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The Daily Hodl 2025-05-31 11:45:51

US Government May Be Forced To Impose Widespread ‘Financial Repression’ To Keep $36,000,000,000,000 Debt Burden Manageable: UBS

The global wealth manager UBS says that the US government’s massive $36.2 trillion debt burden may cause it to take more extreme financial measures. In a new report, UBS says that the US government may be forced to make its growing debt burden more manageable by turning to additional financial repression measures that would artificially lower the yield on government bonds. “We expect that, over the longer term, the US government may pursue both fiscal consolidation and financial repression – a phenomenon that already exists in some form in the US and many other countries – to contain yields and keep the high debt burden manageable.” One potential financial repression measure may be to reform the supplementary leverage ratio (SLR) for US banks, according to UBS. “Presently, large US banks must hold equity capital against all assets, including high-quality ones like Treasuries. Loosening the SLR could be justified as supporting bank lending, but excluding Treasuries from capital requirements would incentivize banks to hold more Treasuries, potentially enhancing market liquidity.” UBS says the US is well-positioned to successfully implement financial repression measures, as long as they are put in place on a temporary basis. “For a country as large and wealthy as the US, widespread financial repression seems feasible and could enable the government to continue financing a growing debt burden without materially increasing its risk of default. Financial repression policies could be deployed temporarily to provide fiscal breathing room, allowing for budget consolidation and improvement, followed by a phase-out and a return to more conventional policy settings. In such a scenario, economic distortions should remain temporary and manageable.” Follow us on X , Facebook and Telegram Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox Check Price Action Surf The Daily Hodl Mix Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing. Generated Image: Midjourney The post US Government May Be Forced To Impose Widespread ‘Financial Repression’ To Keep $36,000,000,000,000 Debt Burden Manageable: UBS appeared first on The Daily Hodl .

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