High-profile hedge fund manager, Stanley Druckenmiller of Duquesne Capital, said that the “once-in-a century emergency measures” of artificially low interest rates to stimulate the economy “are no longer necessary.” At the Delivering Alpha conference in New York last week, Druckenmiller criticized the present Federal Reserve:
“The current policy makes no sense from a risk-reward basis…extraordinary money measures are likely running into sharply diminishing rewards. On the other hand, history shows potential long term costs could be quite severe.”
“I don’t know if the outcome will be benign, ” he continued. “I really don’t. But neither does the Fed … I don’t know what it is in their forecasting record that gives them the confidence.”
Druckenmiller’s remarks seem to be directed at the current Fed Chief, Janet Yellen, because at another point, he called former Fed Chairman, Ben Bernanke, “The greatest living economist.”
Despite having criticized the Fed’s quantitative easing, Druckenmiller invested heavily in stocks at the end of 2013.
On the topic of tax inversions and business owners’ strategy of moving operations abroad to avoid high taxes, Druckenmiller commented, “We’re being unpatriotic, we being the corporate community, because we’re obeying the laws on their books? That’s a little weird to me. These guys they are obeying the law. If you don’t like it, change the law.” The hedge fund manager was apparently alluding to statements by Treasury Secretary Jack Lew calling on companies to show “economic patriotism, ” and run their operations domestically.
When asked who in the world of finance still has “guts, ” he mentioned George Soros (Druckenmiller worked at Soros Capital management from 1988 to 2000) and David Tepper of Appaloosa Management, about whom he said,
“He’s had a lot more volatility than I, but you talk about a guy who knows how to lay it on when he’s got a big opinion, and that’s the key to money management, it’s making a lot of money when you’re right and minimizing when you’re wrong.”
Druckenmiller closed Duquesne Capital in 2010 and converted it into firm to manage his own fortune. He has been involved in many philanthropic projects, including the Harlem Children’s Zone, which he chairs, a $100 million neuroscience institute at NYU’s Lagone medical center, and $705 million donated to medical research and charities to fight poverty.