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Interest rates can't go up because it would risk America's ability to re-pay its debt, as well as the debt of 'zombie' corporations, which would inevitably impa
by 88913527 5y ago
Interest rates can't go up because it would risk America's ability to re-pay its debt, as well as the debt of 'zombie' corporations, which would inevitably impact the Fed's "maximum employment" mandate. If interest rates can't rise, it's going to contribute to more inflation.
- paulpauper 5y agoThis is debatable. A lot of debt is long-term debt that is at a fixed rate. When interest rates go up, long-term bond yields may fall or stay flat (this is called yield curve inversion).. It all depends on future perceptions of the economy. If the perception is that raising short-term rates to aggressively will hurt growth, the bond market will adapt accordingly and become inverted. This makes it easier for the government service debt and issue new debt.
- objektif 5y agoThere is also the political reality that there will be presidential elections soon. No president wants to see an economy slowing down.
- mostly_harmless 5y agoIsn't that sort of the point of raising interest rates? Makes debt more pressing to slow down money velocity and loan creation? (Thus curbing inflation). Sure, if you push the rates too high, you'll hit deflation, but the point would be to strike the balance before that happens.