# Bessent's Bond Buybacks Are Stoking Fears the Dollar Could Follow the Yen Into a Devaluation Spiral > Economists warn Scott Bessent's expanded Treasury buybacks echo the strategy that has weakened the yen for years, risking a dollar debasement spiral if the deficit goes unaddressed, according to Fortune. - Source: Money Standard - Canonical URL: https://moneystandard.co.uk/article/bessent-bond-buybacks-stoke-dollar-debasement-devaluation-spiral-fears - Author: Money Standard Newsroom - Section: Markets - Published: 2026-08-21T03:02:02.997Z - Updated: 2026-08-21T03:02:02.997Z - Tags: Treasury Secretary --- Treasury Secretary Scott Bessent's push to step up buybacks of long dated government bonds is drawing warnings from economists who see echoes of a strategy that has weighed on Japan's currency for years, according to Fortune. Bessent unveiled the expanded buyback plan after 30 year yields climbed to nearly a two decade high, part of an effort to calm a $32 trillion Treasury market under strain. Robin Brooks, an economist at the Brookings Institution, argues that leaning on financial engineering to hold yields down without tackling the deficit driving them up does not make the underlying risk disappear, it just shifts where that risk shows up. Brooks said the approach puts depreciation pressure on the currency because markets are not being paid the risk premium they would otherwise demand. That is where Japan comes in. Tokyo has kept yields artificially low on debt that now exceeds 200 percent of its economic output, and the yen has weakened steadily as a result. Brooks warns the United States risks sliding into a similar devaluation spiral, one that becomes extremely difficult to reverse once a currency starts down that path. Markets reacted to the buyback announcement with a weaker dollar and rising prices for precious metals, a pattern traders have taken to calling the debasement trade as they position for further currency declines. Brooks said markets are already primed for dollar debasement, and that stabilizing a currency gets close to impossible once a devaluation spiral takes hold. Not every economist sees the danger as urgent. Jonas Goltermann of Capital Economics argues the debasement fears are overstated, even as he concedes that unconventional moves like the buyback program could chip away at expectations for a dollar rebound. Left unaddressed in either view is the deficit itself, which is on pace to approach $2 trillion this fiscal year and which the buyback strategy does nothing to close. --- Originally published by Money Standard. Free to cite with attribution and a link to https://moneystandard.co.uk/article/bessent-bond-buybacks-stoke-dollar-debasement-devaluation-spiral-fears.