[Legendary billionaire investor Stanley Druckenmiller] has warned that US markets are caught up in a “raging mania” fostered by the trillions of dollars in government spending. …
The problem is that the nearly $6 trillion allocated by Congress to combat the economic impact of COVID has been spent after the economy already finished recovering. The accelerating pace of inflation, and inability of certain businesses to hire lower-wage workers, are but byproducts of this. …
Druck pointed out that the biggest economic crises of the last 100 years have largely been caused by asset bubbles and inflation. “Inflation is a tax the poor can’t afford or avoid,” Druck added.
Any further stimulus spending is intended to fix a problem that, in Druck’s words, “doesn’t exist anymore.” He added: “If I was Darth Vader and I wanted to destroy the US economy, I would do aggressive spending in the middle of an already hot economy.”
“You usually get a bubble out of that, and you get inflation of that. Frankly, we now have both. This is the biggest bubble I’ve seen in my career.”
And it’s not just stocks: Druck pointed to the state of crypto and housing markets.
“What are we going to get out of this? You’re going to get a sugar high, the higher inflation, then an economic bust,” Druck warned.
It’s not sustainable, so something is going to give way. The ability of the monetary authorities to manipulate markets has greatly increased over the decades, so perhaps there won’t be a market crash. Instead, there will be a collapse in the meaning of money. One day, suddenly, everyone will just know that inflation has arrived, bigtime, despite what government statistics and media spin say.