Drukier Miller Criticizes U.S. Treasury's Expanded Bond Buybacks as 'De Facto QE'

According to Bitcoin News, citing a Wall Street Journal opinion piece, legendary investor Stanley Druckenmiller criticized U.S. Treasury Secretary Scott Bessent’s proposal to increase the single-size repurchase of long-term Treasuries from $2 billion to at least $4 billion, arguing that this move could overstep liquidity management and veer into intervention aimed at suppressing long-term yields. Druckenmiller noted that, with inflation still above target, the U.S. fiscal deficit accounting for approximately 6% of GDP, and federal debt exceeding $40 trillion, rising yields may simply reflect the market’s rational pricing of deteriorating U.S. fiscal conditions. He warned that if markets perceive the Treasury as defending a specific yield level, traders may continuously test the limits of government intervention, forcing repurchase volumes to expand further. He also argued that the Treasury’s simultaneous repurchase of long-term Treasuries and issuance of short-term bills effectively reduces duration risk in the market—akin to a small-scale quantitative easing orchestrated by the Treasury. His recommendation is to let the bond market determine the cost of government financing and to address the root fiscal issues through deficit reduction, welfare reform, and improved debt management.