Question: How DO RISING interest rates in the US IMPACT the interest the US has to pay on it’s debts (Treasuries)? Are they not fixed debt payment obligations?
Answer: Interest rates in the US and the interest the US pays on its debts, like Treasuries, are closely connected, but it’s a bit more complex than fixed debt payment obligations. How It Works: Example: Key Takeaway: While existing debt payments are fixed, rising interest rates affect the cost of new debt. Over time, as more debt is issued or refinanced at higher rates, the overall interest expense for the US government increases, impacting the federal budget and potentially leading to higher taxes or reduced spending in other areas.