Yellen Warns of Growing ‘Fiscal Dominance’ Threat to US Economy

A panel of economic luminaries said the long-run risk posed by mounting federal debt represented a paramount problem facing the US economy.

Those risks include the scenario in which the size of the debt prompts the central bank to keep rates low to minimize debt servicing costs, rather than contain inflation — a concept known as fiscal dominance.

“The preconditions for fiscal dominance are clearly strengthening,” former Treasury Secretary and Federal Reserve Chair Janet Yellen said Sunday during a panel discussion at the American Economic Association’s annual meeting in Philadelphia.

Former US Treasury Secretary Janet Yellen in Washington in October 2024.

Photographer: Kent Nishimura/Bloomberg

The Congressional Budget Office has projected the federal ...