"Biggest Blunder In The History Of The Treasury" - Druck Dunks On Yellen (& Her Husband Appears To Agree)
"Biggest Blunder In The History Of The Treasury" - Druck Dunks On Yellen (& Her Husband Appears To Agree)
Billionaire hedge fund manager Stanley Druckenmiller pulled no punches during a fireside chat with legendary trader Paul Tudor Jones at a recent Robin Hood Foundation event...
Billionaire hedge fund manager Stanley Druckenmiller pulled no punches during a fireside chat with legendary trader Paul Tudor Jones at a recent Robin Hood Foundation event, slamming Treasury Secretary Janet Yellen.
In his view, Yellen made the worst mistake in the history of the Treasury, by not issuing more long-dated government bonds before the Fed began hiking rates early last year. And that, Druck believes has helped pave the way for a debt disaster.
"When rates were practically zero, every Tom, Dick, Harry, and Mary in the United States refinanced their mortgage," Druckenmiller said.
"Unfortunately we had one entity that did not, and that was the US Treasury."
"Janet Yellen — I guess because political myopia, whatever — was issuing two years at 15 basis points when she could have issued 10 years at 70 basis points or 30 years at 180 basis points," Druckenmiller continued.
But he wasn't done, making it clear the scale of the problem she has created:
"I literally think if you go back to Alexander Hamilton, it was the biggest blunder in the history of the Treasury. I have no idea why she's not been called out on this, she has no right to still be in that job after that," Druckenmiller said.
Who could have seen that coming?
"Every caddy I knew, every locker-room person, everybody in America was refinancing their mortgages, every corporation was extending their debt," he added.
One look at the market's perception of USA's sovereign credit risk tells you all you need to know about Yellen and her inane sponsorship of Bidenomics... wrecking America's financial situation - evidenced by UST yields are rising along with USA sovereign risk's sudden surge...
And, as Rabobank's Michael Every noted, it appears Yellen is at it again based on yesterday's announcement on Treasury's borrowing target (and the make-up of that debt issuance being more bill-based once again)
Yes, more bill issuance might take upwards pressure off longer-dated bond yields.
However, Yellen would be doing it to splurge on spending over the next 12 months to try to ensure she stays in the job for another 62.
In which case, US GDP growth will keep looking like it did in Q3, as will inflation, and the Fed may have to act again, raising both T-bill rates and Treasury bond yields.
Worse still for the softly-spoken Ivory-Tower dweller, her own husband - Nobel Prize winning economist George Akerlof - pointed out in June 2020 how the economic profession's descent into irrelevance is highlighted by its failure to predict the Great Financial Crisis...
As Professor Akerlof observes:
In the aftermath of the financial crisis of 2008, economists asked the question why no one had predicted it, at least exactly as it happened. Rajan (2011) said that such a prediction had not been made since it would have required detailed knowledge of theory and institutions in the disparate specialties of finance, real estate and macroeconomics...
There were incentives to present the key pieces of the puzzle, but none to put them together.
Following Caballero (2010), regarding theory, a model with all the pieces could not have been published; it would have been considered too far from precise, simple ideas (such as those that motivate simple new Keynesian or DSGE models); and, in this way, too Soft to merit publication.
Interestingly, the Economics profession also shunned individuals who did put the key pieces together and predicted the crisis in papers published by the BIS.
The Art of Liberty Foundation will be co-sponsoring a conference in Sedona, Arizona on November 3rd, 4th and 5th entitled: Liberty on the Rocks!
The conference brings together some of the leading lights in Liberty to discuss our current political situation and SOLUTIONS, including how to create local Liberty groups and Freedom Cells and how to move yourself out of organized crime’s crooked admiralty law system by correcting your status and standing. Friday night, there will be a VIP Dinner and concert Featuring Grant Prezence. Saturday we are at the Global Center for Christ Consciousness in Sedona for talks, workshops and a panel. There will be a Liberty expo with the ability to table. It is free for all on Saturday after 3:00 PM. Sunday we are taking folks for yoga and hiking in the most beautiful place on the planet. Get the details at