Image: FortuneThe Treasury's recent moves in the bond and currency markets add up to 'soft-form financial repression' to lower debt costs, economist warns
• Economist Saravelos warns that recent U.S. Treasury moves in bond and currency markets constitute "soft-form financial repression" designed to artificially lower debt costs. • The analysis suggests that if U.S. Treasury prices are prevented from adjusting downward, the dollar must weaken to adjust the value of bonds held by foreign investors. • This strategy effectively loosens financial conditions, which may conflict with the Federal Reserve's goal of keeping inflation at or below its 2% target.
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