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Comment by voisin | Hacker News Reader

Am I incorrect in thinking they also can’t afford to let rates rise too much as they can’t afford the interest payments?

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The FED receive interest payments. They don't make them.

But yes, raising too much too fast will cause stress and defaults, and nobody wants that unless it's absolutely necessary.

Federal Reserve receives but the payments are made as a share of the government’s budget, no? So the Fed is trying to balance inflation with effectively defunding the governments non-debt servicing initiatives.

Higher interest payments just means the Gov borrows more. I don't think the Fed is concerned about the ability to issue new debt.

Fed profits (after paying out their 6% shareholder dividend to banks) gets remitted back to the US treasury. With a captured Fed, this is nothing but the government printing money to cancel their debt, with an extra step where banks skim some of it off the top.

The coupon payments in the government’s existing debt are fixed and as such they are not effected by any changes. It will only affect newly issued debt while the debt is being rolled over which will take some time (the average maturity is around 5 years)

If you consider that the Fed should collude with fiscal policy makers, then you're right. The Fed is supposed to act independently, but Powell has thrown that out the window.

Fed tightening would force fiscal side to actually restrain spending which would help alleviate inflation. That's the whole point of tightening to begin with (tightening both public and private credit).

The reason the Fed is supposed to be independent is to avoid a Venezuela type situation where deficit spending is monetized through money creation. Well the Fed has been effectively doing that through QE for two years.

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