Macroeconomic expert Lyn Alden recently issued a stark warning about the US national debt, claiming the Federal Reserve has lost control over its growth. She made these comments at the Bitcoin 2025 Conference.
The Fed’s Losing Battle
Alden explained that the Fed traditionally combats inflation and excessive credit growth by raising interest rates. This approach has worked for decades. However, she argues that the current massive national debt has changed the game.
Raising interest rates, intended to curb borrowing, now ironically increases the government’s deficit. This is because the government has to pay significantly more in interest on its massive debt. The result? Public debt balloons even faster than private debt shrinks. In Alden’s words, “They don’t have brakes anymore. Nothing stops this train.”
The Unsustainable Interest Burden
The sheer size of the US national debt—over $36 trillion—presents another significant challenge. Alden points out that interest rates are unlikely to fall structurally, unlike in previous decades. This means interest payments on the national debt are becoming a huge part of the federal budget, a situation with no easy fix.
Lowering interest rates might stimulate the economy, but it could also lead to a rush into scarce assets. Keeping rates high, on the other hand, continues to inflate the federal deficit. It’s a lose-lose situation, according to Alden.
Conclusion
Alden’s warning paints a grim picture of the US financial system’s trajectory. The massive national debt, coupled with the Fed’s apparent inability to control its growth, suggests a potential crisis looming on the horizon.
