| ▲ | Beretta_Vexee 3 hours ago | |
The principal is repaid by issuing new bonds at maturity. This can be sustained for a long time if interest rates are low, but for much less time if rates rise. The volume of bonds being issued becomes so great that rates have to be raised to ensure they all find buyers. It is not as though the US Treasury can afford to wait until it finds a buyer at lower yield. It absolutely must sell these bonds to pay off the principal on the old ones. | ||