A Short History of US Collateral

Think ‘Monetary Inflation’ and More Bitcoin, Not ‘Financial Repression’ and Fewer Bonds

It fast becoming an accepted trope that policy makers are deliberately aiming for ‘financial repression’. This is defined as a regime where savers are forced to own low yielding government debt, and where yields fall below the pace of nominal GDP growth, thereby forcing down the debt/ GDP ratio. Yet, this is a phoney regime because it grants governments too much agency for things they cannot control. If policy makers genuinely possess the ability for push their cost of funding below nominal GDP growth, or even purposely raise the latter, why don’t they do it more often??