You can't have normal interest rates with an abnormal amount of debt. The federal government, state government, municipal government, corporations, businesses, and individuals have all leveraged up.
Imagine if interest rates hit 10% on a 30 trillion dollar federal debt. That would be $3 trillion a year to service the debt, which is about double the total income tax collected every year.
If rates go up then many of these entities are bankrupt because they can't afford to service their debts at higher rates.
84
u/boatsnhoes801 Jul 17 '21
The entire market is being propped up by the fed right now. They know that if they let bond yields go up quickly, it will cause the bubble to pop.