“The seniors have a very, very powerful lobby,” Druckenmiller said. “They keep getting more and more transfer payments” from younger generations through what’s essentially a pay-as-you-go system, he said.

There were 40 million people in the U.S. 65 and over, according to the 2010 U.S. Census, the year before the first baby boomers hit retirement age. By 2020, that number is expected to grow to 55 million, according to the U.S. Department of Health and Human Services.

Speaking Out

As the elderly population rises, the number of workers who pay into Social Security is dropping. By 2030, there will be about two workers per retiree, down from 3.4 workers in 2000, according to the 2004 book “The Coming Generational Storm” by Laurence Kotlikoff and Scott Burns. If a three-year-old born today is taxed at the same rate as today’s working population, he will get less than half of the benefits that our current seniors are getting, Druckenmiller said.

Usually press shy, Druckenmiller said he chose to speak out on the issue now, because he felt he hadn’t done enough before the financial crisis.

As early as 2005, he forecast the impending real estate crisis and its effects on banks “backing all those silly instruments,” he said. He met with a couple of policy makers and a representative of the U.S. Congress at the time. He also spoke at the Ira W. Sohn Investment Research Conference in New York.

“I had my 30 charts with colors and pictures and laid out for them why I thought it was going to be a huge, huge problem for the U.S. economy and the U.S. financial system,” he said in the interview.

No 1982

Today he sees an even bigger reason for concern because of the government’s massive unfunded liabilities. He also sees trouble with what he calls its trickle-down monetary policy.

The Federal Reserve’s decision to hold interest rates near zero and buy $85 billion of assets a month is pumping up the stock market, all with the hope that rich people will spend those gains, and that money will trickle down to the rest of the country.