Explainer: Jackson Hole's big question: who pays the government's bill?

Rising borrowing costs for highly indebted governments are pushing investors to confront “fiscal dominance,” the once-taboo idea that central banks could be asked to help fund deficits. The issue is expected to be a focus this week at the Federal Reserve’s annual Jackson Hole, Wyoming meeting, involving Fed Chair Kevin Warsh and leading economists and central bankers. Fiscal dominance would mean central bank purchases or other support when governments can’t manage alone, risking higher inflation and currency damage. Debt has surged since 2008 and again during COVID-19. In the U.S., deficits have exceeded 4% of GDP every year since 2019, with Treasury demand starting to strain as long-dated yields rise.