Impact on Interest Rate due to Massive Deficits in U.S. Federal Reserves

Question

The U.S. Federal government has been running deficits in the hundreds of billions of dollars which means that the U.S. Treasury is issuing hundreds of billions of dollars in new Treasury securities.  If this is all you consider, what are the consequences for interest rates, spending financed by private borrowing, the money supply, the bond supply and inflation from this action alone?  While the U.S. has been running these massive deficits, what has been true about interest rates?  How do you explain this contradiction in interest rate effects and what are the big concerns going forward?

Summary

This question belongs to finance and discusses about consequences for interest rates, spending financed by private borrowing, the money supply, the bond supply and inflation of S. Federal government.

Total word count: 471

 

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