Sure but this is "boring". An economy that can only support a negative interest rate can obviously not support a 4-5% interest rate. I don't see any surprise or any malice or trickery. The economy wants negative interest rates, the interest rates are at 0% so people hold onto their deposits and prevent the repayment of the debt. An economy that doesn't want to give up its deposits will obviously die if you give it even more reasons to hold onto deposits.

There is no gotcha. No criminal to catch. Interest rates want to be low, raising them for no reason will destroy the market because it wants the interest rates to be low. If there was sufficient inflation i.e. the market demanded higher interest rates you could raise interest rates with no ill effect. Before that happens you'll have to let the current inflation be here for a year. If you kill it prematurely you'll actually have to do more unconventional monetary policy.

>Why do you think theres a godly group of supremely moral and righteous humans sitting at the FED?

Because you don't want something like turkey to happen where the democratically elected president messes with monetary policy and causes double digit inflation.

Also, selling Treasuries isn’t “magic”. US Treasuries act as reserves in the banking system, that’s how modern banking works. You would be right to say that the Fed and the Treasury do indeed work together — after all, the US government is unlikely to default on any US-denominated obligation issued by itself — but the level of coordination you’re implying is a fiction.

400 basis basis points, back to the level of late 2005-early 2007, is a “tiny” increase in rates? That's an enormous increase...

> just the interest on the money owed is at $hundreds-billions yearly. Now double or tripe that cost…

If you look at history of Treasury interest rates and Fed Funds rates, the relationship you imply where even that giant increase to the Fed Funds target would do that... doesn't exist.