Treasury Secretary Janet Yellen made “the biggest mistake in Treasury history” when she failed to secure long-term U.S. debt at low interest rates in 2021, billionaire investor Stanley Druckenmiller said.
The former president and president of Duquesne Capital told Paul Tudor Jones, founder of asset management firm Tudor Investment Corporation, at JP Morgan’s Robin Hood Investor Conference last week that while all American households and businesses managed to refinance their homes or businesses, lock in lower interest rates before the Federal Reserve raised Early last year, one institution did not, “and that was the U.S. Treasury.”
This mistake, Druckenmiller said, has created the environment for the American debt crisis that exists today.
Yellen, who was appointed Treasury secretary in January 2021 and served as chair of the Federal Reserve from 2014 to 2018, “was issuing two years (of debt issued by the Treasury) at 15 basis points, when she could have issued 10 years at 70 basis points, or 30 years at 180 basis points.”
Druckenmiller said she has no idea why she hasn’t been sued for this. “She has no right to continue in that job after that.”
He also said that if interest rates continue where they are, the government’s annual interest spending will reach 4.5% of GDP by 2033 and 7% by 2043. That would be equivalent to 144% of current annual discretionary spending.
Today, due to pent-up demand, fiscal and monetary stimuli, and shortages due to the pandemic, inflation reached a 40-year high in 2022. As interest rates appear to stay high longer, above 5 % US debt has increased. exceeded $33.6 trillion, while US federal spending exceeds $6.1 or $6.2 trillion.
“Politicians who say they are not going to cut social benefits are simply blatantly lying,” he said. “The figures don’t work at all, it’s a fantasy.”
