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I wouldn't be surprised in fact it's my central forecast the Dow won't be much higher in 10 years than it is today by 2027 the interest expense alone on the debt eats all Health Care spending by 2047 it eats all discretionary spending so we're now getting into fiscal dominance by the way by 49 it eats also security we're getting to the point now where the interest expense on the debt is so high that it's going to eat up our ability to basically service the Next Generation I'm not even sure about the current one our Central case is a hard Landing by the end of 23 but I don't know I've been wrong on a lot of things I could be wrong on this but since I do it for living that's our forecast which is a recession in 23.
the U.S is going into a recession by 2023. this is not coming from us these are the words of well-known investor in former Quantum fund manager Stanley druckenmiller this video will give you new insights as to why an economic downturn is inevitable so watch this video till the end to learn how to position yourself for the coming economic unrest I think I said it was the most radical monetary policy relative to the circumstances in history I made a New Year's resolution that year not to be on TV but when I saw what was going on I couldn't control myself I haven't been on TV since apparently this isn't on TV that's a good thing but I was just incredibly frustrated with what to me looked like a Fed that was just taking unbelievable risks for what the story of the time was inflation was 1-7 and we were buying 120 billion bonds a month this was post-vaccine successful vaccine because inflation was one seven instead of two so we're taking this massive gamble where you threatened 40 Years of credibility with inflation and you're blowing up the wildest raging asset bubble I've ever seen and I knew that the worst second economies happened most asset bubbles the 30s here Post 89 in Japan after the housing bubble up here so that's what I went on if you remember a Fed did 2 trillion in QE after vaccine confirmation and after the time I went on you had the strongest momentum in employment history on a rate of change basis at the same time their partner in crime Administration was doing more fiscal stimulus again both vaccine after it was clear emergency measures weren't needed than we did in the entire great financial crisis I'm not talking about before the vaccine I'm talking about after it turned out I was right I've been wrong plenty of times in my life the Fed was wrong they made a big mistake it's not so much that they were wrong I've been wrong a lot it's the risk reward bet they meet it's not part of their mandate in their opinion and I don't think they looked at it as a risk and to be fair to him we'd had 20 years of disinflation people tend to live in the past and he had plenty of company including on your network the other thing I'll say is I've been wrong a lot in my career and when I do I correct my mistake what was particularly mind-boggling to me two to three months later inflation takes off it's no longer a theory it's actually happening we come up with this ridiculous theory of transitory so we have 5 trillion in fiscal stimulus we have 5 trillion in QE Janet Yellen is running down the TGA account so that's another trillion in stimulus and if you remember the monetary framework in the fall of 2020 they were no longer going to forecast they were going to be data dependent and wait till they see the whites of inflation's eyes so guess what they saw the whites of their eyes and what did they do they forecast that it was going to be transitory when you make them mistake you got to admit you're wrong and move on that nine or ten months that they just sat there and bought 120 billion in bonds I think the repercussions of that are going to be with us for a long long time you got massive fiscal stimulus you have massive monetary stimulus the thing is already starting to percolate and of course it's what caused it there's a lot of people out there saying Wooten caused it Putin did extend it but can I remind everybody that when Putin invaded the CPI was seven percent year to year before he invaded and then all this crazy stuff we did was to get inflation one from one seven to two and we were already at seven but yeah once you light the match and we found this out in the 70s inflation rotates that's summer everybody kept talking about used car prices are going to come down this can come that's not the way it works by the way there are a lot of disinflationary things happening now in the good sectors UK unions okay do you think they're going to come in in the spring and they're going to negotiate and they're going to say oh well the five-year five-year forward is 2.3 so yeah I'll take a 2.3 raise no it's like the railroad Cruise they just got 24 over three years when you lose that much purchasing power so then the wage negotiations it seeps in there then of course there's customers of companies that have to raise their wages and the thing Spirals and that's what we're dealing with and that's the position the feds got themselves in with basically a boom bus policy but yeah they were not alone the fiscal stimulus was a huge part of this but to be fair they enabled it the government can't spend five trillion dollars if they don't print it we are in deep trouble everything I said at those colleges is worse in terms of the metrics except for one thing what I miscalculated was I didn't calculate zero rates I used four percent rates but the only thing Donald Trump and Hillary Clinton agreed on in 2016 was don't cut Social Security don't cut entitlements so nothing was done Joe Biden has excruciated risk Scott because he dared mentioned maybe we we shouldn't be increasing senior pays but if you look at reversal I just talked about and you use the CBO estimate which is rates at 3.8 percent which I think frankly is pretty optimistic given all the things we've talked about by 2027 the interest expense alone on the debt eats all Health Care spending by 2047 it eats all discretionary spending so we're now getting into fiscal dominance by the way by 49 it eats also security we're getting to the point now where the interest expense on the debt is so high that it's going to eat up our ability to basically service the Next Generation I'm not even sure about the current one I will be stunned if we don't have a recession in 23 don't know the timing but certainly by the end of 23 I will not be surprised if it's not larger than the so-called average Garden variety and I don't rule out something really bad why because if you look at the liquidity situation that has driven this we're going to go from all this QE to QT we're following an asset bubble we've been doing all this running down on the SBR which is now that's a strategic petroleum Reserve it's now below 84 levels even though obviously oil consumption is much higher we've had a bunch of myopic policies that have actually delayed the liquidity shrinkage QT has been almost entirely offset by Janet Yellen running down the treasury savings account by the way pretty amazing policy she could have sold 10 years for under one percent during this time and said she runs down the treasury savings account so all that has mass the liquidity shrinkage but it really comes into full gear and she can continue this for a while we could do the SBR for a while simulative stuff but by the first quarter of 23 it kind of goes the other way so our Central case is a hard Landing by the end of 23 but I don't know I've been wrong on a lot of things I could be wrong on this but since I do it for a living that's our forecast which is a recession in 23.
my first boss in Pittsburgh in 1976. he said Stanley the way you time the political cycle is you buy the market two years before the general election and then you sell it on the general election because they always rig things to be good in the election year he said this in 76. we had major Bottoms in 78 82 86 90 94 9802 not so much in 06 because Bush tried to push it through all the way and we see what happens the incredible thing about the myopic policies they're running and I assume it's for the midterms it's kind of dumb politically because it sets up a bad bad 24.
so maybe the Silver Lining is we get a crisis that doesn't destroy us but it's bad enough maybe to bring us together and someone comes out of nowhere because we definitely need to change half the country hates the other half we got myopic economic policies home bus policies you don't really get change unless bad stuff happens to catalyze a change that's what brought in Paul volcker G William Miller and Arthur Burns proceeded him as gloomy as I am I'm open to something really great happening out of nowhere that we don't see by catalyzed by something bad I wish things are going to be a recession I wouldn't be surprised if they haven't prepared for the winter better than we think but of course there's going to be a recession we've got monetary policy tightening in Europe like everywhere else and you have the price of natural gas at about 300 equivalent to oil there Putin I don't know what he's going to do we haven't even gotten into all the red and black swans flying around up above which I'm assuming aren't going to happen but they are flying around thanks for watching the video till the end if you are still with us then don't forget to subscribe to our Channel and hit the Bell icon to be notified when a new video comes out
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