Fed's Control Over Interest Rates Has Limits; Artificially Low Rates Now Causing Pain

The Federal Reserve impacts the economy by raising or lowering interest rates, but cannot perfectly control the economy. Market forces of supply and demand ultimately set rates.

The Fed kept rates artificially low for a long time, and now the economy is paying the price as financial institutions hold low-yielding securities.

The level of interest rates depends on inflation risk, global political risk, and the supply and demand for U.S. Treasury securities.

Foreign central banks hold a large portion of U.S. debt and can demand higher rates, increasing U.S. interest costs.

If the U.S. doesn't get debt under control, it will pay the price in much higher interest costs in the future.