The existing national debt already has an interest rate attached to it. It's cheaper to buy that back once you raise interest rates because its value goes down

The existing national debt already has an interest rate attached to it. It's cheaper to buy that back once you raise interest rates because its value goes down immediately! The US will always be able to pay back its US dollar debt. That is not a factor here. It is true that new debt will have a higher rate attached to it but the US has served debt with rates of over 10% in the past with no problem (wish I could have gotten my hands on some of those). You can't cause the currency to collapse simply by printing money. That money has to go somewhere. As long as the government isn't spending money it doesn't make a difference. We've been printing money for almost 10 years now and giving it away as loans with very low interest rates. This is what many people also call pushing on a rope, there's no uptake for that money in the real economy. Higher inflation is what the Fed wants and has been unable to achieve. You're right though that the Fed does have a dilemma but it's not the one you mentioned. The real problem is that higher interest rates cause other asset prices to go down. I.e. the stock market will go down, real estate will go down etc. That can do damage to the real economy. This is the real problem here. Even the hint of raising interest rates sends the stock market into a spiral. The other thing higher rates do is strengthen the dollar. This makes the US economy less competitive and adds a deflationary pressure. Those are the two things the Fed is concerned about. You're right about having less bullets in the chamber, so to speak, for dealing with future emergencies when the rates are already so low. There's still QE to the rescue and negative interest rates though.