Druckenmiller: Seniors Are Stealing From Our Young

Your next video will start in

Recommended Videos

  • Info

  • Comments


Sept. 11 (Bloomberg) –- Duquesne Capital Management Founder and Former CEO Stanley Druckenmiller discusses the idea of generational theft and the change in average net worth by age group. He speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Special guest, the man who broke the bank of england with george soros, now speaking out against what he calls it a rational theft.

Stanley druckenmiller.

When you and i sat down in the spring, you urged everyone to start focusing on this idea of generational theft.

You would on to speak at your own school and you really rocked the campus, warning students that need to pay attention to the fact senior citizens could be stealing their money.

You are about to embark on a full on college tour.

Why is this so important?

It really solidified to me during the sequester period when the whole debate was going on about cutting government spending in our fiscal issues, and that is when i first came to understand the lack of knowledge on this topic, not just from seniors, but future seniors.

If you listen to the sequester debate in spending and where the debt is, i find it inconceivable they didn't know the facts, including i would be surprised if the president knew the facts given the statements he was making.

During the sequester, you may recover he said, we are not going to balance the budget on the backs of our seniors.

If you look at the situation where we are today, seniors are doing well in the last 30 years, and a remarkable, schmid.

And because the mandate well, the poverty rate is down from 35% to 9% for seniors.

But their wealth is also increasing dramatically.

Looking forward, we have a very tough picture because of the graphic situation for seniors about to explode as a portion of the population and the benefits we promised them, there is no way to cover them given the current situation we have.

Stand, in many ways, the facts speak for themselves and you brought charts doubt illustrate the points you're making.

Lifetime benefits by age.

Clearly, if you're not born yet, you're going to be in deep trouble come the future.

Why is it, do you believe, so many people are so tragically uninformed -- ignorant, of these facts?

Do you blame the voters themselves were during these issues and favoring short-term concerns or do you put the blame at the feet of politicians in washington?

Or both?

I would say both.

This is a country of special interests, as we all know.

As we all know, old people vote or seniors vote.

They vote consistently and young people don't. young people have other interests than say the future economic situation at the age of 20. i sure did.

They're not necessarily focusing on the stuff.

So part of what you're doing, it sounds to me, zinc urging once these younger people have encouragement, get them out to the ballot box and vote with their consciences?

It won't be their conscience.

They should be mad as hell.

Part of what i'm doing is to inform seniors of the situation.

Bucks do they care?

They're getting the money.

I'm sure they care.

Maybe some don't. but i would bet a lot of money that 85% of seniors today, if they knew the numbers were going to go over, they wouldn't be comfortable with this is what they were leaving to their grandchildren and great- grandchildren.

What numbers?

What are you uncomfortable about?

Can we go to a nation of we are takers?

Yes, we have that.

Let's first set the table and looking at what is going on in the last 35 years.

Then i want to get into the demographic problem and why it is so scary from here and why i don't understand the current dialogue that is taking place over the situation.

It is completely uninformed.

This chart on the screen is federal government entitlement transfers and percent of government budget outlays.

If you go back to 1960 when i was seven years old, about 20% of the federal budget government outlays were transfer payments or what we call entitlement.

That number has gone up to 72% over this 35 year period.

The problem with that, first of all, the good news on that, as i said, seniors are much better off and spend -- bituminous, schmid, poverty rate is way down for seniors, but these are transfer payments and there is no productive investment or no looking to future coming out of this.

If you look at how we got from 20% to 70%, almost all of that money went to the elderly.

If you took an elderly person back in 1960, 28% of federal government outlays per capita -- i'm sorry, 40% of government outlays per capita went to them.

That number is 71% all stop where did that come out of?

It came out of children, came out of investments and things like education, infrastructure, things like that.

And that crowding out effect creates a problem going forward because these are not productive investments.

And we have not gotten to the point where baby boomers, for the most part, retired him a beginning to collect their entitlement checks and programs.

Before we get to the demographics, can we put up the well chart?

Let's pull that up.

Since you have started this, when you're putting out these numbers, you started having this conversation in the spring.

What kind of response are you getting?

What are those who are influential with the young people, what are they saying?

The answer is, i don't know.

Jeff canada and i, my partner -- well, i am sort of the tagalong, we went up to vote boating college to see where this went.

I had a number of people contact me after your show.

I did not expect that.

A lot of people watch the show.


I certainly do.

We went up to boden college and give her presentation just trying to outline the facts of what we're looking at the next 30 or 40 years.

The response was overwhelming.

A stone that, we're going to do about 10 to 12 colleges in the next two months -- based on that, we're going to do about 10 to 12 colleges in the next two months.


sector berg is focused more on immigration in the stuff.

Let's look at the net worth by age group.

It is important shaping the debate.

We have always heard the term, you don't want to leave the next generation with less than the current generation.

This chart when it was first shown to me, and it is from the federal reserve board survey of consumer finances, it is kind of shocking.

Because of the previous chart i showed where these transfer payments have gone primarily to the elderly and have been substantial, look at what has happened.

If you are a 29 to 37 year old in this country, your net worth is less than a 29 to 37 --year- old was in 1983. those are staggering statistics.

This is the first generation where a 30 --year-old is worth literally -- his net worth is worth less than his parents.

If you look at the older people, their net worth has doubled over this timeframe.

Again, because this money has been transferred.

Do you not worry -- let's go back to boden.

Do don't worry that people look at you, stanley druckenmiller, middle-class, which a fancy new england college, made of a zillion dollars as a financial speculator, why should i listen to him?

Well, modestly, the way i would answer that is the way i made my money in the industry wasn't necessarily in stocks.

I made most of my money in the bond and currency markets trying to forecast future economic trends and problems that i saw happening.

And one thing i'm not very proud of is if you look at my record, the big years were in bear markets and chaos.

I tend to take rate advantage of catastrophes happening in the marketplace.

In other words, for whatever reason, maybe i have a dysfunctional personality, i was good at looking around corners and protecting them.

And this is much longer and timeframe, but it is the easiest lay-up i have ever seen of something we have got to address and a problem we have got to deal with.

That is a great answer.

This text has been automatically generated. It may not be 100% accurate.


BTV Channel Finder


ZIP is required for U.S. locations

Bloomberg Television in   change