Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. For Druckenmiller, it feels like , just before the financial crisis, just before the global economy slid into recession. On Friday, a transcript of that talk started circulating you can read it here.

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Half a decade ago, there was a risk that Japan-style deflation would trash the U. I just know it's going to end badly, and a year and a half later we figure out it was housing and subprime. I feel the same way now.

I’m not worried about the stock market wobble

Druckenmiller cited a thought experiment from a decade ago, when the Fed held its interest rate at 1 percent for most of and even though the quarterly growth rate for those two years averaged 3. By keeping borrowing costs so low for so long, the Fed helped finance a buying spree that saw investors loading up on toxic assets ranging from debt backed by mortgage that house buyers couldn't afford to collateralized debt obligations that even the rating agencies couldn't assay:.

For today's policy environment to be justified, Druckenmiller said the central bank would have to believe the economy is in its worst shape in more than a century:.

What worries investing guru Jack Bogle right now - Mar. 8,

When you have zero money for so long, the marginal benefits you get through consumption greatly diminish, but there's one thing that doesn't diminish, which is unintended consequences. In his speech, he cited the rally in U.

As this chart shows, it didn't take long for wealth to be recovered and the previous high to be topped:. Druckenmiller didn't claim to know what might trigger a market panic, or when one might arrive. When this thing ends, because we've had speculation, we've had money building up for four to six years, in terms of a risk pattern, I think it could end very badly.

In , as an adviser to Tim Geithner -- who was head of the New York Fed at the time -- Druckenmiller warned U. He was ringing an alarm bell that most officials were content to ignore. Let's hope policy makers are paying more attention this time around.

Should investors worry that stock market ‘fear gauge’ is so low?

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors. To contact the author on this story: Mark Gilbert at magilbert bloomberg. To contact the editor on this story: Cameron Abadi at cabadi2 bloomberg.

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Yes, Worry About the Stock Market The U. Mark Gilbert ScouseView More stories by Mark Gilbert. Forward Guidance On Friday, a transcript of that talk started circulating you can read it here. Clear thinking from leading voices in business, economics, politics, foreign affairs, culture, and more.

Corrects name of club where Stanley Druckenmiller spoke in first paragraph of article published April Before it's here, it's on the Bloomberg Terminal. Mark Gilbert is a Bloomberg Gadfly columnist covering asset management.

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