Depending on who you ask, the U.S. economy is either headed for a soft landing post-recession or an apocalyptic downturn the likes the world hasn't seen since the Great Depression.
While the truth probably lies somewhere in the middle, both schools of thought seem to have the same villain at the center of the issue: Federal Reserve Chairman Jerome Powell.
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This week, Duquesne Capital founder Stan Druckenmiller took aim at Powell, stating that "I was not surprised that inflation reached 9%. I was not surprised that SPACs went crazy, bitcoin went crazy, dogecoin went crazy, equities went crazy."
"What I was surprised by was that for the next year while all of that happened, Jerome Powell's Fed continued to have their foot on the gas they continued to buy $120 billion of bonds a month while rates were zero. This obviously led to everything I described, then realizing they had probably made the biggest mistake in the history of the Fed, they slammed on the brakes," Druckenmiller said in a video interview at Sohn 2023.
Druckenmiller says the government's decision to spend $5 trillion "to fight covid" while it financed 60% of that amount was bound to have dire consequences on the economy.
"I'm sitting here staring in the face of the biggest and probably the broadest asset bubble, forget that I've ever seen, but that I've ever studied," Druckenmiller said.
Given that preponderance of evidence -- mixed with the fact that Druckenmiller says there have historically only been a few instances of soft landings in U.S. history following a recession -- the investor sees pain ahead for the U.S. economy.
Stay tuned.
