Date:
Paul Solman:
How much interest depends on a few things, the maturity of the IOU, 30 days, a year, 10 years 30. That is, how long before the U.S. is obliged to pay you back what it borrowed? Expected inflation in the meantime — you don’t want to be holding an IOU paying 2 percent a year, say, when inflation is, I don’t know, 5 percent, since you would lose money every year.
The likelihood the U.S. is going to stiff you and default. But, ultimately, the interest rate depends on buyer demand.
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