Are interest rates determined by the free market?

[Superfluous Man]

The Treasury does not control their interest rates- the market does.

A free market that is not affected by government lending money with promises to pay it back in the future with funds it must acquire via taxation?

N.B. The thread title does stipulate "free."

[Krugminator2]

A free market that is not affected by government lending money with promises to pay it back in the future with funds it must acquire via taxation?

N.B. The thread title does stipulate "free."

Clearly interest rates are a combination. But the idea that interest rates are as closely controlled like the Soviets controlled the price of bread is just wrong. Market forces, market sentiment and psychology, the economy are much bigger parts of what interest rates are at any given time.

And what major thinker outside of Rothbard and a few anarchists think a perfectly free market in money is a good idea. Hayek always gets thrown around by Ron Paul for his competing currencies idea. But Hayek thought the Federal Reserve was a good idea and probably necessary. Mises was for a statist gold standard. Friedman was for eliminating the Federal Reserve but at the same time having the Treasury use a formula to control the money supply.

[Superfluous Man]

Clearly interest rates are a combination. But the idea that interest rates are as closely controlled like the Soviets controlled the price of bread is just wrong. Market forces, market sentiment and psychology, the economy are much bigger parts of what interest rates are at any given time.

And what major thinker outside of Rothbard and a few anarchists think a perfectly free market in money is a good idea. Hayek always gets thrown around by Ron Paul for his competing currencies idea. But Hayek thought the Federal Reserve was a good idea and probably necessary. Mises was for a statist gold standard.

George Selgin, as far as I know, is not an anarchist.

But if any position is the one held by anarchists, that is a point in its favor, and not against it.

Friedman was for eliminating the Federal Reserve but at the same time having the Treasury use a formula to control the money supply.

Yes. His position was that as long as the money supply was to be centrally managed, that was the way of doing it that he favored. But he preferred that it not be centrally managed at all.

[Madison320]

The primary markets a bit of an anachronism, and a backrub. The secondary market where the spot prices come from is a pretty fluid and open market.

I admit I don't understand the process very well, but if over 90% of the treasuries end up in the hands of central banks and governments, does it make a difference if the buying process is fluid and open? That still seems like artificial demand to me. What would rates be if only private entities loaned money to the US? I'm guessing much higher.

[Zippyjuan]

I admit I don't understand the process very well, but if over 90% of the treasuries end up in the hands of central banks and governments, does it make a difference if the buying process is fluid and open? That still seems like artificial demand to me. What would rates be if only private entities loaned money to the US? I'm guessing much higher.

"Intragovernmental" includes Social Security as well as government employee retirement funds.

[idiom]

I admit I don't understand the process very well, but if over 90% of the treasuries end up in the hands of central banks and governments, does it make a difference if the buying process is fluid and open? That still seems like artificial demand to me. What would rates be if only private entities loaned money to the US? I'm guessing much higher.

Its the risk free rate. People can get higher rates pretty much anywhere else. Only super conservative investors and institutional mandates cause normal people to buy it.

Without huge purchasing the rates would drift up, forcing all other rates of return up too. The upshot would is everybody would find it much more expensive to borrow, and the Government couldn't leverage nearly as high. There is a point that would basically force the US to default if rates went super high, or to print which is still a default.

For it to become a real problem though you would need to have something safer than US treasuries, with a better return than gold. Such a thing is extremely hard to imagine.

[Madison320]

"Intragovernmental" includes Social Security as well as government employee retirement funds.

You need more detail.