Restrained by bonds.

"Major central banks, including the Federal Reserve, the European Central Bank and the Bank of Japan, are formally independent, a system known as 'monetary dominance'." However at the Fed's annual fathering at Jackson Hole, Wyoming, "The topic of 'fiscal dominance' will be one of the key questions facing the Fed's new chair Kevin Warsh." Fiscal dominance is when the central bank prints money to finance the government's fiscal deficit, which leads to inflation, currency devaluation and a flight of foreign investors. Reuters. The questions have arisen because, "Total US debt has topped $40 trillion for the first time," as "The Treasury's latest daily cash and balances statement showed total public debt outstanding at $40.07 trillion, a total that includes Treasury securities held by the public for $32.266 trillion and intra-governmental debt holdings of $7.782 trillion." Reuters. "A sell-off in US government bonds is pushing up borrowing costs, which could squeeze households, companies, financial markets and the federal budget alike." "Treasury yields are what the government pays to borrow and higher yields raise federal interest costs." Reuters. "Debt levels in developed countries are reaching thresholds that look increasingly unsustainable," and "In addition, massive borrowing by technology companies to fund a buildout of AI infrastructure is competing with demand for government bonds." "In Europe, Germany's 10-year Bund yield touched its highest since 2011, French yields were at their highest since 2008 and Britain's 30-year borrowing costs neared peaks in May that marked the highest levels since 1998." Reuters. Japan is no exception. "For years Japan exported capital to the rest of the world." Today, "Thirty-year Japanese government bond yields are now above 4%." "Fiscal realities are increasingly influencing pricing." For India, "Domestic fundamentals remain supportive, and Indian bond yields continue to offer an attractive carry advantage relative to many developed markets." MC. "India's 10-year government bond yield is around 6.87%, while the US 10-year Treasury yield is in the 4.6-4.7% range, leaving a spread of roughly 2.1-2.3%, or 210-230 basis points." For a foreign investor, "A simplified way of looking at the trade-off is: India bond yield - US bond yield - expected rupee depreciation - hedging cost = effective return advantage. With yield differential now much smaller than it has been historically, even a moderate fall in the rupee can erode the additional return available from Indian bonds." MC. In the Union budget of 2026, The government is estimated to spend Rs 57.473 trillion in 2026-27, 7.7% higher than the revised estimate of 2025-26. Interest payments account for 26% of the total expenditure, and 40% of revenue receipts." "Fiscal deficit in 2026-27 is targeted at 4.3% of GDP." prsindia.org. The government was helped by a record payout of Rs 2.87 trillion excess reserves by the Reserve Bank of India (RBI) in May 2026. Kotak Neo. The RBI has also kept its policy rate steady at 5.25%, despite projecting headline inflation at 5%. Mint. All this has led to a sell-off of the rupee. And so, "The RBI has decided to shift to a more constant pattern of intervention to support the currency over the past month, thanks to the foreign deposit inflows, whereas previously it would largely step in to curb bigger swings." ET. Bonds are a form of debt. And defaulting on debt is absolute suicide. They act as a stranglehold on governments. No escape.