Politicians will act this way until the markets ‘revolt’

Stanley Druckenmiller

Anjali Sundaram | CNBC

Billionaire hedge fund manager Stanley Druckenmiller on Tuesday warned that the budget deal struck between President Donald Trump and congressional leaders earlier this week will only add to an already-dangerous national debt problem.

“The obscene budget is just another example of an unintended consequence of global central banks cancelling market signals,” he told CNBC’s Kelly Evans in an email.

“Politicians will continue to engage in myopic policies until markets revolt. And the longer these policies are sustained, the bigger the bill we will leave the next generation,” he added.

Druckenmiller’s comments came less than a full day after Trump announced on Twitter that he’d reached a fiscal spending compromise with Senate Majority Leader Chuck Schumer and Speaker of the House Nancy Pelosi. The budget deal would raise U.S. discretionary spending to $1.37 trillion in fiscal year 2020, up from $1.32 trillion this year, according to Reuters.

The agreement, however, has faced criticism both in Washington and on Wall Street, where Druckenmiller and others have called for deeper spending reductions amid an expanding national debt. He told CNBC in June that mounting corporate debt puts the U.S. in bad shape in the event of a recession.

Druckenmiller is former chairman and president of Duquesne Capital and is currently CEO of Duquesne Family Office.

“We are in worse shape for a recession now than if things had slowed down,” Druckenmiller said at the time. “Once confidence turns down, you have to deal with the hand you’re dealt, and Chairman Powell has now got a tough situation on his hands.”

“I deeply, deeply believe in a capitalist system you need a hurtle rate for investment and if that rate in not up there around 3 or 4 [percent], people are going to get crazy,” he said.

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