Who are those creditors? Who set's that interest rate?
It's largely the FED, right? What prevents the FED from keeping the interests low, if the US-Gov does not want to pay?
It's largely the FED, right? What prevents the FED from keeping the interests low, if the US-Gov does not want to pay?
https://www.thebalance.com/who-owns-the-u-s-national-debt-33...
My understanding is that the Fed buys treasuries at the market rate and does attempt to keep interest low that way by creating some demand at the current rate, but that it’s ability to influence the treasury rates is not as important as the perception that American debt is rock solid. It works by buying a small amount to “soothe markets” and keep other players interested, and is unable to create all the demand by itself without basically destroying the value of the dollar.
Disclaimer: I’m not an economist and probably have massive gaps in the details and mechanics of The US’s fiscal policy (or monetary when we talk about fed creating credit to buy treasuries).