U.S. economy looks like country is at war already - Lyn Alden
(Kitco News) - "It looks like the U.S. is in a war now, because of our high national debt, super high inflation and a possible recession that could become a crisis. It's like wartime finance," explained Lyn Alden, Founder of Lyn Alden Investment Strategy. "Even though the U.S. is not at war with Russia, there are proxy and financial wars happening. There are supply chain and commodity
wars, and an actual kinetic war."
Alden spoke to David Lin, Anchor at Kitco News, about economic trends and inflation, at the Bitcoin 2022 Conference in Miami. Lyn Alden Investment Strategy is an investment research firm for retail and institutional investors.
Alden disclosed that the only other time in U.S. history we saw huge amounts of national debt like we have now was in the 1940's during World War II.
In terms of more interest rate hikes for the year, Alden discussed how high she believes the Federal Reserve can go. "The Fed can continue to raise rates until they break something. Going back, I have been on the inflation side for a few years now. But I am still surprised by the speed of inflation we got," Alden stressed. "When you add a war to the mix that wasn't necessarily anticipated by me or a lot of people not in this timeframe or scale, this adds an inflationary force to it."
Alden spoke about how higher interest rates will impact this economy, which has high debt levels and high inflation. "One of the worst things for reelection is high inflation and low consumer sentiment, which is what the Biden administration and Congress are facing. On the one hand you want the government to control inflation, but you can't always get what you want," Alden emphasized. "If you have this high a debt level, and structural problems with the supply chains in your commodities and your economy, you are stuck between a rock and a hard place."
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Regarding what it would take to bring inflation down, Alden said, "The inflationary pressures are deep. Given how high debt levels are, I don't think the Fed has the tools to properly fight inflation," she pointed out. "It's more of a fiscal problem, and it's more of just how we structure supply chains. It's only going to be resolved by improving supply chains and improving commodity Capex, kind of real-world changes, and those are not quick changes."
"I remain in the inflationary camp. I don't expect inflation to be in a straight line. I think we are going to be in a very inflationary decade compared to the prior one. But I am still anticipating an eventual slowdown in inflation," Alden predicted.
Alden continued discussing her inflationary outlook and what markets she favors. "Part of an inflationary outlook must include what is Putin is going to do, and what is Europe going to do? There are a huge number of variances," Alden said. "I am going to stick to my view that we are going to have these pullback periods, either due to central banks trying to tighten and getting us into a recession or the supply of oil opens, and prices stabilize."
In this inflationary environment, Alden indicated she's bullish on Latin America, gold and Bitcoin. "I like the commodity-oriented and value stock space. For example, in this recent market turbulence, healthcare stocks are holding up well. We have seen energy pipelines doing well because they are less tied to energy prices" Alden stated. "I like real and value assets."
For more on the economic trends and inflation, please watch the full video above.
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