2 ms·

Technically it's not new debt. It's the cost of servicing an already existing debt. Then there's another question, if someone is paying more, it means someone

• AnthonyMouse 8y ago
  > Then there's another question, if someone is paying more, it means someone else is getting paid more. But the someone else is the bank. From there it typically goes into government bonds or some such thing with an equally tenuous connection to consumer prices. Banks don't have a large desire for fresh fish or motor fuel that goes unmet only for a previous lack of funds. What they'd like to do is find someone new to loan the money to, but higher interest rates make people want to borrow less money, so the bank will often just use the money to reduce the amount it itself has to borrow from the Fed.