Interest rates are a policy decision by the federal reserve. Maintain a debt instead of printing money is a policy decision by Congress. In practice the govern

Interest rates are a policy decision by the federal reserve. Maintain a debt instead of printing money is a policy decision by Congress. In practice the government going into debt denominated in its own currency, and printing more of its own currency are essentially the same thing. Mechanically, when the interest rates go higher the Fed policy, the fed just buys the debt itself, driving up the market price (therby down interest rate). In effect, this converts US debt into cash. Similarly, they can sell treasury debt, driving up the interest rate. It is just a quirk of bookkeeping that the we keep track of how much money the treasury owes the federal reserve.