Many central banks are trapped in a cycle of "fire-fighting - leverage - fire-fighting again."

Huw Pill, chief economist at the Bank of England, warned that the rescue mechanisms deployed by central banks to prevent market collapses are inadvertently subsidizing government borrowing, increasing systemic leverage, and potentially disrupting the transmission of monetary policy. Pill described this dilemma as a game of "whack-a-mole": "Ironically, the vulnerabilities are precisely created by the mechanisms introduced to reduce them." The holdings of U.S. Treasury bonds by hedge funds have ballooned from $600 billion a decade ago to $2.4 trillion. Currently, this cycle has entered a new phase of leverage accumulation, while parties have yet to find an effective way to break the deadlock.