Damus
Lyn Alden profile picture
Lyn Alden
@LynAlden
The Fed has a dilemma, almost a race, between two things as they raise rates here.

1) Raising rates generally results in tighter borrowing standards on a lag. This can reduce lending-driven money creation and lead to disinflationary demand destruction around the margins.



2) At high public debt levels, raising rates also increases federal interest expense, which increases the fiscal deficit, which is a source of ongoing inflationary stimulus into the economy.



In the 1940s, inflation was fiscal-driven and public debt was high.

In the 1970s, inflation was mostly lending-driven and public debt was low.

Currently, the Fed is using a 1970s-style playbook to deal with 1940s-style fiscal-driven inflation.



3237❤️59🤙54⚡️1
N · 191w
Great stuff ⚡️
Andruw · 191w
Popcorn
ryanjordan · 191w
Awesome ⚡️
R̸̘̰̘̈́͑̚e̶̪̥̲͖̊̽̈́͒d̷̨͉̯̀͌̈́̚a̶͕̖̿́̏̏c̸͖̫̋̆̈́ť̷̛̖̜̼̘̍e̸̳̯͋̀d̸̠̳̖̣̤̋́̈́͝ · 191w
I just wanted to say I love the longer post format here compared to Twitter. Thanks lyn!
RamenCoffee · 191w
I don't understand how higher debt service is inflationary.
someone · 191w
Is there a solution to this situation then? Or is the gov going towards debt spiral and hyperinflation?
nostr.build · 191w
= rekt
Charlie · 191w
Lyn, based on what you’ve said, is the obvious playbook for todays inflation just inflict war for a rearranging of resources & IOUs, if increasing rates only exacerbates inflation? Obviously if we become more productive and cost effective that would be the ideal scenario. What is stopping us fro...
R_tour · 191w
It looks like it’s all down hill from here. Better negotiate the terms of surrender with #Bitcoin
Bitcoin_Rising · 191w
Off topic but thanks again for the Will Durant reading suggestion. From there I went to his Western Civilization, our Oriental Heritage, on Audible. Magnificent reminder of how history should be written, whic contains a wonderful discussion of Egypt.
Michael R. Sullivan · 191w
Guys, we are so fortunate to have Lyn on here, let's zap her into oblivion to make sure she knows how grateful we are for the value that she produces 💜⚡️💜⚡️
BilboBigBagz · 191w
Yikes what a shit show
Blue Collar Bitcoin · 191w
Awesome Feb letter Lyn.👊
zach · 191w
Great post. Quite a dilemma. Does anybody have that copy of the 2023-style playbook laying around? We can send it off to them so they don’t go and do anything stupid!
oobiyou · 191w
Spot on analysis of the current US fed playbook. #[0]
Brunswick · 191w
The "true inflation" adjusted interest rates would consistently be below zero, possibly by as much as 5%. This means the banks are effectively giving dollars away and they who can lend huge amounts of credit are relying on the cantillion effect to fund their growth and expansion abroad.
Moss · 191w
Inflation is fatal, just because the rate hike slowed down in February, and now inflation has rebounded again. Monetary policy has done its best, but fiscal policy has not played a greater role. Too much reliance on monetary policy will lead to economic imbalances, and inflation will rebound if you...
Len AKA The Lengend⚡ · 191w
The Fed have painted themselves into a corner. And on top of this, the debt ceiling needs to be addressed and when it is raised, Congress will use that to go further in debt. Default of debt will happen by the end of this decade.
QW · 191w
Doom Loop imminent
TeamBitcoin · 191w
🤙🏻⚡️
Thank you, Sir. · 191w
Thank you for the note, Lyn. Why did tightening lending standards front-run the effective interest rates this cycle? If one feeds the other, could they ever even out like they did in years past?
闲聊闲侃 · 191w
#[0]
Erik The Decentralist · 191w
⚡⚡💪🏼⚡⚡ 🙏 TY Lyn
HashTrash4Cash · 191w
I was thinking about this the other day. I wanted to know something like how much will interest expenses on the debt go up every quarter for the next few years assuming rates stay high and the duration mix stays the same. i.e. what does the cash flow pain curve look like for the next few years. Has ...
Grand · 191w
Nice Lyn, you brought your data to nostr :D
MSTR383 · 191w
You have literally been saying this for at least a year. It’s so simple, yet many can’t grasp it. Humans are wild. Good stuff as always, Lynn!