The US financial system has crossed a threshold that threatens to change the rules of the global economic game. Macroeconomist Lynn Alden defines this as the era of “fiscal dominance.” In this scenario, the size of the public deficit outpaces the Federal Reserve’s traditional tools, making interest rate policy less effective in the face of debt that appears to have a lifespan.
According to Alden, the author of this book, broken moneythis transformation was envisioned after the 2008 crisis and reached the point of no return in 2019. For the first time in several decades,Public debt outpaces new private credit creationEven during the growth period.
“We are already in a period where debt becomes a problem,” the analyst said. “The devaluation is already happening,” the analyst said, noting that accounting problems have made the structural deficit of about 6% of GDP both a driver and a burden on the U.S. economy.
Today, this fiscal imbalance faces a wall that financial capital cannot jump over: the physical reality of energy. Since February 28th of last year, The armed conflict between the United States, Israel, and Iran has caused an unprecedented supply crisis.
As CriptoNoticias reported, the closure of the Strait of Hormuz in March blocked the shipment of 20 million barrels a day, exposing vulnerabilities in the monetary system that cannot be fixed simply by printing more money.
In this regard, Alden bluntly pointed out that central banks can inject liquidity to support government bonds, but “they can’t create oil or fertilizer.” This shortage will cause fuel prices to soar and disrupt global food production.
The result is Inflationary pressures hit developing country economies particularly hard; As Alden explains, there is no room for maneuver to absorb these costs.
We are already in an era where debt is a problem. Deterioration has already begun. That’s the straw that breaks the camel’s back. When people can’t go to work or turn on the lights, disaster ensues. What worries me most is what is happening in the Strait of Hormuz due to the lack of energy, the lack of raw materials. If the shutdown continues for a long time, energy and food shortages will be the worst-case scenario for the economy. The Federal Reserve cannot print oil.
Lynn Alden.
The role of Bitcoin in the face of the exhaustion of traditional models
Bitcoin emerges as an alternative payment infrastructure in the face of a fiat currency system that Alden believes is locked in the limits of the 70s. The economist argues that whereas gold relied on financial intermediaries that took time to settle transactions, Bitcoin can provide final settlement almost instantly. This is the case with Alden How to remove the layer of trust in financial institutions that are forced to monetize debt today To stay afloat.
Could this be the last debt cycle? Will this really destroy the statutory system? I think you can. The fiat currency system as we know it dates back to the 70s. Trade takes place all over the world. The intermediaries have all the power. Before the dawn of Bitcoin, there were no fast payments, but now there are alternatives.
Lynn Alden.
To understand Alden’s position, we need to distinguish between speed of payment and final confirmation. Under the current system, transactions are instantaneous when using a card, but settlement, the actual movement of money between banks, can take days or weeks. Historically, this slowness has forced the world to rely on financial intermediaries to “guarantee” funds until they arrive.
Alden argues that Bitcoin breaks this system by allowing assets to be moved and ultimately settled in minutes. There will be no need to trust institutions currently under the pressure of national debt.
Bitcoin is the opposite of fiat currency. It is rare, decentralized, and mathematically limited… There are two reasons why there is nothing to stop this train. That is mathematics and human nature. Bitcoin is a mirror of this system and the best protection against it.
Lynn Alden.
But that path is not without controversy. While some on Wall Street believe that artificial intelligence will lead to dramatic increases in productivity that can dilute the weight of debt, the reality of 2026 presents a panorama of regional shortages and high prices.
With commercial flows in the Strait of Hormuz minimized and debt feeding its own interests, Alden’s analysis suggests: The end of the fiat era is a transition process It is already reflected in a decline in global purchasing power.
(Tag Translate)Bitcoin (BTC)
