Can interest on national debt be lowered by fed action?

 OR DO MARKET FORCES NOW CONTROL YIELD?

FED ACTION CAN INCREASE INFLATION

President Trump continues to criticize Jerome Powell for not lowering interest rates. He believes that the Federal Reserve can save $1 Trillion in interest on the debt by lowering rates to 1%. While this all sounds very simple, it is unlikely that interest on the debt can be controlled completely by the federal reserve. 

If the Fed lowers rates it may cause a rebound in housing prices and building activity but it will also send a signal that higher inflation is ahead, especially in housing and building materials. The national debt, now $37 Trillion and rising by $2 Trillion a year is another matter. Interest rates rose after passage of the last budget as it sent the signal that inflation is going to increase, the buying power of the dollar is going to decrease and along with it the interest on the debt will likely continue to increase. 

Interest rates on the debt are set by market forces on treasury auctions and at present the only thing keeping them alive is that the rest of the world is also increasing debt and making the U.S. market somewhat stable by its size and history. Maybe the best of bad choices situation.

Foreign buyers of U.S. debt have been liquidating their holdings and moving into metals and other forms of assets. Much of this is in response to the massive deficits in the U.S. budget that indicate a continued loss of purchasing power for the dollar. While savers have enjoyed at least some return on their money within increased CD rates, I suspect much of this money is ending up in government debt, the fed can lower that rate, but it will be accompanied by another round of real estate malinvestment and speculation.

Real efforts to decrease government interest payments would be by actual fiscal responsibility and cutting deficits and lowering the debt, without that it is just another kicking of the problem down the road, when it may be very soon out of road.