Fred Thiel, CEO of Marathon Digital Holdings, a Nasdaq-listed Bitcoin mining company, has warned about the future of the U.S. economy and the consequences of the Federal Reserve’s current monetary policy. Thiel noted the possibility of an upcoming period of fiscal dominance, in which the Federal Reserve would have fewer weapons to fight inflation.
Marathon CEO Fred Thiel Alerts About Fiscal Dominance Period
Fred Thiel, CEO of Marathon Digital Holdings, a publicly listed Bitcoin mining company, discussed challenges the Federal Reserve might face in its battle to tame inflation. Thiel stated that the U.S. economy might be close to entering a period of fiscal dominance, which would affect the efficiency of the methods that the Fed has to battle inflation and take it to a self-imposed goal of 2% yearly.
According to Thiel, this fiscal dominance period, which occurs when the increasing debt and deficit levels become sufficiently high that monetary policy ceases to be an effective tool for controlling inflation, would result in the Fed having “few tools” to battle this phenomenon that still has not been contained.
Thiel bases his remarks on the levels of interest payments as part of government revenues and the levels of outstanding Treasuries by maturity dates, which “need to be refinanced in addition to issuance of additional debt to cover interest payments and deficit spending.”
More Signs
Thiel is not the only one who has recently alerted about the possible effects of the high spending and rampant money printing in the U.S. economy, that might lead to a difficult fiscal situation in the upcoming years.
Fitch, one of the three largest credit rating agencies in the country, cited the deteriorating fiscal situation and a “high and growing general government debt burden” as causes for downgrading the U.S. debt rating from “AAA” to “AA+” back in August.
Furthermore, the latest Consumer Price Index (CPI) report, which showed higher inflation figures than anticipated, might mean that the Federal Reserve has not finished increasing rates to try to bring inflation under control. However, economists like Nobel laureate Paul Krugman think otherwise, as he recently stated that the war on inflation was “pretty much won” and without the occurrence of an economic recession.
What do you think about Marathon CEO Peter Thiel’s thoughts? Tell us in the comments section below.
