Sorry. I have been in transit for two days and haven't had a chance to respond.
"I do think the US can keep on recovering but then interest rates then need to move higher creating the issue around interest on Government debt."
I don't agree that there is an automatic connection between US recovery (if or when it happens) and rising US interest rates.
There are other factors at work:
1. Given the depth of the "Great Recession", many macro models suggested that the Fed needed to push US rates well into negative territory (-2% in one case) to produce the stimulus required. This was impossible. I
It is likely that the ideal interest rate for the US is still in negative territory, in which case the FOMC doesn't have as case for an increase.
2. One of the key mandates of the Fed/FOMC is to control inflation within certain expected boundaries. There isn't as strong case for doing this at the moment. Such inflation as there is, results from capacity constrains in industries where production levels are not influenced by interest rates (energy and agriculture).
I agree that the US is "between a rock and hard place", but I would blame Congress rather than the Fed.
(I hope this is coherent. I am still a bit jet lagged.)
