I think a huge point you are missing here is the whole supply and demand aspect. The whole point of raising interest rates is to reduce the demand of borrowed m

I think a huge point you are missing here is the whole supply and demand aspect. The whole point of raising interest rates is to reduce the demand of borrowed money. What made sense to borrow for at 1% interest may not make sense at 4.75%. I myself was taking out margin loans in the 2010s at 1% and investing in dividend yielding stocks in the 4-5% range for a long time. I was never excessively leveraged, but it absolutely made sense to do so at that time. Nowadays, that's a really dumb bet. In fact, I have a lot of stuff in cash right now as I kind of wait and see where I feel the market is going, and as of this week its getting over 4% interest at IB, which is great. Also, I think you are misunderstanding magnitudes here. Do you have stats on what percentage of federal debt is actually being held by US citizens? Joe Schmo is not sitting on piles of bonds.