Fed policy outlook and economic growth debate
Debate over the U.S. economy and markets is widening as investors weigh kashkari crypto skepticism against shifting expectations for monetary policy and digital assets.
Recent minutes from the Federal Reserve show little enthusiasm for immediate rate cuts. Moreover, some regional Fed presidents are openly discussing the possibility of raising rates instead of lowering them, signaling a prolonged period of tight financial conditions.
Former Deputy Treasury Secretary Michael Faulkender backed this cautious stance. He argued that deregulation, tax reform, and expanded U.S. energy production could lift productivity and allow stronger growth without reigniting inflation pressures.
According to Faulkender, current Fed models underestimate the productivity boost from artificial intelligence and advances in the energy sector. That said, he suggested these forces could support robust expansion even if interest rates remain elevated.
Some projections discussed in the conversation were striking. Growth of 5% with inflation below 1% was described as plausible if productivity accelerates and energy prices decline, potentially reshaping the outlook heading into 2026.
Critics of the Fed’s baseline forecasts say traditional models do not fully capture deregulation, supply side tax changes, or rapid AI adoption. However, supporters of policy reforms believe these structural shifts could alter the relationship between growth and inflation over the medium term.
Neel Kashkari attacks crypto’s real world utility
Against this macro backdrop, Minneapolis Fed President Neel Kashkari used a public forum to sharply criticize digital assets, escalating the long running clash between central bankers and the crypto sector.
Speaking at the Midwest Economic Outlook Summit, Kashkari dismissed the entire asset class. “Crypto has been around for more than a decade, and it’s utterly useless,” he said, framing the technology as failing to deliver practical economic value.
He drew a direct comparison between crypto and artificial intelligence. In his view, AI already demonstrates clear everyday benefits for businesses and households, whereas crypto still has not convincingly shown it can solve real world problems at scale.
Kashkari also highlighted potential stablecoin risks for the banking system. Moreover, he warned that widespread use of these tokens could drain traditional bank deposits, reducing banks’ capacity to extend credit and amplifying systemic vulnerabilities.
Questioning cross border payment advantages
One of the most frequently promoted narratives from crypto advocates involves faster and cheaper cross border payments. Kashkari challenged that storyline directly, questioning whether the promised efficiencies truly materialize in practice.
He noted that even if digital tokens can move across borders nearly instantly, recipients still must convert them into local fiat currencies to pay for goods and services. That conversion process, he argued, reintroduces costs, compliance checks, and market frictions.
According to Kashkari, only the adoption of a single global currency would fully eliminate those frictions. However, he stressed that governments are highly unlikely to surrender control over national monetary policy to such a unified system.
He further criticized what he described as vague or evasive explanations of how stablecoins supposedly create value. “Ask the most basic questions,” Kashkari said, warning the public to be skeptical of what he called “word salad nonsense answers” about how crypto infrastructures function.
Implications for crypto markets and policy
Kashkari’s blunt remarks arrive at a delicate moment for digital assets, as traders parse every signal from the Fed on the timing of future policy moves. If the central bank delays rate cuts and keeps conditions tight, liquidity could remain constrained for risk assets such as Bitcoin and major altcoins.
The repeated clash between kashkari crypto critics and industry advocates underscores how central bank rhetoric can shape sentiment. Moreover, sustained skepticism from senior officials may influence institutional adoption and capital allocation decisions in the coming quarters.
At the same time, direct criticism from a high profile Fed official adds another layer of regulatory concern. When central bankers publicly challenge crypto’s usefulness and emphasize banking stability risks, it can sway how lawmakers, supervisors, and international bodies design oversight frameworks.
That said, the broader debate over innovation, AI driven productivity, and financial technology is likely to continue through 2025 and beyond. As Fed policy, economic growth, and digital asset regulation evolve, markets will keep reassessing both the opportunities and the vulnerabilities highlighted by Kashkari and his peers.
In summary, firm Fed policy guidance, ambitious growth projections, and outspoken criticism from Neel Kashkari are converging to shape a more cautious environment for crypto, even as technology and productivity narratives gain momentum across the wider U.S. economy.
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Author: NixCoin