US Debt Growth Surpasses Liquidity, Raising Financial Stability Concerns
The current imbalance between US debt growth and liquidity may indicate vulnerabilities in the financial system. Key points include:
- US debt is increasing faster than liquidity.
- Low liquidity can heighten funding pressure on risk assets, including equities and crypto.
- Similar low liquidity ratios were seen before the 2019 repo crisis, prompting emergency Fed interventions.
- This situation suggests fragility in financial infrastructure.
- Persistent debt growth could lead to renewed funding stress.
- Short-term shocks may lower crypto prices as investors reduce risk.
- Long-term liquidity issues could push central banks toward easing, benefiting Bitcoin and digital assets.
