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Stanley Druckenmiller: "Bernanke Running The Most Inappropriate Monetary Policy In History"

Tyler Durden's picture


When three hedge fund titans all explain in words so simple a financial media channel morning show host can grasp that there is nothing behind this rally but smoke, mirrors, and a bearded academic, it seems more than a few people start to pay attention. Following Paul Singer and Kyle Bass, Stanley Druckenmiller "loves the market short-term, but hates it long-term," since Bernanke is "running the most inappropriate monetary policy in history." He warns, for it is a warning, that "markets will melt up," until the Fed is forced to tighten. He recommends shorting the AUD, and sees the commodity super-cycle as over, because, "supply-demand... is deadly." He also likes Google but not "tech companies that engage in financial engineering under advice of hedge fund managers."


Stan Druckenmiller: 

  • Decade of fast commodity demand is over
  • China leverage and misallocation of resources similar to US 2005-2008.
  • Bernanke running the "most inappropriate monetary policy" given circumstances in history
  • No bear market until the Fed changes monetary policy'
  • Sees Australian Dollar Coming Down ‘Hard’
  • Avoid commodity currencies in general
  • He likes Google; does not like other tech companies which engage in financial engineering under advice of hedge fund managers
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Wed, 05/08/2013 - 14:49 | 3542112 waterwitch
waterwitch's picture

so what would force the fed to change course?

Wed, 05/08/2013 - 14:52 | 3542126 fonzannoon
fonzannoon's picture

when people realize they are overpaying for shit sandwiches.

Wed, 05/08/2013 - 15:01 | 3542164 jbvtme
jbvtme's picture

"smoke, mirrors and a bearded academic"...amen

Wed, 05/08/2013 - 17:16 | 3542584 Jack Napier
Jack Napier's picture

The Fed will never change course. It's just a matter of waiting for the hull to fill with water. They already hit the iceberg in 08.

Wed, 05/08/2013 - 21:59 | 3543364 Honey Badger
Honey Badger's picture

When "money" leaves the stock market, where will it be going? Perhaps into a store of value?

Wed, 05/08/2013 - 14:54 | 3542135 Cursive
Cursive's picture


Nothing.  Their hand will have to be forced.  For example, bond prices start falling precipitously or roving zombie masses of unemployed start an OWS-style economic showdown.

Wed, 05/08/2013 - 15:31 | 3542257 andrewp111
andrewp111's picture

How about an oil spike to $200. That will fix it for them.

Wed, 05/08/2013 - 15:10 | 3542185 kaiserhoff
kaiserhoff's picture

Was just having this conversation with a tech guy who trades like I do.

Something big will break, California, Spain, France, China, and Ben & Co, having squandered all their ammo on saving the Jew bankers' hides, will have to pull back, salvage what they can, and suffer the return of free markets.

And I do mean SUFFER.

Wed, 05/08/2013 - 15:28 | 3542245 andrewp111
andrewp111's picture

Sure. But will it happen before or after Bernanke leaves office in 7 months? I expect after, but what do I know.

Wed, 05/08/2013 - 15:14 | 3542195 prains
prains's picture

morning wood and the kids inadvertently running into the bedroom when a throw down wrestle is going on is <inappropriate>


Ben "where's your shalom bitchez" Justtryandspankme, however, is a tad more than inappropriate.

when did crimes against humanity get so watered down to inappropriate ???

Wed, 05/08/2013 - 15:16 | 3542201 Sudden Debt
Sudden Debt's picture

well... look at this kid on how he handles the cop

and yet... no American Adult has a clue what to do against Bernanke or Obama.... like this 12 year old does.

he's my hero of the day actually :)

Wed, 05/08/2013 - 16:10 | 3542395 prains
prains's picture

there is hope.......and he's twelve years old

Wed, 05/08/2013 - 17:19 | 3542593 FinalCollapse
FinalCollapse's picture

The Stonecutters control everything: White House, Congress, courts, police, media, etc. Absolutely nothing can be done unless people will come to streets and fight - and I really mean fight. The OWS movement tried it peacefully only to be beaten, shot at, sprayed, etc. 

