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> The Federal Reserve sets USD interest rates, not China or any other foreign sovereign. If the time ever comes where there's no market for our debt at 2%, we'
by zacharytelschow 8y ago
> The Federal Reserve sets USD interest rates, not China or any other foreign sovereign.
If the time ever comes where there's no market for our debt at 2%, we'll see who's actually in the driver's seat. No China itself is not, but the market generally is.
- TheCoelacanth 8y agoAs long as the Fed lets banks materialize money out of thin air for 2% to loan out to someone else, there will be someone willing to loan the US money for 2%+ε. The deciding factor is not whether or not the US can borrow money, it's whether you can buy anything outside of the country with that money.
- User23 8y agoIf that time ever comes, it will be because of a collapse in the US economy to such an extent that foreigners no longer want to hold claims against it. At that point it doesn’t matter what nominal interest rates are, because it simply won’t matter. Many get the causality backwards, thinking that inflation causes economic collapse, but the former is actually the consequence of the latter.