Lyn Alden, a macro expert from the Federal Reserve, has issued a dire message. She says that they have effectively lost control over the debt growth in the United States.
Alden, speaking at the Bitcoin 2025 Conference held in Las Vegas, explains the Fed’s typical control over credit growth within the US financial sector.
The macro-guru says that the Fed raises interest rates in order to reduce credit growth and inflation. This strategy has worked for decades, she adds.
Alden, however, warns of a critical turning point in the US, whereby the debt has become so large that even raising the interest rate to slow credit growth, will ultimately cause the government to borrow further, which can lead to escalating public debt faster than it is possible to shrink.
The problem was that, many decades earlier, when the federal debt was very low, and the majority of money was created by the private sector at the time, raising interest rates would have slowed credit growth. The private sector would be slowed faster than the fiscal deficit would increase.
It is only in the last few years that [US debt] has reached 100% of GDP. Ironically, when they increase interest rates they actually accelerate the growth of private credit faster than they do.
This means that they no longer have brakes. This train can’t stop because it has no brakes. .”
Alden points out, too, that it will be extremely hard for the United States to manage the high interest costs on the $36.22 trillion of national debt.
We are now in a situation where interest rates have not been structurally decreasing for decades and the debt level is still extremely high. The rates are the highest they have ever been. Interest expense has become a significant part of federal expenses for the very first time.
But if they keep interest rates high, the federal deficit will continue to grow. If they maintain high interest rates, the federal debt will continue to grow .”
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This article ‘Nothing stops this train’ – Macroguru Lyn Alden warns that the Fed has no way to slow down debt growth in US financial system appeared first on The ICD.
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