“While 10% annual would be terrible it’s not “hyperinflation” and we aren’t at 10% (yet).
Hyperinflation is something like 50% per month. It’s extremely unlikely that the US Dollar will ever experience that.”
I agree with your definition of hyper-inflation. One of the main reasons The Fed has kept interest rates so low has been to enable the Federal Government to borrow at nearly zero interest rates. Meaning borrowing up the hilt for virtually free. As in getting free money. As in money growing on trees.
If The Fed is forced by worldwide markets to increase interest rates to where the FedGov has to borrow at 3-4-5%, this will make servicing the FedGov debt much more difficult.
The low short rates are ones that the Fed has some control over, but the longer ones are up to what bond buyers have been willing to pay. And for some reason big money has been willing to get very low yields for a long time.
This may be due to a savings glut from the likes of China. It could also be from foreign lenders choosing to be repaid in dollars which has allowed the Fed to increase the quantity of money without it showing up here as inflation until now. The dollars have been sponged up outside the US. These are just possibilities I’ve read of in recent years to explain the low rates despite the growing money supply.
When rates do rise it won’t hurt the government for any already issued debt. It will affect new debt issued by the Treasury. So rolling over maturing issues will be affected as well as any new debt if Congress increases the debt limit.
A very large portion of the debt is held by the Fed for monetary management and those interest payments all revert to the Treasury making them have zero effect.
We are still in an era of very low rates. All through the Reagan years IIRC they were never below 5%. The low rates really didn’t start until right after 9-11.