“ Nothing stops this train '' – Macro Guru Lyn Alden warns Fed has no way of slowing the growth of debt in the American financial system
The Macro-Expert Lyn Alden issues a disastrous warning, saying that the federal reserve has indeed lost control of the expansion of debt in the United States.
Speaking at the Bitcoin 2025 conference in Las Vegas, Alden explains how Fed generally controls credit growth in the American financial system.
According to the macro guru, the Fed increases interest rates to slow down growth and inflation of credit – a strategy it notes has been effective for many decades.
But Alden warns that the United States has reached a turning point where the national debt is now so massive that the increase in interest rates, intended to limit the expansion of credit, ultimately pushes the government to borrow more, which means that public debt is even faster than private debt cannot shrink.
“The problem is that several decades ago, when the federal debt was low and most of the money creation came from the private sector, whenever they increased interest rates, they would slow the growth of credit. They would slow the private sector faster than they would explode budget deficits.
The problem is now that the [US debt] is 100% of GDP, which has only occurred in recent years. When they increase interest rates, they ironically increase the deficit at a faster pace than they slow down the growth of credit in the private sector.
Basically, what it means is that they have no more brakes. Nothing stops this train because there are no more brakes attached to it. »»
Alden also underlines that the country will have an extremely difficult time to manage the interests of its national debt of 36.22 billions of dollars.
“Now, we have been in an environment where, for the first time in decades, interest rates are no longer structurally, and debt levels are always very high. They have been the highest that they have been since the 1940s. And therefore interest expenses in fact become a very significant part of federal spending for the first time, and there is no easy way to control.
If they reduce super low interest rates, then everyone wants to embark on rare active ingredients. But if they keep high interest rates, they continue to explode the federal deficit. »»
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