Lyn Alden: New Era Of Fiscal Dominance = More Inflation, Slower Economy

Investors require a different playbook now that the rules have changed

In order to succeed, it's critical to understand the rules you're playing by.

And the rules for investing may have recently changed.

There's a good argument to be made that we’re now in an era of fiscal dominance.

Today's guest, one of the smarter you'll get the chance to hear from, is certainly making that case.

So what exactly is ‘fiscal dominance’?

Why is it important for investors to understand?

And which assets do well, and which do poorly, in such an era?

To find out, we have the good fortune of speaking today with Lyn Alden, investment strategist & author of the recent book Broken Money: Why Our Financial System is Failing Us and How We Can Make it Better.

She also shares her outlook on the dollar, gold and Bitcoin.

To hear it all, click here or on the image below:

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Adam’s Notes: Lyn Alden (recorded 4.25.24)

Executive Summary:

• Fiscal dominance occurs when large sovereign deficits and debts limit the options available to central bankers to address economic challenges, particularly inflation. Lyn sees the US now in such an era of fiscal dominance.

• Federal debt currently stands at ~120% of GDP, significantly higher than during Volcker's tenure. Moreover, the fiscal deficit surpasses the combined sum of annual new bank loans and corporate bond issuance. This situation poses an increasing challenge for current Federal Reserve Chair Jerome Powell, who must navigate a delicate balance between controlling inflation while avoiding exacerbating the fiscal deficit. But when push comes to shove, he’ll have to sacrifice the Fed’s inflation target in favor of trying to keep the national debt serviceable.

• Eras of fiscal dominance tend to be