“I hope we can all agree that once in a century emergency measures are no longer necessary five years into an economic recovery,” begins Stan Druckenmiller as he unleashed a torrent of uncomfortable truthiness on a crowd of Fed apologists stunned by his reality check that the Federal Reserve is putting the economy at risk by continuing its aggressive market intervention.. Blasting the counterfactual “mob”, Druck slams, “To economists and Fed officials who continually cite that we are better off than we would have been without ZIRP for long I ask why is that the relevant policy time horizon? Five years after the crisis and with growing signs of economic normalization it seems to be time to let go of myopic goals.” Simply put, Druckenmiller concludes, rather ominously, “I am fearful that today our obsession with what will happen to markets and the economy in the near term is causing us to misjudge the accumulation of much greater long term risks to our economy.”
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Some other choice comments…
“today’s fed policy is as puzzling to me as during any of those periods, and frankly, rivals 2003Â in the late stages to early 2004 as the most baffling of the number of instances i have in mind.”
“There is a heated debate as to what a ‘neutral’ funds rate would be. We should be debating why we haven’t moved more meaningfully toward the neutral funds rate if for no other reason so the Fed will have additional weapons available if the outlook darkens again,”
“I made a living analyzing the future, not the past. The Fed’s monetary experiment will be more disruptive down the road than anticipated,”
“Every ounce of intuition in my body is that the potential costs have crossed the potential benefits in Fed policies.”
“I don’t know what’s in the Fed’s forecasting record that allows them to make such a bet.”
