Same as.....if I was in debt $100,000, and I borrowed another $100,000 I could use that to make payments on the $200,000 and buy more shit.
When that ran out, if lenders agreed, I would borrow another $100,000 to make
payments on now $300,000 and buy more shit etc.
As long as I can keep doing this, the game continues. But that doesn't
alter the facts that I now owe $300,000 instead of $100,000 which means I will
be paying forever, borrowed even more to keep going or default because I can
never pay it back.
If my borrowing costs rise, I will then be making higher interest payments and have less left over to buy more shit.
US 10 yr rates below 1.7%...the norm is closer to 4-6%. The FED has pegged the rate banks can borrow at 0%, but that also means Savers get 0%.
TRILLIONS HAVE BEEN POURED into efforts to jolt economy, and here in the US we have declining GDP , growth rates which are now around 1.5%......so are we already in the influence of the debt "black hole" and no matter how much NEW MONEY is printed to pay off the OLD MONEY and see it trickle into economic activity, we have perversed the system....delay the inevitable correction....STIFLE investment and we get mediocre job creation.
FED SPOKE of QE3, butactually since then their balance sheet has declined.....