Two recent developments suggest that heavily indebted governments are turning to an old playbook, one that’s generated a lot of buzz on social media and could prove to be a long-term bullish tailwind for assets such as bitcoin $BTC$77,734.03 and gold.
That playbook is “financial repression,” a policy governments use when their debt grows too large to manage through free markets, and default is politically and socially unacceptable. The government transfers wealth from savers to itself by eroding the inflation-adjusted value of cash and bonds over time. They do so by keeping interest rates below inflation, forcing banks and pension funds to buy government debt, trapping savers at home by barring overseas financial services.
The new European Union (EU) rule limiting where savings can sit is an example of that. Starting Jan. 11, 2027, banks based outside the EU will not be able to provide core banking services, including deposit-taking, to clients residing in the EU, unless they operate a licensed branch in that member state.