Wed, 05/08/2013 - 21:12 | 3543249 Monedas
Monedas's picture

He hurts his case by choosing such a petty matter .... cops and fed ex delivery people are entitled to common courtesy .... it's kind of a sucky stand off !   Smacks of the universal socialist death wish !

Wed, 05/08/2013 - 15:43 | 3542297 Thisson
Thisson's picture


Wed, 05/08/2013 - 22:07 | 3543094 Al Gorerhythm
Al Gorerhythm's picture

so what would force the fed to change course?

A "Crack-up Boom".

And then the pundits will observe that only then would a good and competent manager of the economy, deem it wise to change course.; circumstances dictating action meme.

Wed, 05/08/2013 - 14:50 | 3542115 samsara
samsara's picture

...The Turbo button is only for short bursts.... Now you broke the bloody ship !!!...

Appologies to Galaxy Quest.....

Wed, 05/08/2013 - 15:22 | 3542221 Hippocratic Oaf
Hippocratic Oaf's picture

Bernanke......."Look! I have one job on this lousy ship, it's *stupid*, but I'm gonna do it! Okay?"

and MY appologies to Galaxy Quest

Wed, 05/08/2013 - 14:50 | 3542117 NoLongerABagHolder
NoLongerABagHolder's picture

Not very timely advice..... the markets have already melted up.


Wed, 05/08/2013 - 15:16 | 3542202 NotApplicable
NotApplicable's picture

I'm thinking that perhaps we ain't seen nothin' yet.

Wed, 05/08/2013 - 15:30 | 3542249 andrewp111
andrewp111's picture

Bubbles always rise fastest right before the pop. They still have to make DOW 36000 come true.

Wed, 05/08/2013 - 14:51 | 3542120 Lost Wages
Lost Wages's picture

Seems as soon as Druckenmiller said this everything turned downward.

Wed, 05/08/2013 - 14:51 | 3542122 fonzannoon
fonzannoon's picture

Did Drunkenmiller say this last year as well? If so then he has some credibility. Otherwise he is just another FOMO.


Wed, 05/08/2013 - 15:21 | 3542222 kito
kito's picture

commodity collapse....drumroll.......deflation........................

Wed, 05/08/2013 - 15:28 | 3542248 fonzannoon
fonzannoon's picture

I completely disagree. there will be no drumroll.

Wed, 05/08/2013 - 15:44 | 3542299 kito
kito's picture

lots of oil drums will be rolling off of commodity traders balance sheets when commodities get ripped.............................

Thu, 05/09/2013 - 08:37 | 3543198 WhiteNight123129
WhiteNight123129's picture

Hi Kito,

What is interesting is that his view is more complex than that. he sees overheating in the US (hence tightening of rates) yet bust in other parts of the world (deflation).

But then if China prints money, what would the Chinese do? Maybe buy USD? It is going to be epic and complicated to navigate.

This is a super tricky scenario.

I doubt that when hte FEd stops QE first and consider raising rates, I doubt that treasuries will yield 1.70% for 10 years.

I think Short treasuries and long tobacco shares for me.


Wed, 05/08/2013 - 14:52 | 3542127 McMolotov
McMolotov's picture

China leverage and misallocation of resources similar to US 2005-2008.

And with roughly four times the population of the US, what could possibly go wrong when the bubble bursts?

Wed, 05/08/2013 - 14:53 | 3542129 101 years and c...
101 years and counting's picture

china can kill this market on a whim.  with or without the printing psycho changing policy.

Wed, 05/08/2013 - 14:55 | 3542138 101 years and c...
101 years and counting's picture

oops.  i called it a market.  i meant to say "china can kill this policy tool for transferring wealth UP the ladder on a whim.

Wed, 05/08/2013 - 15:11 | 3542186 NotApplicable
NotApplicable's picture

As long as they can trade worthless Fed and Treasury notes for gold, I don't think they'll pull the trigger.

Wed, 05/08/2013 - 14:55 | 3542139 q99x2
q99x2's picture

They need to get Bernanke in cuffs and 5150 him.

