One would not normally call the Fed “radical”, yet that’s exactly what Druckenmiller called them in a recent interview. I couldn’t agree more. He joins a growing chorus of top financiers who are despairing at the Fed’s folly (Dalio, Grantham, Summers...).
Why is the Fed so radical? In a word, politics - populist politics, to be exact. Just because Trump lost the presidency doesn’t mean that populism has gone away from the American political scene. If anything, it has only grown stronger as politicians of both parties are vying for the hearts and minds of a deeply divided nation. They are in a cash bidding war for the votes of Americans who are deeply disenchanted with their political status quo.
So, when in doubt, buy them out. No matter which party governs, it’s no longer an ideological contest but a cash-slinging mud fight. Good luck with that... I have seen many a country try that and it ALWAYS ends up the same way: bankruptcy and misery. Argentina and Greece come immediately to mind, but history is full of similar examples.