Lyn Alden: While "Nothing Stops This Train", Imminent Economic Crisis Is Unlikely

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**SPEAKER_2** (0:27)
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**Lyn Alden** (0:31)
Nine years of bring back the snack wrap and you've won.

**SPEAKER_3** (0:34)
But maybe you should have asked for more.

**SPEAKER_5** (0:37)
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**SPEAKER_3** (0:40)
Now you've really won.

**Lyn Alden** (0:42)
Go to McDonald's and get it while you can. So when I say nothing's up to the train, there's actually two sides of it. One is basically the argument that they, despite multiple attempts, they will not materially and persistently reduce the fiscal deficit. So that's one side of it. The other side is kind of the other, which to say it's also not going to blow up anytime soon. So it's not like it's going to spiral into disaster anytime soon. Basically that the wheels are going to stay on the track. And so neither to the bull side, which is basically the gold lock scenario where they managed to get deficits down or to the bear side that we just hyperinflate next year or something, is basically saying that those are both very low probability outcomes in any sort of investible time horizon, three, five, seven, ten years. And that therefore we're stuck in this kind of middle gray zone of large deficits, but the system is continuing to run.

**Adam Taggart** (1:44)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. Today's guest has long been warning that the US., as well as many other countries, is now in an era of fiscal dominance. That's when fiscal spending gets out of control, like a runaway train. It becomes so large that it becomes the primary determinant of economic growth and inflation, steamrolling over any impact of monetary policy or private sector lending. And today's guest is famous for predicting, quote, Nothing stops this train. But can its momentum be slowed, buying the system more time? And does AI offer a chance to improve the situation? For answers, we're very fortunate to welcome back to the program Lyn Alden, investment strategist and author of the book Broken Money, Why Our Financial System is Failing Us and How We Can Make It Better. Lyn, thanks so much for joining us today.

**Lyn Alden** (2:35)
Thanks for having me again. Happy to be here.

**Adam Taggart** (2:37)
Oh gosh, it's always such a pleasure, Lyn.
Well, you have been saying for a long time, nothing stops this train, and I think anybody with eyes looking at the system can say, yeah, so far at least, Lyn's been pretty darn right. Let me ask you this. Normally, I kick these off with, what's your current assessment of the macro situation, and that's what this question is, but let me put a little spin on it. The administration has been saying, look, you guys should prepare for a really good 2026 We did a lot last year. That's going to start creating tailwinds for the economy from here, and it's only going to get better. And of course, it's their job to be the cheerleaders-in-chief, but they have been doing a lot to try to spur economic growth, and we'll see whether that bears fruit or not. But is there a chance that if they are able to increase economic growth, notably, that that could buy us more track for the train, let's say?

**Lyn Alden** (3:38)
Well, it's a good question. One of the factors is if you look at GEP growth, one of the inputs is the deficit, basically, overall spending matters. So you almost get like a feedback loop there. In general, the nothing stops is trading thesis.
Basically, the more productivity growth there is, the more offsets there are to the money printing, the longer it goes. When I say nothing stops is trading, there's actually two sides of it. One is basically the argument that despite multiple attempts, they will not materially and persistently reduce the fiscal deficits. That's one side of it. The other side is the other, which to say, it's also not going to blow up anytime soon. It's not like it's going to spiral into disaster anytime soon. Basically, that the wheels are going to stay on the track, so to speak, that there is a lot of highway ahead, whichever kind of description you want to use. Neither to the bull side, which is basically the gold lock scenario where they manage to get deficits down, or to the bear side that we just hyperinflate next year or something, is basically saying that those are both very low probability outcomes in any investable time horizon, three, five, seven, ten years, and that therefore we're stuck in this middle gray zone of large deficits but the system is continuing to run. The overall inflation calculation, price inflation, it's obviously very, we've talked about this before and your other guests have. It's a very messy calculation. There's all sorts of factors and variables that go into it. But when it's putting aside the measurement artifacts, basically what price inflation is, is you have at least the modern area of money supply growth. So over the long term, it might be 7% per year in a developed country. Then you have productivity growth, which is lumpy and it doesn't affect all things equally. But over time, when we have billions of people working, we have technology getting better, we are better at organizing and doing things in the world. So that all else being equal, many things get cheaper in that economic sense. But then it's offset by the money printing. So if on average, the 7% money growth, will we get 4% better every year of making the average thing, then the net price inflation is something like 3%, although of course, it's very uneven. I think that's the trend that's going to continue for quite a while.