WTFinance Nothing Stops This Deficit Train with Lyn Alden
Jul 9, 2025
Lyn Alden, a leading macro strategist and founder of Lyn Alden Investment Strategy, discusses her insights into the current economic landscape. She covers the alarming rise of U.S. fiscal deficits and the complexities of financial dominance in markets. Alden delves into the implications of tariffs, the risks posed by high interest rates, and how these factors may push the U.S. towards a scenario similar to Japan’s economic model. Her thoughts on financial repression and investment strategies for navigating economic volatility are particularly engaging.
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US Fiscal Dominance Explained
- The US is now in fiscal dominance, where public sector deficits outweigh private debt creation.
- Fed tools like interest rates are less effective because government borrowing is less sensitive to rates.
Drivers Behind Rising US Deficits
- Interest rates offset rising debt costs for decades, but now rates are stuck sideways, removing that relief.
- The US faces a demographic cliff with retiring baby boomers increasing deficit pressures.
Managing Bond Market Challenges
- The Fed and Treasury can occasionally lose bond market control, but have tools to intervene.
- Issuing more short-term T-bills and a dovish Fed chair can stabilize debt funding.
