Stanley Druckenmiller: "This Is The Most Unsustainable Situation I Have Seen In My Career"
By Tyler Durden
By Jody Chudley, originally posted on the Daily Reckoning
Simple Math Shows America Is Headed for an Economic Disaster
With so many voices streaming at us through our televisions and computers, a person can’t be blamed for tuning out.
For the most part, tuning out is exactly what we should do. But sometimes it is very important that we pay attention…
By listening to Jeremy Grantham, Jim Grant and a host of other investors, a person could have avoided and profited the crashing of the tech bubble of the late ’90s.
By listening to Kyle Bass, Michael Burry and Prem Watsa, an investor could have avoided and even profited from the crashing of the housing bubble in 2008.
Today is another time when we all need to be paying attention. This time, the man we need to be listening to is Stan Druckenmiller.
For 25 years as a hedge fund manager, Druckenmiller compounded money at an annualized rate of return of 30%. Incredibly, he did it without a single down year.
Druckenmiller has a dire warning for all of us. One that requires action.
There is nothing for Druckenmiller to gain from providing this warning. He isn’t talking his book or trying to gain investor support — he isn’t promoting anything. He doesn’t even have a political agenda.
He is spending his own time and money to try to bring this issue to light because he believes it is crucial for the United States.
Druckenmiller simply believes that America is heading for a disaster, and he is trying to use his high-profile position to get people motivated to stop it.
What you need to know about Stan Druckenmiller is that his incredible investing performance was rooted in his skills in making macroeconomic forecasts.
When describing how he was able to compound money at such a crazy rate and not have a single down year, Druckenmiller said:
How did we do it? Very simple. While others were focusing on the present, we looked and focused on the future in terms of analyzing unsustainable situations.
And when I look at the current picture of expected tax revenues combined with benefits promised to future generations, this is the most unsustainable situation I have seen ever in my career.
The disaster that Druckenmiller sees coming for the United States is all about changing demographics and entitlement spending. They don’t add up to a sustainable situation.
In 1940, entitlement payments, which include everything from disability payments to Social Security to Medicare, amounted to just over 20% of annual government spending in the United States.
Today, entitlement spending has swelled to nearly 70% of the annual federal budget.
Things are about to get a whole lot more complicated. The 20-year baby boom that took place after World War II is now beginning to result in a retiree boom.
For context, Druckenmiller points out that in 2030, the average age of an American citizen …read more
Source: Stanley Druckenmiller: "This Is The Most Unsustainable Situation I Have Seen In My Career"
