Stanley Druckenmiller sees a debt horror movie playing out.

Long-time debt Hawke, Stanley Druckenmiller could be zeroing in on the real elephant in the room; unchecked government spending leading to a $32 trillion deficit blowout.

US debt is expanding by $1 trillion every six months, and $200 trillion in off-balance sheet debt could now be a permanent fixture unless the US defaults (unlikely) or hyperinflates the debt into insignificance.  

“The fiscal recklessness of the last decade has been like watching a horror movie unfold,” said Stanley Druckenmiller, who runs his own Duquesne Family Office in a recent speech at the USC Marshall School of Business.

“The fiscal recklessness of the last decade has been like watching a horror movie unfold”

STANLEY DRUCKENMILLER

Stanley Druckenmiller sees a debt horror movie with the debt ceiling as a sideshow eclipsing the ballooning public deficit. He hopes the US government doesn’t go into default.

“But honestly, all this focus on the debt ceiling instead of the future fiscal issue is like sitting on the beach at Santa Monica worrying about whether a 30-foot wave will damage the pier when you know there’s a 200-foot tsunami just 10 miles out,” he said. 

More than a decade ago he was asked to articulate the next pending crisis, Stanley Druckenmiller sees a debt horror movie, he told the audience. 

In the wake of the 2008 financial crisis, Stanley Druckenmiller toured more than a dozen university campuses telling students to keep an eye on ballooning deficits, which he correctly forecasted would bankrupt future generations.  

Fast forward to 2023, the global debt horror movie we are living in has not only sold out future generations it has also bankrupted the system, with half of the banks potentially insolvent. We have a global systemic crisis underway with no firewalls, it is a made in America global problem.   

“all this focus on the debt ceiling instead of the future fiscal issue is like sitting on the beach at Santa Monica worrying about whether a 30-foot wave will damage the pier when you know there’s a 200-foot tsunami just 10 miles out”

STANLEY DRUCKENMILLER

Stanley Druckenmiller cited to students a decade ago that reckless spending could dwarf the economic pains of 2008. The situation today “looks much worse than I had imagined 10 years ago,” he said in May 2023. 

The biggest issue facing the US is runaway entitlements such as Social Security, Medicare and Medicaid, which without cuts today will have to be slashed in the future… but never are as doing so is political suicide.

Republicans and Democrats are the same wing on the public deficit dragon neither willing to implement spending constraints.

“I don’t see a financial crisis in our lifetime” – Janet Yellen

Spending on seniors will reach 100% of federal tax revenues by 2040 based on Congressional Budget Office estimates, he said, including interest expense. Moreover, the current $31 trillion US debt load doesn’t account for future entitlement payments so the full US debt load is more like $200 trillion, he estimated

Unfortunately, by still owning a large amount of government debt, the Fed continues to create the false illusion that it can help with our fiscal problems,” he said, 

Stanley Druckenmiller sees a debt horror movie playing out which could be unstoppable

Fed is already reversing its balance sheet reduction in the wake of the 2023 bank failures, of which there have already been three and likely to be more in what could be dubbed the great 2023 bank runs.

“I don’t see a financial crisis in our lifetime,” said Janet Yellen in 2017 could be the best short play of the year.