds and yen, and long commodity currencies betting on benign economic outlook.
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“I'm long equities. I'm long some commodities. I'm short fixed income. And I'm long commodity currencies. Short the yen. So all sort of for now.”
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Bloomberg Television, 19 December 2019
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“I look back and the core PCE was one and a half in '98 and '99 when Greenspan started raising rates again from 475 is currently one seven and he's got them at 1.5.”
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Bloomberg Television, 19 December 2019
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“If you look at it, what if I were to tell you there was a Republican president, but a better version, and you had two thirds Republican majorities in both houses of Congress, and you had a deficit to GDP of two, not 4.5, and you had a debt to GDP lower than The United States”
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Druckenmiller says negative rates are the most anti-capitalist idea and that Trump has clearly influenced Powell despite media claims otherwise.
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“It's the most anti capitalist idea I could ever dream up. And he's pushing Powell. You know, I didn't want to believe this, but it's pretty clear now that he's had an effect on Powell.”
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Bloomberg Television, 19 December 2019
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“So 1,000,000,000 people have been lifted out of extreme poverty in the last twenty years. Why? Because obviously India and China adopted a free market model.”
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Druckenmiller argues that for every billionaire created, 400,000 people exited extreme poverty over the same period.
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“And with regard to all this other talk about billionaires and so forth. So during that same period, you've created 2,500 billionaires, but you've brought a billion people out of poverty.”
Reported 8 quotes
in print, highest ranked first
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reported
Druckenmiller states that a 30-year Treasury yield of 5.5 percent is not a crisis but simply a bill for fiscal choices.
“If the 30-year must trade at 5.5% to clear, that isn't a crisis. It is an invoice,”
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reported
Druckenmiller defends using AI to write his work, comparing it to using a calculator for math.
“I’m not embarrassed by it. … I write everything using AI now for the same reason I use a calculator when I do math problems.”
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reported
Druckenmiller calls the long-term Treasury yield the most important price globally and America's only remaining fiscal disciplinarian.
“The long-term Treasury yield is the most important price in the world. It is also the only fiscal disciplinarian the U.S. has left. ”
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reported
Druckenmiller characterizes artificial yield suppression as a subsidy to government procrastination on fiscal reform.
“Every basis point of artificial yield suppression is a subsidy to procrastination,”
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reported
Druckenmiller says he has traded for fifty years on the belief that markets aggregate information better than committees.
“I have spent five decades trading on a simple premise: Markets aggregate information no committee possesses, and prices are how that information reaches decision makers,”
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Druckenmiller warns that defending a bond price level invites market tests of government resolve that require ever-growing interventions.
“Once markets believe Treasury is defending a price, every rise in yields becomes a test of official resolve, and the operations must grow to survive the tests.”
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reported
Druckenmiller says the ideas are his own and he has discussed them for over fifteen years, though he wishes he were a better writer.
“These are my ideas and I’ve been speaking about them for over 15 years, as anyone who knows me knows. Would I prefer that I was a great writer? Yes, but that’s not who I am.”
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reported
Druckenmiller says the only durable way to lower long-term yields is to address the primary deficit.
“Then do the only thing that durably lowers long-term yields: address the primary deficit.”
Appearances 4 appearances
every confirmed appearance, newest first