The debasement trade is gaining new traction on Wall Street as concern over the size and cost of the budget deficit mounts.
The conventional wisdom behind the trade is that perceived hard assets, like cryptocurrencies and precious metals, gain as investors try to hedge against a weaker U.S. dollar and Treasury debt in the face of ballooning government spending.
Those fears reached a fever pitch last week before, and after, the Treasury Department's unusual step of increasing debt buybacks.
The size of the Treasury purchases announced so far are trivial in comparison to the size of the overall market, but the signaling effect was very powerful.
Gold touched three-month highs last week, building on last week's advance of more than 5%.
Bitcoin added 2% to the highest since May, with a 22% surge last week.
Conversely, investors fled the dollar, which hit three-month lows last week.
The Treasury Department announced it would double the maximum size of its bond buyback.
U.S. federal debt topped $40 trillion.
Billionaire investor Ray Dalio recommended investors remain overweight gold and bitcoin ahead of what he warned could become a debt crisis in the U.S.