Wed, 05/08/2013 - 14:58 | 3542152 Bam_Man
Bam_Man's picture

Druckenmiller = Captain Obvious

Wed, 05/08/2013 - 16:00 | 3542348 WarHorse
WarHorse's picture

The guy has returned 30% per annum since 1986.  I'll listen to him over you all day, every day

Wed, 05/08/2013 - 16:00 | 3542349 WarHorse
WarHorse's picture

The guy has returned 30% per annum since 1986.  I'll listen to him over you all day, every day

Wed, 05/08/2013 - 14:59 | 3542155 Uncle Zuzu
Uncle Zuzu's picture

I hate that phrase 'melt up'. It's part of the hedge fund lexicon along with 'fill the gap' or 'edge'.

Wed, 05/08/2013 - 14:59 | 3542156 SKY85hawk
SKY85hawk's picture

Good for Stanley.

But, Zerohedge was first!

-          The effectiveness of monetary policy was last discredited in the 1970s. The persistent attempts to revive growth with easy money led to stagflation.  The real world has turned to be opposite to the favored positions of the economics profession: the financial market is not only inefficient but systematically bubble-prone. 

Trying to bring back yesterday through monetary growth will eventually bring inflation, not growth.  This is what the Gov’t wants in order to ‘pay off the Debt’. 

Source: http://www.zerohedge.com/news/2013-01-23/money-cannot-buy-growth


Einstein's definition of insanity seems applicable, too!


Wed, 05/08/2013 - 15:30 | 3542254 azzhatter
azzhatter's picture

Just ignore Stan and get real advice from Joe Kernan, Anjew Ross Sorkin,Cramer, Squicky and Steve (I blow Bernanke every day this year) LIESman

Wed, 05/08/2013 - 16:06 | 3542368 Blankenstein
Blankenstein's picture

First you better take a sedative and keep a barf bag handy.  Against my better judgement, I tuned into CNBS yesterday to see what crap they were polluting the airways with and could barely stomach it. 

Wed, 05/08/2013 - 15:00 | 3542158 Xploregon
Xploregon's picture

So, IF Drunkenmiller is correct, would any of you like to venture what that implies for PM'S?

Wed, 05/08/2013 - 15:12 | 3542188 NotApplicable
NotApplicable's picture

Physical or paper?

Wed, 05/08/2013 - 15:23 | 3542228 css1971
css1971's picture

Commodities down = gold down.

Wed, 05/08/2013 - 15:49 | 3542315 Thisson
Thisson's picture

Not necessarily.  Commodities can go down due to lack of demand for final finished goods.  Gold isn't tied into that process, but it is tied up in baskets with other commodities, such as the CRB.

Wed, 05/08/2013 - 15:49 | 3542311 Thisson
Thisson's picture

The problem is this: PMs are one of the only ways to hold money outside of the system.  BUT, if real interest rates go up, PMs will suffer due to the increased opportunity cost of holding them.  So, I think the only course through Scylla and Charybdis is to hold PMs until enough financial assets are destroyed that interest rates go up significantly.

Perhaps a more important question is how can interest rates go up with the Fed buying every financial asset?  There has to be some kind of market schism between the official rate of interest and the black market rate, perhaps caused by distrust of dollar-denominated assets.

Wed, 05/08/2013 - 15:00 | 3542159 ebworthen
ebworthen's picture

The FED and Wall Street need to sucker in more pension, 401K, IRA, and retail investor money before they make the "surprise announcment" of the end of QE and the raising of rates.

The bankers and CONgress will know ahead of time of course.

Wed, 05/08/2013 - 15:14 | 3542198 NotApplicable
NotApplicable's picture

Martial Law will be declared in response to a false-flag first, as fedgov has no other method of surviving an end to QE (think hollow-points, billions of dem).

Wed, 05/08/2013 - 15:00 | 3542160 Hohum
Hohum's picture

I wonder if Mr. Druckenmiller looks at rig counts or if he just assumes the supply trend will continue forever and always.

Wed, 05/08/2013 - 15:53 | 3542322 francis_sawyer
francis_sawyer's picture

He "pow~wow", & smokem peace pipe with fellow tribe chiefs... Trade wampum for fire water...

Wed, 05/08/2013 - 15:12 | 3542187 kaiserhoff
kaiserhoff's picture

Inappropriate = Criminal

Wed, 05/08/2013 - 15:14 | 3542196 Yen Cross
Yen Cross's picture

    "Avoid commodity currencies in general"? I think the guy means, "short commodity currencies in general".  

  Fixed it for ya Stan...

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