Lyn Alden on AI Deflation and Bitcoin’s Role in Inflation
Lyn Alden argues that persistent US fiscal deficits and fiscal dominance mean the Federal Reserve cannot fully control monetary inflation. Despite Silicon Valley's promise of an AI-driven age of abundance, AI-driven price deflation in white-collar services will not reduce the price of scarce assets like Bitcoin. Alden cites Egypt's 15% inflation as an example of broken money, emphasizing that monetary inflation remains a persistent issue.
Alden also discusses how a potential peak in AI equities and continued bond market pressure could drive capital back into cryptocurrencies, particularly Bitcoin. She highlights the role of stablecoins, gold, currency interventions, and liquidity in decentralized finance (DeFi) and centralized exchange (CEX) venues in shaping adoption, market impact, and security dynamics.
Additionally, Alden provides insights into the gold market following a recent pullback from record highs and explains why Bitcoin and gold trade differently. She notes that the Fed's support for the Treasury market would be crucial in managing inflation and maintaining financial stability.