Is the Federal Reserve Losing Its Grip on U.S. Debt Growth?
At Bitcoin 2025 in Las Vegas, macro analyst Lyn Alden raised major concerns about America’s debt trajectory. She argued the Federal Reserve can no longer slow down credit expansion effectively.
In previous decades, the Fed used interest rate hikes to rein in inflation and reduce private borrowing. That method worked when federal debt remained low and the private sector drove money creation.
Now, Alden believes the situation has flipped. With debt topping 100% of GDP, rising rates don’t slow the system—they worsen it. Instead of shrinking credit, higher rates force the government to borrow more.
She explained this shift changes everything. Today, tightening policy increases federal deficits faster than it reduces private borrowing. In her words, “nothing stops this train,” because the brakes are gone.
Interest Payments Becoming a Serious Fiscal Burden
Alden emphasized the dangers of rising interest costs. With $36.22 trillion in debt, even small rate hikes carry massive consequences.
Unlike past decades, rates aren’t trending down anymore. That change collides with debt levels not seen since World War II. The result? Interest expense now eats up a growing share of federal spending.
She warned that managing this burden leaves policymakers stuck. Slashing rates would push investors toward hard assets and risk bubbles. But keeping rates high continues to blow up deficits.
No Easy Fix as Fiscal Pressures Mount
Alden made it clear: the U.S. faces a monetary trap. Raising rates fuels debt. Cutting them invites instability.
She stressed that without structural reform, there’s no smooth way out. The Fed’s traditional tools no longer apply to today’s fiscal landscape.
Her message to the audience was blunt—the system is speeding forward, and the brakes no longer work.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
