$40 trillion.

The number itself is attention-grabbing, but the investment implications may be more important. U.S. debt has more than doubled since 2017, while annual federal interest expense has reached roughly $1 trillion. Increasingly, investors must consider what happens if high debt, persistent deficits and rising interest costs begin influencing monetary policy and financial markets. On August 18, the 30-year Treasury yield surged above 5.3%, its highest level since 2007.

Bessent’s Treasury Maneuvers

In response to rising yields, the Treasury announced that it would double its liquidity-support buybacks of long-dated bonds from $2 billion to at least $4 billion per operation, beginning September 9, 2026. To finance the purchases, the Treasury issued short-term bills, effectively swapping long-term obligations for short-term debt.

When yields remained elevated, officials floated tapping the roughly $1 trillion Treasury General Account cash reserve to buy long bonds. While this helped cool the 30-year yield, the intervention sent an important signal: policymakers are sensitive to borrowing costs.

If the bond market is not allowed to fully demand higher yields for fiscal and inflation risk, some of the adjustment could instead occur through lower real rates, easier financial conditions or a weaker dollar.

This brings an old macro concept back into focus: the de-dollarization or debasement theme.

Debasement does not necessarily mean runaway inflation or the collapse of the dollar. A more realistic version could involve policymakers tolerating somewhat higher inflation, lower real interest rates or gradual currency depreciation rather than making the difficult fiscal adjustments required to stabilize government debt.

For investors, that could create very different winners and losers across asset classes.

Potential Winners

Gold and Precious Metals

Gold is the traditional starting point for the debasement trade.

• Scarcity: Gold supply cannot be expanded through monetary or fiscal policy.
• Real-Rate Sensitivity: Lower or negative real interest rates reduce the opportunity cost of holding an asset that pays no yield.
• Currency Hedge: Dollar weakness can increase the dollar price of globally traded metals.
• Reserve Demand: Gold remains a reserve asset independent of any government’s liabilities.

Silver can participate in many of the same trends, although its greater industrial exposure generally makes it more economically sensitive and volatile.

WisdomTree Solutions

• WisdomTree Efficient Gold Plus Equity Strategy Fund (GDE)
• WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (GDMN)
• WisdomTree Efficient TIPS Plus Gold Fund (GDT)

Broad Commodities and Real Assets

The same scarcity argument extends beyond precious metals.

• Finite Supply: Energy, industrial metals and agricultural commodities cannot be created like currency.
• Inflation Sensitivity: Physical assets can reprice as the general price level rises.
• Dollar Exposure: Because many commodities are priced globally in dollars, sustained dollar weakness can provide a tailwind.
• Real-Economy Exposure: Infrastructure and natural-resource businesses own assets whose revenues may adjust upward with inflation.

A debasement regime could therefore favor ownership of real assets over fixed nominal claims.

WisdomTree Solutions

• WisdomTree Enhanced Commodity Strategy Fund (GCC)
• WisdomTree Inflation Plus Fund (WTIP)
• WisdomTree Efficient Rare Earth Plus Strategic Metals Fund (WDIG)

Emerging Market Equities

A weaker dollar can materially change the environment for emerging markets.

• Easier Financial Conditions: Dollar weakness can reduce pressure on countries and companies with dollar-denominated liabilities.
• Capital Flows: A declining dollar can encourage investors to diversify away from U.S. assets.
• Commodity Exposure: Many emerging economies are major exporters of energy, metals and agricultural products.
• Relative Valuations: A rotation away from highly valued U.S. markets could increase demand for less expensive international equities.

Emerging markets are therefore not simply a growth story. In a debasement regime, they can become a currency, commodity and capital-flow story simultaneously.

WisdomTree Solutions

• WisdomTree Emerging Markets High Dividend Fund (DEM)
• WisdomTree Emerging Markets ex-State-Owned Enterprises Fund (XSOE)
• WisdomTree Emerging Markets Multifactor Fund (EMMF)

Emerging Market Local-Currency Bonds

EM local debt deserves its own place in the discussion. For a U.S. investor, returns can come from three distinct sources:

• Income: Many emerging markets offer comparatively attractive nominal and real yields.
• Rates: If inflation continues to moderate in individual EM economies, local central banks may have room to lower rates, potentially supporting bond prices.
• Currency: If the dollar weakens, appreciation of EM currencies can add to dollar-based returns.

WisdomTree Solutions

• WisdomTree Emerging Markets Local Debt Fund (ELD)

Developed International Equities

Dollar weakness could also benefit developed markets outside the U.S.

Japan offers exposure to improving corporate governance, shareholder returns and capital efficiency, while a strengthening yen could provide another source of return for unhedged U.S. investors.

Europe offers greater representation in financials, industrials and materials, where increased infrastructure, defense and capital spending could complement the potential currency benefit of a stronger euro.

For U.S. investors, international equities can therefore offer two potential return engines: underlying equity performance and foreign-currency appreciation against a weaker dollar.

WisdomTree Solutions

• WisdomTree Japan Opportunities Fund (OPPJ)
• WisdomTree European Opportunities Fund (OPPE)
• WisdomTree True Developed International Fund (DOL)

Select U.S. Equities

Debasement does not necessarily mean U.S. stocks lose.

• Companies with pricing power can raise prices alongside inflation.
• Energy, materials and miners can benefit from higher commodity prices.
• Infrastructure and industrial businesses may benefit from higher nominal investment.
• Value-oriented companies may be less sensitive to rising discount rates than highly valued long-duration growth stocks.

The distinction may become less about stocks versus bonds and more about which businesses can turn inflation into higher revenues and cash flows.

WisdomTree Solutions

• WisdomTree U.S. High Dividend Fund (DHS)

Potential Losers

• Long-Duration Nominal Bonds: Inflation erodes the real value of fixed payments, while higher yields reduce existing bond prices. Growing deficits and Treasury issuance could also force investors to demand greater term premiums for assuming fiscal and inflation risk.
• Excess Cash: Cash can provide liquidity and stability, but nominal stability is not the same as preserving purchasing power.
• Long-Duration Growth Equities: Highly valued businesses whose expected earnings lie far into the future can be particularly sensitive to real interest rates. Higher discount rates reduce the present value of those future cash flows.

A New Asset-Class Map?

If fiscal pressures eventually produce lower real rates, persistent inflation and a weaker dollar, the potential beneficiaries extend far beyond gold. Commodities, real assets, emerging market equities, EM local-currency bonds, developed international equities and select U.S. companies with pricing power could all have a role.

Conversely, long-duration nominal bonds, excess cash and some long-duration growth assets may face a more challenging environment.

That is ultimately what makes the return of the debasement trade important. It isn’t a prediction that one asset will outperform another. It is a recognition that when investors begin questioning the future purchasing power of the denominator itself, the relative attractiveness of entire asset classes can change.