To US government. It holds a lot of short term debt that it continuously rolls over into new short term debt. If the rate go up, new short term debt will become

To US government. It holds a lot of short term debt that it continuously rolls over into new short term debt. If the rate go up, new short term debt will become much more expensive to service. Here is a simple example with made up (but not completely off base) figures. Assume US government has debt amounting to 100% GDP. Assume also that it collects taxes amounting to 20% of GDP. If rates are 2%, then interest payments are 2% of GDP, which is 10% of the budget. Now, if bond rates go to, say, 6% (current mortgage rates), then interest payments are 6% of GDP, which is now actually 30% of the budget. Basically, at high debt-to-GDP ratio, small changes in the interest rates cause huge swings in how much budget is spent on interest payments. This money has to come from somewhere, and more debt is only a short term answer.